Seattle Children’s Hospital BlueBin Case Study

Seattle Children’s Hospital
BlueBin Case Study
September 2013
Since 1907, Seattle Children’s Hospital has been
dedicated to providing top-quality care to every
child in the region who needs it, regardless of the
family’s ability to pay. Seattle Children’s Hospital
is consistently ranked among the nation’s best
children’s hospitals by U.S. News & World Report
Through the collaboration of physicians in nearly
60 pediatric subspecialties, Seattle Children’s
Hospital provides inpatient, outpatient, diagnostic,
surgical, rehabilitative, behavioral, emergency and
outreach services. Seattle Children’s Hospital is
also the primary teaching, clinical and research site
for the Department of Pediatrics at the University
of Washington School of Medicine, which is ranked
as one of the top 10 pediatrics programs in the
country by U.S. News & World Report. In recent years, Seattle Children’s Hospital
embarked on the development of a strategic plan
with the goals of promoting hospital growth,
increasing research opportunities, reducing costs
and improving the quality of patient care throughout the hospital. In order to achieve these goals,
Seattle Children’s Hospital embraced a “continuous
performance improvement” (C.P.I.) process, which
involved the application to the health care industry
of the leading “lean” production methodologies
made famous in the automotive industry by Toyota.
A key piece of the plan was to improve the supply
chain at the hospital by developing a better materials management system.
Understanding the Problem
The previous system involved traditional materials
management methods, such as locked cabinets,
supply carts and par-level systems. It also meant
heavy involvement from clinicians in the sourcing
of and accounting for supplies. This inefficient
system meant clinicians spent significant amounts
of time searching for supplies. Items used regularly
were often stashed in closets and drawers to be
sure they were available when needed, but this
practice led to increased waste with expired items
and unreliable supply levels since a true accounting of supplies was nearly impossible.
“We knew we needed to do something,” said Patrick
Hagan, MHSA, who was president and chief operating officer at Seattle Children’s Hospital during this
time. “We had to get our people on the front line
out of the materials business. It was a tremendous
waste. It kept nurses and doctors away from the
bedside when they had to try to figure out where
the supplies were.”
The hospital was routinely receiving poor results
on staff surveys when it came to the availability of
necessary supplies. Hagan added that all the
search time and frustration resulting from the old
system diminished both the quality of the clinicians’
experience in their jobs and the quality of the
patient experience at the hospital.
Designing a Better System
To make their supply chain vision a reality, Seattle
Children’s Hospital brought in Charles Hodge, vice
president and chief procurement officer, who was a
Six Sigma expert in strategic sourcing. Hodge took
his precise understanding of how a supply chain
works and married it with the hospital’s strategic
plan to develop a solution.
To get started, Hodge and his team analyzed data
for all of the supplies used over the course of a
year to see where peaks and valleys in usage
occurred. This allowed them to better determine
the optimal levels to be stocked in supply bins.
Next, they worked with their distributors to develop
an ordering method that would allow them to order
only what is needed—factoring in lead times
required—versus ordering in bulk.
The final piece was to develop an analytics
program and dashboard that would allow the
hospital to access and make use of vast amounts
of supply usage data. The dashboard would allow
the hospital to monitor actual usage levels and
make immediate adjustments to match the oftenchanging needs of the hospital. Expert programmers
were brought on board, and the team embarked on
a six-month development cycle to come up with
the right solution. The end result was a new, lean
supply replenishment solution, now known as
To make sure the solution was ready for application
in the real world, it was first rolled out to the most
challenging department in the hospital—the ICU—to
quickly highlight where adjustments were needed.
The deployment included a mock set-up where
nurses were brought in to provide feedback on how
the bins were laid out and labeled, allowing them to
have direct input early in the process (a practice
which became part of all new deployments).
Two Blue Bins, One Robust Solution
BlueBin is a two-bin supply replenishment solution
that is based on the Kanban method originally
developed in the automotive manufacturing industry
to streamline the flow of supplies based on usage
patterns. There are two bins of each item; when
one bin is empty, it is placed on a designated shelf
and the second bin is pulled forward. Empty bins
are collected and sent to the central supply office
where the bar codes are scanned to initiate a
new order.
What makes BlueBin unique is the simple two-bin
front end that is intuitive for clinicians to use,
combined with robust technology on the back end
for managing replenishment and vendor relationships.
Analytics software, and a dashboard for easily
accessing the data, enables the hospital to clearly
see how and when supplies are being used,
pinpoint problems, and then adjust orders as
needed to ensure supplies stay at optimum levels.
A key efficiency of the BlueBin dashboard is the
ability to quickly and easily highlight the small
number of bins – out of the roughly 60,000 bins
that are in use throughout Seattle Children’s
Hospital – that might need immediate attention
at any given time. BlueBin ensures that the right
supplies are always there when needed and that
clinicians no longer waste valuable time searching
for and managing supplies.
“BlueBin enabled the implementation of our vision,”
Hagan said. “It got people on the front line away
from materials management. It was a tremendous
boon for clinicians.”
The BlueBin dashboard also allows the hospital to
track the performance of suppliers in areas such as
order lead times, on-time delivery performance and
cost variance, as well as track order anomalies and
other components required for efficient control of
the hospital’s revamped materials management
system. This precise knowledge and control of the
supply chain leads to increased efficiency and
performance, and reduced costs for the hospital.
“The BlueBin dashboard gives the hospital eyes
into every piece of the supply chain,” Hodge said.
“Not just internally, but externally as well, so they
can drive accountability through performance
metrics up and down the supply chain.”
Seeing Results
Following the rollout of the BlueBin solution in
2009, Seattle Children’s Hospital saved $2.5 million
in inventory reduction. For the next three years, the
joint commission surveys found zero expired items
– the first time this had ever happened in Hagan’s
career. In addition, urgent calls to the central
supply office were greatly reduced. BlueBin had
exceeded their expectations.
“It is the bane of clinicians, having to call central
supply urgently searching for some specific supply
and having to describe what you are looking for
over the phone,” Hagan said. “With BlueBin, these
calls from nurses and doctors have plummeted to
near zero.”
“This dramatic improvement and sustained
success highlights just how effective the BlueBin
solution is,” said Greg Beach, CBET, senior director
of supply chain at Seattle Children’s Hospital.
“Honestly, we wouldn’t have believed on day one
that we would see this kind of lasting impact.”
In addition to saving clinicians time, which could
then be redirected to patient care, the BlueBin
solution increased morale among staff and gave
clinicians at the hospital far more confidence in the
materials managers. Hagan believes this increased
confidence has improved the relationship between
the users and providers of supplies, which in turn
created a level of trust that has led to collaboration
and improved patient care.
“When I saw BlueBin in action at the hospital for
the first time, I thought it was almost too good to
be true,” Hagan said. “I don’t know that there’s
anything out there that comes close to what this
system provides and the paradigm shift it represents.”
Supporting nurse morale and satisfaction is incredibly important at Seattle Children’s Hospital. The
hospital is proud of their Magnet Recognition
Program® designation, which is awarded to only
three percent of all hospitals in the country. The
Magnet Recognition Program recognizes health
care organizations for quality patient care, nursing
excellence and innovations in professional nursing
practice. As a result, Magnet hospitals draw the
best nurses in the country. The supply chain is a
part of the Magnet review process, which gauges
how involved nurses are in improvement, and
BlueBin has helped foster a connection between
nurses and the supply chain that continues to
influence operations today.
A Lasting Impact
Forming BlueBin Inc.
Seattle Children’s Hospital’s use of the BlueBin
solution is still growing today. The initial deployment focused solely on patient care, but now
covers the laboratory, environmental sciences and
pharmacy departments. And BlueBin, well into its
fourth year of deployment, continues to influence
and improve the operations of Seattle Children’s
Following the great success Seattle Children’s
Hospital was having with its new, lean materials
replenishment solution, many health care leaders
began to call the hospital for advice. Hodge then
realized that the BlueBin solution could be scaled
to other hospitals to duplicate their success.
In 2009, prior to using BlueBin, Seattle Children’s
Hospital asked nurses to take a satisfaction
survey. One question asked nurses to rate on a
scale of 1-5 whether they had the right tools to do
their job. In 2010, just a year into using BlueBin’s
system, nurses’ response to this question was 20
percent higher and has sustained at that level
through 2012, when the last survey was given. In
addition to achieving a new level of nurse satisfaction, reported search time for supplies reduced by
50 percent.
In 2011, BlueBin Inc. was officially formed under
the direction of Hodge and Dr. Howard Jeffries,
who was the medical director of C.P.I. at Seattle
Children’s Hospital when the BlueBin solution was
being developed. Today, BlueBin Inc. is a privately
held company with headquarters in Seattle.
Hodge serves in the capacity of founder and board
member at BlueBin Inc. Jeffries serves as chief
financial officer and board member at BlueBin,
while also continuing his medical practice as a
pediatric cardiac intensivist at Seattle Children’s