Supply storage systems:
Silver bullet or silver lining for Cost management?

By Rick Dana Barlow and Jeannie Akridge

Determining whether to invest in closed or open automated supply storage system technology can be a costly decision for any healthcare facility. Whether it’s awash in red ink or teeming with black the facility has a shot to collect some green (in terms of cost savings) or flush it away, depending on its ultimate choice.

To help wade through the some of the market hype, Healthcare Purchasing News Senior Editor Rick Dana Barlow posed a series of pressing questions to executives at four leading manufacturers of supply storage system technology. From buttons on bins to shelving fully encased in glass and plastic, automated supply storage systems may represent a boon to anal retentive organizers or a bane to penny pinching bean counters.

Open storage courtesy of PARExcellence

Rob Sobie, director of supply automation at Cardinal Health Inc. (San Diego); Cary Piotrowski, supply automation consultant, and Eric Schulties, director of closed loop supply at McKesson Automation (Pittsburgh); Ken Perez, vice president of marketing at Omnicell Inc. (Mountain  View, CA); and Joe Dattilo, president of PAR Excellence Systems Inc. (Cincinnati) each weighed in with their thoughts to clear up some of the confusion and amplify the debate.

HPN: What’s the biggest misconception hospital administrators have about automated supply cabinets? How can – and should – it be corrected?

McKESSON: The biggest misconception that hospital administrators have is that cabinets are required to lower supply costs and ensure compliance. We have been able to demonstrate substantial improvement in supply chain costs and have achieved compliance levels equal to or higher than hospitals that have deployed cabinets with our open system, at a much lower cost to our customers. Thus, our ROI is typically higher. Also, hospital administrators probably underestimate the impact the product has on their operations and therefore will prioritize it lower among competing projects. They might invest in a new MMIS, for example, rather than invest in point of use, and thereby not really improve operations at all since the same inaccurate data that was driving their old system is still in place impacting their new system. This can be stated from a clinical perspective, too.

Healthcare systems want to move to more efficient, electronic means for doing charting or MAR, which take some time to become efficient with, and yet they still have old inventory solutions in place that cause nursing much more time than one realizes, such that the nursing team feels over-taxed by new technology since they can’t adopt it easily while handling their ‘other’ responsibilities. This creates a backlash among the team to new products on the floor and supports the ‘resistant to change’ mentality that often develops in the clinical arena. In fact, many of our clients now acknowledge how easy our automation solution is and that it actually frees up time for the nurse, creating satisfaction that had long gone ignored and builds a ‘tech-friendly’ environment ready for future advancement.

OMNICELL: The biggest misconception is that hospitals’ choices are limited to cabinets, when an integrated solution which combines supply cabinets and open bar code inventory management, is available today. 

 

"Our customers have consistently told us that they’d like an integrated, easy-to-use system to manage all medical/surgical supplies, regardless of where they are stored – in closed cabinets or open shelves." - Ken Perez

 


PAR EXCELLENCE: Unfortunately, the term ‘automated supply cabinet’ has been used to describe all point-of-use solutions. This misconception leads to the perception that all point-of-use systems are too expensive and not easily justified. In addition, some believe that nurses will not comply with a system unless access is restricted. Our customers’ experience over the last 12 years proves otherwise. When we installed the first open point-of-use system in the country in 1993, we were confident that if the system was quick and easy, the nursing staff would comply, and they have. Open point-of-use systems provide all the same benefits as the automated supply cabinet at a cost that can be easily justified. We have made considerable progress since 1993 in clearing up these misconceptions. Our sales and marketing staff, our clients and most industry consultants are spreading the benefits of open system. It seems to be making an impact. Over the last few years, the two primary suppliers of automated supply cabinets have felt the need to introduce open systems.

CARDINAL: The biggest misconception about automated supply cabinets is that they cost too much and that users won’t like them. They deliver a swift ROI and provide savings and efficiencies that other systems cannot replicate. Initially, users inappropriately think that the systems will slow them down when, in fact, they actually speed them up. Improving product availability, eliminating needless product searches and using real-time data to make informed inventory management decisions all help to assure that the users get what they need quickly.

HPN: If cash-strapped hospitals already are debating costly investment in ERP systems, upgraded MMIS or Internet e-commerce technologies, how can they justify investing in automated supply cabinets? Where do you fit into this chain between hospital computer systems and the Internet?

PAR EXCELLENCE: Let’s change the terminology again. Let’s not talk about automated supply cabinets when referring to automation in materials. True, cash-strapped hospitals cannot justify automated supply cabinets. Obviously, the organization must determine priorities among ERP systems, e-commerce technologies and point-of-use systems. We believe that the point-of-use system has the largest impact in reducing supply chain costs by actually streamlining the entire internal distribution process.

For many hospitals, the addition of a point-of-use system might be all that is necessary to, in effect, upgrade their present MMIS. We typically control all of the various PAR Location inventories throughout the organization. We automatically create orders/requisitions for both stock and non-stock items and forward these to the hospitals ERP systems. The ERP system may be interfaced to the e-commerce systems, however we can also directly interface with vendors, if desired. We can foresee that sometime in the future, point-of-use systems may work in tandem with e-commerce technologies to provide all of the functionality required in a streamlined supply chain.

CARDINAL: Though there is a cost to automated supply systems, the savings and revenue they generate help offset the cost for these other items while integrating and working with them. Several of the systems mentioned add cost to the system and do little to generate a return. Why does the customer need to update their MMIS? Is it due to its limited functionality or is the manufacturer discontinuing it? While these systems can help improve the flow and access of inventory, they do very little to mitigate or limit access to it. Without limits and without change there is little to no impact in consumption, cost or revenue.

McKESSON: We are a crucial piece in the supply chain, a collector of data at the point of use, which ultimately impacts the movement of supplies and information throughout the chain. Inaccurate, or untimely data being input into the IT infrastructure renders the entire system inaccurate, and therefore a poor investment at that time. In addition, unlike the other systems mentioned, our solution can be installed in a relatively short time (3-6 months), is an easy system to learn and can deliver results in a very short period, therefore building support for more advanced systems and delivering a short-term win for the hospital administration with the clinical staff.

OMNICELL: Automated supply cabinets play a valuable role at the point of use within an overall supply chain management strategy, and can integrate, as we’ve done at Rush-Presbyterian-St. Luke’s Medical Center in Chicago, with OmniBuyer, our e-procurement solution, to create a unique       Closed storage  automated end-to-end supply chain. All of            courtesy of Cardinal Omnicell’s systems, including automated supply cabinets, open bar code inventory management systems and OmniBuyer, integrate seamlessly with ERP and MMIS systems.

HPN: What kind of ROI can facilities with lower IT budgets and/or older legacy systems expect from using your company’s technology vs. facilities with higher IT budgets and a better handle on their operational efficiencies?

McKESSON: The ROI is directly dependent upon the pre- and post-conditions of the prospective client. The overall investment in supply automation is more easily justified by larger institutions with more staff and greater inventories, but from the perspective of data integrity, they have equal importance to large and small, and in both cases can justify themselves quite easily. Supply automation by itself isn’t the ‘silver bullet’ to solving one’s supply chain issues, but it is the front-line tool that provides timely, accurate data of how inventory is being consumed in the clinical setting to allow one to create the most efficient means for replacing that inventory and improving the overall experience for both the patient and clinician.

PAR EXCELLENCE: We offer solutions for organizations of every size. We also offer solutions with various levels of sophistication. Some solutions may provide less automation than more sophisticated solutions. If a facility cannot afford the ultimate solution, they might need to forego certain benefits and subsequently achieve a lower ROI. We have provided upgrade paths to allow the cash strapped organization to start slowly and grow into the more sophisticated products. It must be stated that all of the benefits associated with automated supply cabinets – financial and non-financial – are also achieved with an open system. While the benefits remain identical, the cost of an open system is significantly less than a closed system; therefore the ROI is significantly higher.

OMNICELL: With over 3,000 interfaces to its credit, Omnicell’s systems work with any back-end system, therefore providing benefits to facilities regardless of the age of their systems. In general, our systems provide a financial payback that is less than two years.

CARDINAL: Because of its unique turnkey architecture, our automated systems begin to provide value from the moment they are deployed. They can integrate with the simplest or most complex IT products offered in healthcare today. Our extensive interface library and expansive field-based support teams can seamlessly create the communication links that IT professionals demand. With each level of integration, customers stand to gain incremental efficiencies and cost savings. Since each ROI is site specific, the only way to answer your question is by engaging our Professional Associates to do a comprehensive site analysis.

HPN: Who’s the ideal hospital customer for these units and where should these units be placed to achieve the maximum return on investment? The supply chain manager whose inventory is a mess, the supply chain manager who needs that extra edge to boost an already efficient inventory management process, the nursing floors, the operating room, the laboratory, the emergency room?

PAR EXCELLENCE: The only appropriate use of a closed supply cabinet is in a supply area that is literally out in the open; in a high traffic area; where the hospital is attempting to restrict access to patients, families, or other non-hospital personnel; or in areas that need to secure limited items due to state regulations or extremely high cost. Those are the two areas where we believe closed cabinets can be justified. Open point-of-use systems, however, can be justified in any department within the organization. We provide multiple solutions with varying costs. While the OR and Cath Lab may benefit more from a point-of-use system, all departments are candidates for the open system.
"We believe that most hospitals cannot justify automated supply cabinets throughout the facility. Most organizations, however, can justify open point-of-use systems. " - Joe Dattilo

 

McKESSON: Any place significant quantities of supplies are consumed is a candidate. Certainly some areas are better suited than others. Those that are the ‘easiest’ to install (basic med/surg floors) don’t drive the greatest ROI. However, they can be the pilot sites to demonstrate impact and achieve overall acceptance within the facility. The greatest ROI is achieved in areas where the labor costs are highest and the inventory value is greatest (OR and Cath Lab). The next areas are those where the improved charge capture may have an impact on revenue. Ultimately, the goal of supply automation is to eliminate redundant processes and automate workflow to increase efficiencies and staff productivity.

CARDINAL: The ideal customer is the one who recognizes the need for change and appreciates the value that automation provides. Interestingly, it’s often the ones who don’t think that they need automation that deliver the strongest ROI results. Regardless of the size or complexity of the organization, we offer a range of automation products for every hospital location. Less complex nursing floors are often the first to deploy. ER, Inpatient and Outpatient OR, ICU, Interventional Radiology and Cath Lab deliver the greatest incremental impact due to the complexities associated with valuable stock and non-stock inventories. These units generally have the highest value inventory and the greatest volume of people traveling though them. They are also closely linked to ambulatory patient classifications and may still rely on cost and charge capture.

OMNICELL: The entire supply chain is fair game for improved efficiency, and Omnicell has implemented its automated supply systems in all areas of the hospital, with benefits gained everywhere they have been utilized. In particular, we have seen increased interest in integrated closed-cabinet and open bar code inventory management solutions for the surgical services market.

HPN: When your company calls on a hospital to sell your product who is the first contact and who is the primary contact once a contract is signed? The director of materials management? The CEO? The CFO? The director of nursing? Why?

OMNICELL: For automated supply cabinets, the main initial contact is usually the director of materials management. Because nurses are primary users of our systems, nursing management gets involved. Increasingly, specific department heads, such as the OR manager, are pulled into the discussion. The executive officers (e.g., CFO and CEO) usually play more of a review and approval role.

Recommendations for Storing Clean and Sterile Supplies

Criteria

• Supplies should be stored at least:

• 18 inches from the ceiling

• 8-10 inches from the floor

• 2 inches from an outside wall

• Do not store supplies:

• On windowsills

• Under sinks, exposed waterpipes, or   
sewer pipes

• Under sprinklers and air vents

• Arrange supplies in a manner that prevents crushing, bending, compressing, or puncturing the packages

 

• Do not bring outside shipping boxes into clean storage areas

• Limited traffic

• Controlled temperature and humidity

• 24°C (65°F), relative humidity < 70%, minimum 4 air exchanges per hour

• Closed or covered cabinet preferred

• Open shelving can be utilized if area has limited access, and area’s ventilation and housekeeping practices are monitored

• Packages that have expiration dates should be rotated, first in, first out

Developed by North York General Hospital, in conjunction with various resources

 

 

McKESSON: First, it’s the C-suite, including CFO, CIO, and CNO, to understand the overall strategic direction of the organization, the organization’s pain points and priorities, and overall perspective on issues they may be experiencing with their supply chain. We then work with the director of materials management and nursing unit managers to understand the specifics, define the best solution and expected impact, including future state processes, and a tactical plan for how the technologies would best be deployed. Once the contract is signed, we continue to work with all levels of the organization as appropriate to make sure that we are staying abreast of strategic direction and priorities as well as maintaining relationships with those that use our services and technologies on a daily basis.

CARDINAL: This varies greatly based on demographics and site. We would prefer to meet with the CEO and CFO but recognize the need for internal sponsorship. Most often, we meet first with the vice president of nursing, director of pharmacy or director of materials management. Subsequent meetings are established to include nursing, pharmacy, materials management, biomedical engineering, information services and others. This is when the previously mentioned site survey would begin.

Once the CEO or CFO signs the contract, the primary point of contact becomes a combination of the vice president of nursing and the directors of pharmacy and materials management. These are the people who help drive process change and seek the efficiencies that all agreed upon. They are closest to the staff and are often the strategic leaders in driving the deployment.

PAR EXCELLENCE: Our primary contact and sponsor is the director of materials management. They are most likely the first to recognize the potential of our products. The DON, CFO and CIO are also heavily involved in the purchase decision.

HPN: How do customers document and prove the savings they achieve through your company’s technology? Can they isolate your product’s specific contribution?

PAR EXCELLENCE: There are a number of ways to document the savings. It partly depends on the agenda of the individual hospital. Where are their priorities – labor savings, inventory reductions, reductions in product utilization, increased charge capture, elimination of existing charging systems, etc.? Since the benchmark must be the current process, it is important to identify these stats prior to implementation. With appropriate documentation collected prior to implementation and with appropriate controls to eliminate other variables, the product’s contributions can be isolated.

McKESSON:Through accountability, one truly can observe the changes pre- and post-install. Whether this is through the overall expense of supplies issued to the department, the reduction in labor required within the supply chain, or in observed  charge capture
High Density storage at Royal         improvement, the overall  impact is
 Victoria Hospital                      easily proven simply by performing an audit of activity and validating that staff are using the system. If they use it, they will see positive results.

CARDINAL: Every customer seems to have a preferred methodology or specific area of emphasis. To assure   
   common measure points, we provide a structured short- and long-term financial analysis based on customer-provided information. Completed in conjunction with the customer’s finance group, our Professional Associates team works closely to establish and document the savings using a mutually agreed to measurement model.

OMNICELL: Numerous independent, well-documented studies have documented the benefits of Omnicell automated supply systems and bar code inventory management systems.

HPN: What will automated supply cabinets look like in five years? How will they function differently? What additional services will they provide to a changing market?

McKESSON: Depending on regulatory conditions, it is quite likely that supply-specific cabinets will not exist in the future. Most inventory contained in cabinets today isn’t required to be ‘locked’ up. As the accountability movement progresses, it will only be the data collected that will be important to providers of supply automation, and the means of capturing that data. How that data is captured is what is important, not the cabinets or storage device specifically. The continued proliferation of bar code use, the introduction of RFID tags and continued rollout of mobile, clinician-focused technologies will likely have a large impact on the supply automation solutions of the next five years.

PAR EXCELLENCE: We would not anticipate a different look or additional ‘bells and whistles’ for that would likely add cost to a product that is very difficult to justify at the present time. Biometrics will continue to be incorporated since they can speed the process for the caregiver, but additional features that add to the cost of the cabinet or add to the caregivers’ efforts must be avoided. We do not see any additional services provided by a closed supply cabinet system. We do see the expansion of open point-of-use systems to all departments within the hospital, eliminating the myriad methods of ordering supplies and managing the inventories throughout the organization. In addition, the data collected from these systems will be presented in a method that prioritizes and highlights required actions.

CARDINAL: We believe that the automated supply cabinets of the future will look like the Pyxis PatientStation SN of today and will share many of the same attributes that have made them so successful to date. The first secure, automated in-room medication and supply dispensing system, Pyxis PatientStation SN effectively closes the loop on the delivery and administration processes while providing a clinical workstation for clinicians and an entertainment portal for patients and their families. Although the tracking and input mechanisms on future systems may be different, the integrated automated supply cabinet will look essentially the same. What will be different are the enhancement products that work in conjunction with the cabinets to assure global inventory management regardless of the product type. Variations in configurations, drawer types and tracking mechanisms will continue to evolve.

With regards to their function, we believe that the automated supply and medication cabinets will integrate further into outcomes management that will directly feed to help drive distribution and demand management. Today’s processes in materials management and pharmacy are based largely on retrospective analysis regarding on-hand quantities and reorder points. By using the vast data streams created by our systems, we will be able to more closely analyze and manage patient and inventory needs much sooner than we do today. In this case, deeper collaboration with other systems and vendors is a necessity. Arrays of vendor providers are working diligently to get their software, hardware, imaging, nurse call or other systems into the patient room. Many of these systems are hardware dependant, requiring a clinician to carry an arsenal of devices to the bedside. Pyxis PatientStation SN integrates multiple systems, including dispensing, verification, imaging, nutritional and others to further promote communication and reduce errors where studies demonstrate that they happen the most: at the bedside.

In the case of medical/surgical supply distribution, we recognized that customers saw incremental value in securing higher cost inventory but often balked at placing low-cost, low-value inventory disposables, such as bedpans, into a cabinet-based system. In many instances, this meant that the product was tracked and managed outside of the point-of-use device. To help eliminate this disparity, we created Pyxis JITrBUD, a battery-powered radio frequency transmitter that is attached to each storage bin or location and electronically tracks inventory use by transmitting information to the cabinet-based system it is linked to. By pressing either the Vend or Return buttons located on the JITrBUD device, the user is instantaneously sending a replenishment request all the way back to the vendor. This is one case of how we’ve adapted to the changing market. We’ll continue to adapt and create new products even faster than ever before because that’s what healthcare demands.

OMNICELL: Our customers have consistently told us that they’d like an integrated, easy-to-use system to manage all medical/surgical supplies, regardless of where they are stored – in closed cabinets or open shelves. To that end, today Omnicell provides a truly integrated inventory management system, what we call ‘OptiFlex,’ that combines automated supply cabinets with bar code inventory management systems for managing supply inventory on open shelves. Automated supply cabinets, especially those that accommodate both supplies and medications and which integrate with open systems, will continue to play an important role within the overall supply chain, providing effective, highly secure inventory management at the point of use. HPN

Infection control in the supply room: Chatroom supply chain talk

"We need to revamp our storeroom process and would like to know if someone is willing to share their "clean area" guidelines with us. Currently our orders come off the truck and go on to our storeroom shelf. From there it is issued and sent to requesting departments (including OR)— still in the outer box – which is so against sterile procedure. What we’d like to do is have an unload/break down room to remove items from their outside boxes and then have the storeroom be a clean area." — Anonymous Materials Manager

 

Explains a rural hospital materials manager, regarding the above chatroom request, "I received quite a few responses back from people who are going through the same thing. I thought we were a lone wolf in the way we handled things, but we’re not. They realize that it’s wrong but they don’t have the funds or the space to do it correctly."

 

    HPN asked: What prompted you to look at your storeroom guidelines?

"Our infection control nurse decided it needed to be a priority. We’ve known for some time that our setup wasn’t good, but if we ever tried to implement something or ask for budgetary dollars to make the changes, we were always denied."

    She adds, "Being a non-patient care area we tend to get put on the back burner. All the money seems to go to the patient care area. But they finally decided it was time to do something before we get a JCAHO survey that red-flags us. We haven’t had a rise in infection rate that prompted it.

"Our shelving units are very old and they need to be replaced, so the thought was, instead of putting a bandaid on the problem, since we already have to get new shelving units, let’s revamp the whole thing to make it a real, workable storeroom; and define dirty vs. clean, which we should have been doing."

She explains further the physicality of their problem.

    "Our storeroom is a mix of clean and dirty. Some things are in the outer boxes, some things are removed from the outer boxes. We don’t have a good procedure one way or another. Right now, they’re taking things off the shelf, putting them on a cart and taking the cart out of here. The carts that they’re putting the supplies on are in a dirty area. So they could be transferring dust and so forth from the dirty area to the floors."

 

Lack of space is a key concern at their hospital.

 

    If she could have just one wish-list item it would be "double the size of our storeroom." "We’ve grown tremendously over the last nine years. And our storeroom stays the same. We’ve added on 6 more operating rooms, we’ve added a center for outpatient surgery. We’ve added MRIs, expanded our emergency room, added a cath lab…we’ve expanded so many services, and added things that require us to store more supplies, but we’ve stayed the same.

    They’ve hired an architect to assess the situation and give recommendations. "We’re in the process of deciding which vision we’re going to go with: whether we allow our storeroom to be a dirty area in that all of the outer boxes are stored down here. Or, our other option would be as things came off the truck, we would unbox them immediately, put them into totes and bring them though a doorway which would split the store room, and then the other side of the doorway would be the clean area.

    "We’re waiting for our facility steering committee to decide how much money they’re willing to spend and what we can do construction-wise. The question is, do we just utilize the space, or do we get to expand a little bit? We’re looking at new shelving units or moveable shelving units, to be more efficient."

As far as responses back she says, "Strangely enough, a lot of people are in the same situation that we are; that they know they don’t have the best process. They’re curious as to what we’re going to do, and they’ve asked me to keep them updated."

 

A Toronto hospital shares their experience .

 

    She received one response from someone working in a Toronto hospital who revamped their storeroom guidelines last year.

    Says Diane White, Manager of Infection Prevention and Control, at North York General Hospital, "Good infection control practice dictates that you keep boxes off of the floor, and a certain length from the ceiling. There should be no outer cardboard boxes in the patient care area."

    She says they found an opportune time to revamp their procedures with visiting infection control practitioners from the USA. "We were able during last year’s SARS outbreak to put a lot of this in place then, because we had more people here looking at different ways of doing things."

    As part of the revamp, she says they incorporated various sizes of wire carts and plastic bins into their storeroom to help keep boxes off the floor. They also developed checklists and guidelines for storeroom conditions.

White stresses the importance of having proper procedures in place.

    "With all of the immunocompromised patients, we should be looking at things like the use of cardboard, etc., in patient care areas and it should really be seen as a priority," she concludes. HPN