Hospital
bears down on inventory, door to door 
by
Todd Shields 
After completing a count of medical products in the top 60 cost centers,
Christopher Baskel learned they held 95% of his hospital's entire inventory.
With that fact in hand, he and other department heads decided to probe
further by figuring out an individual department's inventoried value
based on price. Pursuing an administrative plan to reduce inventory,
the team appraised the hospital's catheter laboratory and tallied $965,500
worth of equipment.
"Now
I had good data and I said to myself, 'Wow.' It was one of the truly
finer moments," said Baskel, systems director of material management
at 500-bed Loyola University Medical Center, Maywood, IL. It has a $160
million budget for purchased services and supplies.
Baskel, physicians and administrators then asked their four major vendors
to buy back Loyola's existing cath lab stock, as well as put all future
stock on consignment. Two of the vendors agreed, and today the catheter
department's inventory is valued at $148,000, or 85% less than a year
ago.
"We
didn't want to hire outside to audit the departments. So I assigned
roles and responsibilities with deadlines for the count sheets. People
from finance were present during the counting because it's so important
to get accurate, honest data," said Baskel, who is also a board member
of the Health Care Resource Management Society's Chicago chapter.
Systemwide survey
Though
healthcare facilities frequently buy medical equipment and devices on
consignment, analyzing inventory department by department is somewhat
unusual, experts said. Experts found Loyola's program intriguing.
Next, Loyola will analyze its radiology department and then other high-value
units such as the operating room and clinical laboratories. Eventually,
all 60 cost centers will be analyzed.
"There's
been a drive the last couple of years for material managers to lower
inventories, but I would say it's very unique to focus on individual
departments to find inventory-cutting opportunities," said Al Cook,
president-elect of the Association for Healthcare Resource and Materials
Management, Chicago.
Cook called Loyola's 85% cath lab stock reduction "quite remarkable."
Other
authorities explained the door-to-door method's true value is its documentation
of hard data, which can be used to convince physicians and other end-customers
to reevaluate their merchandise and possibly rid the departments of
obsolete gear.
For both hospitals and vendors, maintaining a multidepartmental purchasing
review team to oversee a tight and updated inventory featuring the latest
in technology is a "win-win situation," said Dee Donatelli, director
of corporate accounts for medibuy.com, San Diego. Whereas vendors certainly
want to see high-tech products in hospitals, getting physicians engaged
in the purchasing process - examining prices, evaluating product utilization,
negotiating with vendors - is equally beneficial.
"Identifying
your inventory to see what you actually need as opposed to what you
have is a huge opportunity to reduce inventory. Still, you don't want
to beat yourself coming and going. Certainly, you don't want to have
stockouts," Donatelli said.
Market
share
For large healthcare facilities with high-volume purchases, negotiating
with vendors for consignment contracts is easier to capture than at
smaller hospitals. Still, a manufacturer may push for a market share
of a department's purchasing interests, explained George Simon, manager
of Loyola's heart catheter lab.
Becoming locked into market-share agreements could conflict with a doctor's
choice for favored products and, ultimately, a patient's best care.
"That's
not the case here, though. Doctors still have a choice to fit their
clinical decisions," Simon said.
"In
dealing with our vendor, we said no to a guarantee of the market share.
They finally relinquished because we are a high-volume lab, and they
wanted our business."
Typically,
stock is more varied in Loyola's interventional radiology department
than other cost centers.
Because of that product variety, several vendors had been named as suppliers.
Under the inventory-reduction concept, radiology administrators knew
the situation needed trimming. They started with offering bids to 10
companies and, after reviewing their offers, they chose three to renegotiate
contracts.
"Rather
than buying 30 separate items, we want a package order from these companies.
To us, that's good leverage. The purchasing department is still figuring
that out with the vendors, but the preliminary indicators are that they
are willing to talk about it," said Dr. Robert Henkin, Loyola's chairman
of the radiology unit.
HPN
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