It’s no secret that healthcare materials managers grapple with supply chain nuances and the need to control expenses every day. By implementing new software and systems tools they can get help that will relax their grip a bit.

While a variety of factors are driving organizations to look for new sources of revenue, they shouldn’t lose sight of the fact that supply expenses can represent upwards of 25 – 40 percent of a hospitals operating budget. Improvements in the supply chain processes can help reduce costs, increase efficiencies, add to accountability, and improve safety. Vendors offer numerous solutions from systems to software that can help your organization improve its supply chain now. Long past are the days when bins were open to multiple staff pulling items they want from supply closets.

At the AHRMM Technology conference last October in Atlanta, materials managers were presented with a number of options that would lessen the workload in their departments as well as provide important information on usage, buying trends, inventory levels, and charge-back efficiencies. Presented with an array of solutions, their united concern was how they could introduce the need for additional equipment purchases into their hospital’s tight budgets. The conference focused on the use of closed and open supply cabinets and inventory software that have the ability to control supply replenishment, track usage, record patient charges – at point-of-use or at point-of-pull, and be efficient for the clinical staff to use and meet the patient care needs. The point-of-use systems allow the product to be scanned at the patient’s bedside where the information is transmitted to materials management as well as billing. Point-of-pull is where a product is pulled for use and the information is captured by a work station or an automated patient display board connected to the inventory system.

Closed storage systems typically contain an ID code or swipe card entry for security. The cabinet contains a built-in computer that will display the patient and supply information. With a few entry steps the caregiver has the supply, the inventory is updated and the patient charge is captured.Open systems may be part of a storage closet or open shelves and bins. The patient information is captured on a separate computer station or wall mounted intelligent display board. Both systems use a scanning device to scan the product barcode from the supply.

Materials Managers cited the need for a supply chain management solution that included or had the ability to interface with their other systems. The wish list included:

• Order management

• Inventory management

• Contract management

• Electronic billing/invoice payment

• Procurement and sources

• Rebate tracking

• Bar code reading that facilitates easy updating of the Item and Charge masters

• Future order cycle planning

• Ability to recognize multiple bar codes (manufacturer, HIBCC, UCC or Internal Hospital)

• Ease of use

• Receiving and distribution tools

• Efficient use of the facility space

• Security issues (for both the supply integrity-as well as patient safety)

The ultimate goals of such a system would be to help increase revenue, decrease operating costs, foster faster cycle times, save labor, increase collaboration between the departments, and ultimately improve the quality of care and the relationships with customers.

HPN researched a number of systems with manufacturers and found these examples of system implementation. Every hospital has a different need or a different culture they need to work with. There is no limit to the variety of tools and the flexibility available for customizing your hospitals supply chain solution.

A major concern for many providers is what to do with their legacy systems. If you already have a process automated, why would you want to reinvent the wheel? Not to mention that the workers are used to the existing systems and replacing the systems would be very expensive.

Ascension Health System

The Ascension Health System was created in 1999 and by 2003 had grown to 67 general acute care and related facilities. Because Ascension had been formed by the joining of the Daughters of Charity, the Sisters of St. Joseph, and the Carondelet Health System, they had no less than 11 legacy materials management systems. "Our current systems were too ingrained, and to simply eliminate them and bring in a brand new system would have been too costly," said Judith Laux, Director of Technology Services for Supply Chain Management, "We were looking for a buyer-centric model, one that already had something that was easily implemented across our facilities." After setting up a list of 400 requirements for a system to integrate into and enhance their existing systems, Ascension opted to implement OmniBuyer from Omnicell of Palo Alto, CA. This front-end requisitioning tool helped eliminate paper requisitions and phone orders and established a standard ordering procedure. Ascension found that the new set up saved them time and efficiencies. Omnicell provides end-to-end supply chain management tools, but also offers them in modules so it is easier to customize a solution and preserve and enhance legacy systems.

Omnicell also recently purchased BCX Technology of Lebanon, TN incorporating their point-of-use features into their system. The BCX’s ScanREQ point-of-use system utilizes touch screen technology, bar code scanning and inventory management software that enables hospitals to handle supply management more efficiently and cost-effectively.

Health Alliance

The Health Alliance of Greater Cincinnati is an integrated system of hospitals, physicians and medical services with six hospitals and 40 primary care clinics staffed by 170 practitioners. The Health Alliance was using handheld technology to count inventory levels but the data capture capabilities were limited. They solved this problem by using a combination of an e-Procurement solution from Lawson Software, St. Paul, MN and PAR Excellence Systems of Cincinnati, OH that brought regularly used supplies to the hospital floor, making them easily accessible, stocked, and accounted for and secure.

PAR Excellence’s iButton technology allows a special hand-held, battery operated probe to gather information and download the data from its storage cradle to the Lawson system. The caregiver using the probe touches a mounted panel containing a button for each patient and selects the appropriate button for the patient. The caregiver then touches an identification tag (iTag) that is placed on the supply bins for the item being dispensed for the patient. The information then downloads automatically when the probe is returned to the cradle.

"The technology is superior to bar coding and other data collection methods because it’s easy to use and reads accurately every time," said Steve Roland, Health Alliance’s Corporate Director of Materials Distribution, "The data is then manipulated through Lawson. Requisition orders are generated and sent to our distributor, which are picked, packed and brought back the same day or next, completing the replenishment process." The charge back process is also more efficient because it’s a two step process for the caregiver. The patient charge is captured. The systems can be customized to set your own levels of notification for supply replenishment, inventory management and critical alert notification.

Swedish Medical Center

The Swedish Medical Center in Seattle, WA was faced with opening a new patient-care tower, relocating most of its existing nursing units and expanding its intensive care units. This 1296 bed facility has 58 operating rooms on three campuses. Although they had been named the areas best hospital by National Research Corporation they were looking for ways to reduce stock outs, improve overall service to Nursing without adding personnel, and achieve supply management practices. Swedish Medical center installed Pyxis SupplyStation from Cardinal Health of San Diego, CA. By automating the management of supply charges, Nursing was removed from the process of charging patients for supplies. It also helped with the stock outs.

"The bottom line is, when nurses need a supply, it’s there; that’s what they care about. We’re at a 99% fill rate, and it used to be about 82%, "according to Allen Caudle, Swedish’s VP of Supply Chain Management. Pyxis SupplyStation and CathRack were also installed in the Cardiac Catherization Lab. "Before Pyxis SupplyStation, precious time was being spent filling out billing forms required by payers and regulators and searching for supplies needed to perform our clinical duties," said Carol Jacobson, MN, RN, Clinical Manager of the Cardiac CathLab and Interventional Unit, "We have been able to redesign our supply chain processes and significantly reduce manual and time-consuming billing activities for our staff."

Spartanburg Regional Healthcare

The Spartanburg Regional Healthcare System in Spartanburg, SC had some supply chain issues. The two supply closets for the 28 bed oncology unit were costing the facility $2,200 per week each in supplies, taking 90 minutes a week to stock, and there were 69 instances in two months when a caregiver could not find a needed supply. Raymond A. Shingler the Senior VP and CIO for Spartanburg turned to McKesson of Pittsburgh, PA for help. They installed SupplyScan in the two supply closets and saw the supply cost go down to $760 per week, stocking time reduced to 20 minutes a week and the stock outs reduced to 3 incidences.

"The man effort is significantly reduced," Shingler said, "plus we’re saving money." Spartanburg had little difficulty deciding between the open system offered by SupplyScan

and a closed system. "The closed system is great for inventory management, but there is a time delay in the process of accessing supplies," Shingler said. "Nursing views the closed system as a barrier between the supplies, the nurse and the patient." According to Shingler, once the nurse is inside the supply closet, they simply touch the screen for the patient, scan the bin holding the item they need, and confirm the inventory decrement with audible notification provided by the system. Charges are done, re-ordering is done, and inventory is decreased – automatically.

Some caregivers have issues with the scanning of each item and the impending charges to their patients particularly when they care for patients with financial challenges. McKesson’s Material Management Consultant, Cary Piotrowski told materials managers at the AHRMM technology conference, to work with caregivers on the importance of scanning their inventory pulls; "Don’t sell it as a charging tool but as a replenishing tool".

MedStar Health

MedStar Health is a not-for-profit healthcare system with seven hospitals in Baltimore and Washington, D.C. with 22,000 employees and 4,000 affiliated physicians that serve more than 500,000 patients per year. At one time, each hospital had its own IS department but now MedStar has one corporate IS department and a consolidated application support function. They are working toward standardizing major applications into individual units for budgeting, management and support purposes.

As MedStar Health grew and created new services, the organization needed software that was scalable and flexible enough to grow with the system. MedStar selected distribution and procurement suites from Lawson Software of St. Paul, MN along with Lawson Broadcasting that delivers financial information by cost center to the desktop using browser technology. The procurement suite will be interfaced with their existing Picis PeriopSuite software so they’ll have accurate inventory management in the operating room and up-to-date supply data in Picis.

"Lawson has impacted our bottom line by enabling us to incorporate completely separate companies with one business office software package," said David Smith MedStar’s Application Manager for the ERP Service Line. Lawson has transactional suites that can handle financials, human resources, enterprise performance management, merchandising, and service automation along with the procurement and distribution suites.

LeeSar/Sarasota Memorial Hospital

LeeSar Corporation is a regional service center that operates as a purchasing cooperative for Lee Memorial Health System in Fort Myers and Sarasota Memorial Health System in Sarasota, Florida. LeeSar differs from a Group Purchasing Organization (GPO) in that they work directly with clinicians and end users to get compliance before executing a contract. Sarasota Memorial Hospital (SMH), which uses LeeSar as their buying & contracting arm and distribution center, had over 3,000 users who had access to their requisitioning system according to Patrick Cross, the Manager of Supply Systems at SMH. They also were concerned about how to get better control and limit errors in billing and with their payments to their distributors and GPOs.

SMH receives four truck deliveries a day from LeeSar with up to 100 different orders per delivery. LeeSar maintains the item master and does the vendor, parts number matching – a luxury most materials don’t have. Patrick said the largest problem they had with staff buy-in was converting to a mouse from their mainframe system. He recommends making sure the end user population receives the proper education and training prior to the conversion. They added the Procurement Module from PeopleSoft of Pleasanton, CA and were able limit their end user requestors to 400. SMH was also able to convert from supply closets to 86 carts for their 40 nursing stations and increase to nearly 90,000 items in their catalog from 60,000 and achieve a 98% fill rate.

One of the ways SMH saves time with the PeopleSoft system is that they are able to go online, shop for products and go to the "check-out," the system automatically creates the purchase order, it then automatically creates the invoice when the products are delivered.  SMH will upgrade to PeopleSoft v8.8 with general ledger, asset management, inventory, e-Procurement, expense and contract pricing modules early this year.

Jefferson Main Line

Jefferson Main Line Health is a division of Jefferson Health Systems and has three acute care hospitals, one rehabilitation facility, multiple physician practices, and a research center in the Philadelphia, PA area. They have 7,800 employees and 1,300 physicians on staff with 80 people on their Materials Management staff. The facilities were on separate databases but they chose a PeopleSoft inventory system to help them integrate to one item master and one vendor master. This allows them to keep their processes consistent but their accounting separate. The item master has enabled them to increase from 25,000 to 45,000 items in their database. And, the use of handhelds with barcode scanning has cut inventory and par level checking 2-3 hours per day according to Michele Shields, Main Line’s System Administrator for Materials Management.

The scanned information goes through an interface into the inventory system to create orders on the back end for replenishment and follows through to payment, accounting, and financial information. Most floors are stocked daily, buy major orders created from restocking have been reduced to 2-3 times per week. They are currently not linked directly to Premier, their GPO, but they have the ability through query to compare their usage with the GPO’s records.

ROI

One of the unanticipated benefits reported by end-users who had adopted these technologies was they were getting pay-back on their investments much quicker than anticipated. Savings continued to grow as they expanded the areas where they used the systems and their caregivers increased usage as they became comfortable with the resulting increased efficiency of the systems. HPN