CHICAGO – When Mike Gray, C.P.M., CIRM, "self-proclaimed" supply chain evangelist at Dell Inc., opened the Association for Healthcare Resource & Materials Management Supply Chain Technology Conference & Exhibition here in mid March he must have pinched a nerve with the hundreds of attendees in the audience.

The No. 1 problem in the supply chain, Gray asserted during his keynote address, is forecasting. "It’s tough to predict what customers want," he said. Dell’s customer representatives are required to forecast demand and "must be accurate, but they’re not always extremely accurate." It’s so integral to their business that they now meet weekly about the calculations to determine what went wrong, he added.

Emanating from a company that originated in a college dormitory room and grew into a multibillion-dollar corporate darling on Wall Street, such an opinion carries some credibility and should make healthcare materials managers heave a sigh of relief. After all, if a conglomerate like Dell can’t seem to do it totally right, then what hope do hospitals have?

But Gray wasn’t revealing this so audience members could use it as an excuse for lackluster performance. He was just trying to show that all supply chain managers, regardless of industry, struggled with the same challenges.

"Forecasting is not a passive activity," he said, "but an active one. It’s like shooting an arrow and running alongside it to direct it to the target."

Gray’s words offered vivid allegory for healthcare supply chain managers who face intense pressures from the demanding clinical areas of the hospital.

The highly trained, specialized critical care nurses who treat very acute patients and make sure intensive care units operate smoothly shouldn’t have to worry about access to necessary supplies when they need them. But they do.

Unfortunately, the unpredictability of patient care in the ICU, and the likelihood of 11th hour crises, as well as the lack of effective demand forecasting, tend to complicate the materials management department’s response, which frustrates both the critical care and materials management staffs.

These two groups, however, must work together to anticipate, prepare for and respond to supply demands and needs for critical care patients. Of course, that’s easier said than done as one side typically demands more than the other side believes they need.

"ICUs are not highly intensive product utilization departments," said Dee Donatelli, vice president of VHA Inc.’s Integrated Delivery Team. "What they do need is a larger variety of specialty products based upon the types and critical nature of their patients. As a result they often request or require a lot of SKUs, and sometimes receive push back because materials management doesn’t want or think they need so much ‘stuff.’" Donatelli once served as a cardiology nursing manager responsible for the ICU, catheterization laboratories and rehabilitation centers before becoming a hospital purchasing manager, then a director of materials management and finally a supply chain consultant.

"General multi-specialty ICU departments in hospitals are very difficult to supply on a day-by-day basis because they can treat a wide variety of illnesses," said Patricia Klancer, senior consultant at Amerinet Inc. Klancer also served as a director of materials management. "Some cases are extremely supply-intensive, such as dialysis and burn cases. Other types of diagnoses consume predictable types of supplies, such as ventilator tubing, unique IV solutions, closed suction systems and specialty dressings. High-cost catheters such as Swan Ganz and multi-lumen catheters are a concern because they have limited shelf life. If the physicians demand a variety of styles and sizes, these can easily sit on the ICU shelves for many months until they expire." 

Added Donatelli: "In reality the ICU or clinical par stock locations rarely exceed $5,000 of on-hand inventory, which equals about two cardiac stents. So my question is, does it really matter? The answer is yes, it does, but within reason. My philosophy is and always will be, give nursing what they need and focus energy on getting nursing out of the stockroom and back to the patient room." 

To reach that point materials managers and critical care nurses must build a trusting relationship based on data, which should generate a proven track record of performance so they can strategically expand the process and improve service levels, according to Donatelli.

"Because the demand for these supplies is unpredictable and extremely variable, using the average daily or weekly consumption volumes as the basis for setting par levels is simply not sufficient," Klancer said. "Many of the items will average out to less than one per week or even less than one per month. Yet, keeping them available and removing outdated products from the shelves has literally a life-or-death impact. Safety and quality care requires that even these low-frequency products be stocked at the minimum level of two of each line item. Inevitably, however, stocking two is insufficient when two or more patients with a similar diagnosis are admitted concurrently." 

One approach is to start with the proverbial "gold standard" and offer critical care nurses a "utopian solution" with a catch. That is, ask them what they think they need and simply give it to them. However, materials management should monitor usage over time to determine needs and adjust stock levels when and where appropriate.

"The nurse can never anticipate 100 percent of what the doctors request," Donatelli said. "Expecting 100 percent is utopian. Doctors who say they have no problems getting what they need in the O.R. generally have the luxury of time to let the O.R. know what is needed so that the nurse has it available."

Such a project may take anywhere between six months to a year. "Don’t forget that this didn’t get messed up overnight," she cautioned. "It takes a long time for people to change and to establish trust."

Another approach is to establish what Donatelli calls "have available" stock areas – not hidden stat areas or secret stashes, but caches of anticipated or estimated supplies that critical care nurses can access in a flash. "You don’t need to have certain supplies in every location but you should have it in a location where the critical care nurse can get them within 10 minutes," she said. "Even 10 minutes can seem like a lifetime."

Good communications between materials management and the ICU are critical. "The best solution is trained, dedicated supply technicians who talk to the nursing staff during their replenishment activities," Klancer said. "This leads to knowing what types of supplies are moving quickly, and the ability to increase the pars on a temporary basis. This is especially valuable for the dialysis and burn cases, where even one patient will consume a large quantity of solutions and dressings in a single day. In my personal experience, I’ve seen many times where the average consumption of a dialysis solution is 10 liters per month, yet a single patient needed 30 liters in a single day."

When the ICU encounters more acute cases the ICU manager and inventory buyer should meet directly to determine a "best guess prediction of product demand," according to Klancer. The inventory buyer must then make arrangements to bring in extra supplies to cover the peak demand. After a few days, a phone call to the ICU will confirm that the demand has ceased and the on-hand inventories can be dropped to normal levels, she added.

Disaster recovery situations, however, tend to disrupt normal systems, according to Klancer, so it makes sense for a hospital to turn to its GPO for assistance in critical care areas.

"In my own personal experiences as the materials manager in two separate facilities, my staff and I needed to respond quickly to several disasters – a train wreck with multiple injuries, including burns and fractures, and a tornado – both of which required additional supplies and materials. On both occasions I was able to turn to my GPO representatives who assisted me by navigating the system with quick responses on much-needed supplies and medications primarily by serving as the conduit between our facility and suppliers/distributors."

Computer-assisted
forecasting challenges
But is 100 percent predictability on part of the hospital even reasonable?

"I think we could do much better forecasting than we do," Donatelli noted. "Unlike Dell, we have not dedicated the fiscal infrastructure to do it. We don’t do a good job managing upstream. Hospitals will always need new CT scanners rather than, say, a new ERP system.

"Technology does play a central factor in what we do," she continued. "Dell and Ford [Motor Co.] have fewer variables. Variability is always going to be a compounding issue. We do have data more readily available that enables us to do better forecasting. It’s not 100 percent, but we should be able to get a pretty good idea."

Unfortunately, the supply chain tends to convolute a process supported by a weak infrastructure. "What baffles me is how distributors have to backorder bedpans," she said. How does a hospital fix the fill ratio? She asked rhetorically. Complain to the distributor? Hospitals generally submit a forecast to their suppliers based on past usage history. However, the distributor should notice when the hospital’s usage approaches the monthly forecast ceiling before the month ends, she added.

Because many hospitals may rely on data provided by their suppliers rather than from their own information systems they should expect complications. Also, many hospitals may not use their systems to the fullest extent or they use more sophisticated systems that require data accuracy from the start in order to generate any kind of reports. "So many elements can go wrong," Donatelli said. "So much information has to be loaded correctly for the information to flow properly. Data just helps present an objective business case versus subjective finger-pointing."

With the older and less sophisticated IT systems, hospitals tended to "develop more successful workarounds," she noted.

Still, Donatelli encouraged facilities to appoint, train and maintain a "superuser" who knows how to run the IT system to generate usage and trending information, train others and be the go-to person when challenges arise.

"No computer systems can replace the responsiveness and problem-solving ability of experienced staff with the skills to manage unpredictable demand," Klancer countered. HPN