A Case for Inventory Control

 

A Case for Inventory Control By Marcia Frieze and Arlene Carlo, Carlo , RN, BSN, FCSP Healthcare workers (HCWs) are continually seeking ways to enhance service and quality, and improve the financial bottom line. An effective inventory control management system for surgical instruments in the healthcare setting is one way to achieve this goal. Wh

y control surgical instrument inventories?  inventories? 

Every hospital wants to get a handle on managing instrumentation. Surgical instrumentation has become increasingly complex and expensive. The instruments represent a substantial financial investment for healthcare facilities. Money is tight and HCWs do not have the luxury of buying excess inventory. This is especially true of  endoscopic instruments, which have become a costly and necessary financial investment as HCWs increasingly utilize minimally invasive surgical procedures. In today's healthcare setting, there are hundreds of instrument sets containing thousands of different types, designs, and sizes of instruments that are used in surgical procedures. As the number and variety of instruments used in surgery has increased throughout the years, so has the cost of these instruments. In addition, surgical cases and the need for rapid turnover of sets have contributed to the need for better organization and control. Remember, an organized inventory management program keeps trays under control and circulating. The volume of procedures can be better handled and tracked avoiding the need to routinely flash instruments. The volume, high cost of surgical instruments, increased turns, and limited inventories make it essential that an effective management system for this asset be in place to provide accurate control and timely data. Instrument management systems  systems  Every hospital sees the need to manage its instrument sets. Having an established written policy and procedure regarding instrument inventory management is one step; having the cooperation of the staff to implement these procedures when overwhelmed by the increased volume of cases and responsibilities is another. In other words, we need a team of dedicated staff trained to utilize the system each and every step of the way. Training and cooperation are crucial in maintaining an inventory management system. Furthermore, the system must be consistent and easy to implement. Healthcare facilities typically utilize a manual record-keeping system, or an automated system, to document information. However, all healthcare facilities are not the same. The decision as to which system to utilize, whether manual or automated, is based on several factors, including the size of the facility, the number of  surgical instruments, procedures, staff compliance, and the financial resources of the institution. It is important to choose an instrument management system that will best meet the healthcare facility's particular needs. Whatever  system is used, it should be efficient, cost-effective, and easy-to-use. It is crucial for the staff to completely understand the system, be trained to use the system, and work together to achieve optimum results. Manual inventory control systems  systems  Manual instrument management systems are certainly a way to start. In the past it was the only option and these may work for smaller healthcare facilities and surgery centers. However, a manual inventory system takes a considerable amount of time and effort to maintain. Keeping manual logbooks where all processed instrument trays are listed and tracked is time consuming and labor intensive. There is a chance for error. Additionally, retrieving information from a manual system is difficult, as there are volumes of  paperwork to look through before data can be complied and analyzed. When there are many instruments, it is even more difficult to maintain accurate control with the manual system. It is also a challenge to consolidate information from the records to generate needed and valuable reports that are useful to enhance the operation of the department. Organization and standardization of trays, color-coding, labeling, and instrument count sheets are a few solutions that can help manage the process. There are products currently on the market such as sterilization containers that provide organization and secure containment of surgical instruments. These container systems provide a

 

location for the identification of set name or service, load card information for the sterilization record, and options to customize and standardize sets. Automated inventory control systems  systems  Computer technology has provided opportunities for improving instrument management. Computerized inventory management systems have the capability to manage and process large volumes of data quickly and provide reports that help the healthcare facility do a better job of managing its surgical instrument inventory. It is important to be aware of which systems are currently available in the marketplace and what they offer. Most computer management systems track the instrument set through all processes and services. Others have additional options, such as instructional features on line, instrument preventive maintenance reminders, and employee tracking for productivity. Take time to review literature and assess different systems and costs. Although an automated system may require a substantial initial investment, it has proven to be a cost effective instrument management program.  According to Valerie DeVries, RN, sterile processing manager at Lenox Hill Hospital in New York City, "It may cost thousands of dollars, but it's worth it. Now we can find the trays. At Lenox Hill, w e have an outrageous volume of instruments and now we have a better handle on standardization and control over the instrument inventory." However, the system requires maintenance, backup, and someone to sit and input consistently. When it comes to inputting data, bar coding is a valuable tool. Inputting data using a bar code system is a definite time saver over manual input as long as the information is recorded at time of use. Bar coded trays and a bar  code scanner provide improved tracking of instrument sets. Using a tray system that provides a location for  labeling as well as the ability to bar code is a clear advantage. Scanning ensures accuracy of data entry. Instrument sets are scanned at specific workstations in order to know the location and status of any set at any time. Surgical instrument sets can be identified with a bar code label that identifies each set. Labels can be affixed to inner baskets and outside of containers and to the outside of trays that are wrapped. Computers track the flow of sets through the department and at each stage of the processing department. Reviewing the process:  process:  First, instrument sets are scanned when they enter the decontamination area. Scanning creates a record that the tray is there. The tray is scanned when the set arrives in the prep and pack area for assembly, when sterilized, and when delivered to the operating room or storage area.  A count sheet for each set is printed when the set is scanned for assembly and bar  code labels are printed to affix to the outside of the container or package before the sterilization process. Additionally, a backup plan is necessary as with all computerized systems. Implementation takes time and requires a concerted effort. When all processes andtracking documentation rely on an automated systemTherefore, to function, if  the system goes down, documentation cannot be obtained. service is an important feature of the system. Bar-coded trays and a bar- 

The system must be as user friendly as possible. At Sarasota Memorial Hospital, an code scanner provide 845-bed regional medical center, an automated inventory management system was improved tracking of  approved by the staff in central processing and the OR, and put into use. According instrument sets.  to Jim Heller, director of central services, "Sarasota Memorial's first goal was to have sets complete with the correct instrumentation. The facility created count sheets and imported photos for each instrument in the computer." Later they implemented an instrument maintenance program, a tracking system and standardized to a sealed container system to store and contain the instrument sets using bar code labeling. In conclusion, choose an instrument management system that will work for you. Obtain consensus from everyone involved and do a step wise implementation program. Make it easy. Do a back-up and use trays that can be standardized and labeled. In the end, whether the inventory management system is manual or automated, what it comes down to are the people, their dedication, and commitment.

Marcia Frieze, MS, ismanager, the CEOeducator, of Case Medical, located  in Richfield, NJ. Arlene Arl ene Carlo, RN, BSN, FCSP, is an experienced clinical and consultant.  consultant.

 

Hospital Materials Management Information Systems

Hospital Inventory Control & Supply Chain Management (SCM) Solutions The singular focus of Caduceus Systems is to deliver significant improvements in the ability of hospital facilities, networks, and other healthcare organizations to optimize the processes and work with hospitals materials management information reduce theflows costs associated related to t o inventory and supply chain management (SCM). systems and Strategically, we position healthcare provide pr oviders rs to exploit contemporary technologies and connectivity with suppliers and trading partners to: t o:

       

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Drive down costs Improve patient care and saf ety ety iciency Increase eff iciency Optimize inventory levels

Our

built-for-hospitals-from-the-ground-up built-for-hospitals-from-the-g round-up approach includes a tailor tailored, ed, tactical hospital inventory management solution for operational requirements - a significant area for cost savings.

R educing educing

Your Inefficiencies & Saving You Money

Unparalleled

in its design and scope, the t he Caduceus Materials Management Information System (MMIS) is an advanced "end-to-end" "end-to-end" hospital supply chain software solution utilizing scanning and a wireless infrastructure to manage materials, costs, and charges from requisitioning to the point of care. Caduceus Systems delivers an effective way for forward-thinking forward-thinking hospitals and other  healthcare facilities to integrate the best-of-breed hospital supply supply chain management solutions that have proven so effective in reducing costs throughout American industry without requiring wholesale change in existing systems.

This challenge was first articulated in a major analysis of inefficiencies in the t he healthcare industry,, the Efficient Healthcare Consumer Response Report (EHCR, 1996). The report industry identified $11.6 billion of cost saving opportunities in the American America n healthcare system directly due to inefficient product pr oduct movement and ineffective inventory inventory control c ontrol and materials management. Nearly ten t en years later, this situation has only grown worse. As m materials aterials cost has increased, this is inefficiency our overburdened health system ca cannot nnot afford.

 

 

Hospital

Inventory Management 

While many hospitals today use robotics to fill prescriptions and sophisticated systems to track and monitor patient care, most still use manual processes to determine what, how often and how much to order. The vast majority of hospital pharmacies still rely on a "want book," using pen and paper to take notes throughout throughout the day on items to be ordered. They double double the work by visually iinspect nspecting ing the on hand inventory of items in the pharmacy, and cap off this process by manually entering their daily order into technology systems provided from their pharmaceutical distributor. Many pharmacy buyers were trained as pharmacy technicians and in lieu of formal purchasing instruct instruction, ion, rely on their own intuition. A typical typical hosp hospital ital pharmacy has more than 2,000 pro ducts in its inventory. Relying on visual inspection, memory or experience to decide how much to order leads to costly overstock and stressful buying emergencies. Compounding this problem is the fact that most hospital pharmacies do not have a process for accurately reconciling what is received against what their pharmaceutical distributor bills. The serious consequences of traditional pharmacy purchasing include: lack of inventory i nventory control control missed contract compliance excess inventory levels frequent and costly emergency deliveries workflow stock-outs interruptions and expensive rework increased health system l abor requirem requirements ents Taking control of inventory is much easier than it was a few years ago. The right inventory process redesign includes three components: technology; buyer experience; and change management.

Beyond purchasing--Managing

hospital inventory

Nov 1, 2003 By:

Chris Alverson  Alverson 

Managed Healthcare Executive

Each year, the average health system invests millions of dollars in pharmaceuticals. While hospital pharmacists are expert at evaluating the efficacy eff icacy of drugs, many haven't ha ven't looked closely enough at their inventory management ma nagement processes. In fact, the ttypical ypical health health system  pharmacy does not use calculated methods for determining product orders. As a result, hospital pharmacies average a relatively low 10.2 inventory turns per year, lose contract compliance opportunities, and continue costly process inefficiencies. A disciplined inventory management program progra m applies "buying science" to pharmacy  procurement and can make a huge difference in inventory inve investment, stment, labor conservation and  patient safety.

 

While many hospitals today use robotics r obotics to fill prescriptions and sophis sophisticated ticated systems s ystems to track and monitor patient care, most still use manual processes to determine what, how often and how much to order. The vast majority of hospital pharmacies still rely on a "want book," using pen and paper to take notes throughout the day on items to be ordered. They double the work by visually inspecting the t he on-hand inventory inventory of items in the t he pharmacy, and cap off this  process by manually entering their daily order into technology systems provided from their   pharmaceutical distributor. distributor. Many pharmacy buyers were trained as pharmacy technicians and in lieu of formal  purchasing instruction, rely on their own intuition. A typical hospital pharmacy has more than 2,000 products in its inventory. Relying on visual inspection, memory or experience to decide how much to order leads to costly overstock and stressful buying emergencies. Compound Compounding ing this problem is the fact that most hospital pharmacies do not have a process for accurately reconciling what is received against a gainst what their pharm phar maceutical distributor bills. The serious consequences of traditional pharmacy purchasing include:        

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lack of inventory control missed contract compliance excess inventory levels requent stock-outs and costly emergency deliveries f req workf low low interruptions and expensive rework increased health system labor requirements

Taking control of inventory is much easier eas ier than it was a few years ago. The T he right inventory  process redesign includes three components: components: technology; buyer experience; and change management. At the core of the program is a discipline that relies on velocity rankings, a term used to illustrate the speed at which a product moves off the shelf. Wholesale channels use inventory classifications of A, B,C, and D items as product velocity metrics. An "A" item can typically represent 10% of the stocked SK Us (stock keeping units) but 60% of sales, while a "D" item can represent 25% of stocked SK Us and only 10% of sales. Each velocity group has its own inventory turn goals. These rankings help focus more of a pharmacy buyer's time on "A" items and less time on slower moving "B" and "C" items. Ideally, the order process incorporates comp c omputer uter calculated reorder re order points and reorder  quantities for each item, built in to the ordering process, eliminating the need for the want  book.. The pharmacy can rely on suggested, automatically generated order quantities, contract  book compliance checks, and other time and cost saving decision-support decision-support features. A process like this ensures adequate on-hand inventory while preventing costly overstock. Thorough manual reconciliation of daily distributor deliveries is burdensome and impractical for most hospitals. With the millions of dollars worth of inventory on their pharmacy shelves, however, hospitals hospitals need reassurance rea ssurance that what they receive and what they paid for ar aree the same. Hospitals should take advantage of their distributors' distributors' receiving technologies tec hnologies that automate the check-in process and instantly compare what is delivered to what is invoiced. Hospital will r ealize significant realize inventorypharmacies management processes, such as: measurable benefits from redesigning their 

 

Increased inventory turns -The higher the number of inventory turns, the less capital is invested at any given time. Hospital pharmacies pharmaci es should strive for an inventory turn rate of at least 14 turns, and ideally over 16. Improved contract compliance-Contract items represent a significant area for pharmacy savings for pharmacy-the more compliant with buying group contracts, the higher the savings. Without a disciplined inventory management process, pr ocess, a pharmacy runs the risk of  stock-outs that lead to non-contract non-contract purchases. Outmoded pharmacy buying methods contributed to an average 40% of hospital pharmacy drug spend invested in non-contract items.

Southwest Washington Medical Center Cent er (SWMC), a 442-bed hospital outside of Vancouver, Wash., adopted McKesson's Asset Management program last year, and its pharmacy department experienced savings of 2.5 hours a day in purchasing staff time. In one year, the department increased its inventory turns and realized r ealized a cost sa savings vings of $170,000. $170,000. Pharmacy staff say the program has allowed them to identify areas in need of improvement, and to find other opportunities for savings. sa vings. Hospital pharmacies can expect new challenges over the next decade, including adopting electronic medication administration record technology, technology, implementing i mplementing automated prescriber  order entry, and coping with continuing clinical labor shortage. s hortage. Modernized Modernized inventory management can help them address these challenges, by optimizing the purchasing and inventory management processes to free up pharmacist time, reduce costs, and a nd increase capital availability for future needs. The result is a more efficient effici ent system that that can produce significant savings for the hospital while providing pharmacy with more time to focus on  patient care activities.  About the Author  Chris Alverson

Articles by Chris Alverson