Until the last decade or so, providing service to the cardiac catheterization laboratory, as well as other cardio and circulatory-focused areas was a relatively simple exercise.

Because the cath lab was such a cash-rich environment for the hospital, clinicians, by and large, ordered, purchased and used what they wanted, while materials management may have contributed insofar as to submit purchase orders to the favored vendors. Typically, such inventory was classified as "non-stock" and expensed directly to those departments so materials management had little to no influence in product selection, contract negotiation or even data management on consumption patterns.

"The idea was to keep the doctors happy and the products flowing throughput," said Ed Schrader Jr., senior director, cardiovascular, orthopedics and imaging services at Novation. Ed has nearly three decades experience working in the interventional radiology and cardiology sector. "Cardiology was a cash cow, but it’s not as much a cash cow as it used to be. We’re seeing rampant improvement in technology along with faster obsolescence of technology, and these revolutionary changes are becoming more expensive. Now we’re in a cost-based environment so the perspective of cath lab managers is that they have to manage their costs and look for help to do it. It’s a great time for materials management to get in there. It’s definitely an opportunity."

So long as the clinicians generated enough revenue, based on procedural volume, to compensate for expenses, administrators paid little to no attention to bottom line concerns.

But the fluctuating financial climate changed all that. Now, more advanced technology, such as bare metal and drug-eluting stents, have emerged, sporting higher prices and overall costs with each successive update. Meanwhile, Medicare and private payer reimbursement refused to keep pace. So what was once considered a black-and-white process has blurred to varying shades of gray with administrators and clinicians seeing more red than green.

"We see a much more engaging environment in hospitals because the executives managing those hospitals are turning the screws, looking for ways to lower costs," said Michael Carpenter, vice president, spaceTRAX, InnerSpace Corp. (Grand Rapids, MI).

Disconnects, crossed signals

Historically, the philosophical and operational disconnect between materials management and the cath lab has been obvious. Materials managers tend to procure lower cost items, such as commodities, in larger quantities for the nursing floors and other areas. Meanwhile, clinicians in the cath lab tend to face physician preference demands, procuring extremely valuable devices in smaller quantities.

"As a hospital you can’t compete effectively by putting 10 of these high-cost devices on the shelf," said John Wass, CEO of Boxborough, MA-based WaveMark Inc., a manufacturer of Internet-based radio-frequency identification (RFID) software to track usage and manage inventory. "These devices can cost a fortune, not only to buy, but to stock."

In the for-profit world there are no exceptions on how inventory is managed, according to Wass. "Materials management would ride herd on this. Procurement policies will be followed," he said. "That’s the way it should be if you’re looking at and striving for process efficiencies."

But Wass recognizes that in the not-for-profit world, particularly in healthcare, hospitals may not adequately support and leverage the overburdened materials management department. "Their true calling is in clinical services and not the back-office areas," he added.

But that’s slowly changing and giving rise to a different set of challenges.

Cath labs wonder, and rightfully so, whether materials management can deliver, Wass noted. "Inventory management systems that work for the rest of the hospital don’t work in the cath lab," he said. "The fundamentals don’t apply. You can’t roll the cath lab into an existing process. That’s why cath labs typically do it on their own. Materials management has tried to manage it but without success. They need a different set of tools to use."

Schrader agreed. "These guys [in the cath lab] have been alone for quite some time," he said, "so there’s a comfort level with certain devices and processes. And the cath lab deals with different issues in patient care and physiology, which adds another degree of difficulty." The cath lab director not only has to oversee inventory but manage the needs of individual physicians, too, he added.

One impediment is a lack of data, which cath labs may not be collecting and analyzing on their own. "Any good decision or dialogue requires good data," Carpenter noted. "You can’t influence behavior without it because you’ll get a less than desired outcome."

InnerSpace catheter cabinet

Generally, clinical inventories are the least visible and most growing in terms of costs, Carpenter continued. As a result, materials management must understand the clinical needs and requirements of the cath lab, while the cath lab must recognize and support the business expertise of materials management to jointly develop an effective clinical inventory management process, he noted. That includes tracking consumption and connecting it to physician, procedure and patient, as well as handling implant logs, device recalls, product performance issues and charge capture. "The typical materials manager hasn’t been exposed to these unique clinical department needs," he added. "But these clinical relationships are now building."

Relying on department-specific software modules may not be the optimal answer either, according to Thad Mac Krell, director of business development, Owens & Minor Inc. (Glen Allen, VA). The national distributor makes and markets an Internet-based inventory management services platform specializing in high-end physician preference products. Mac Krell contended that over-confidence and over investment in embedded inventory management functionality may be an Achilles heel.

"Virtually all cath lab hemodynamics systems include inventory management functionality that, during evaluation, appears to have the necessary requirements to effectively manage a department’s supplies," he said.

"However, in practice these applications fall far short, usually providing little more than a list of products consumed in each case, and even then only providing the barest of product details as inputted by the clinical staff. What’s missing are features that any materials management team would see as essential, such as comprehensive product databases, lot number and expiration management, consignment tracking, spend and budget analysis features, par level tracking, replenishment processes, receiving processes, etc. 

"And even in cases where the clinical staff in the department has devoted countless hours to building and maintaining a comprehensive product database in their hemodynamics system in order to improve their clinical documentation," he continued, "that effort will not translate into definable supply chain improvements due to the lack of the above. Both materials and clinical administrators need to look outside of their primary applications – MMIS and hemodynamics respectfully – to enhance and broaden their capabilities and functionality and to expand their reach."

Materials management information systems, which may be ideal for traditional medical/surgical commodities and supplies, fall short in the clinical product areas dominated by physician preference, according to Mac Krell, much like the shortfalls of the hemodynamics system. He attributed it to the unique data characteristics and reporting requirements that hospitals typically have for these inventories. "For example, unlike general med/surg supplies that can easily be managed by the MMIS application, various constituencies in the hospital, from finance to quality teams to clinical researchers, to physicians, to administrators want to know a whole host of details about how key products, [such as] cardiology, orthopedics, implants, spine, bone and tissue, etc., are ordered, received, paid for, tracking while on site, issued for procedures, documented, consumed by physician, returned to vendors, etc.," he said.

Owens & Minor’s QSight alert screen
Click image for larger view.

"Furthermore, the MMIS is insufficient for the perpetual management of high cost, non-stock items namely because it is not designed to be used in the clinical setting, it does not record case or procedural details, it does not have the necessary reporting structure to collect and display information that is meaningful to the clinical and financial managers and, perhaps most importantly, the MMIS does not make use of the package bar-code as a means of tracking the inventory, favoring instead the internally developed item master number." 

Change past due

Because clinical resources tend to be more expensive and scarce, it makes sense for the cath lab to delegate supply management to materials management, Carpenter said.

"The clinical mission of cardiology departments is extremely important to every hospital, and yet while cardiology department administrators will very often pursue incremental resources for marketing, IT support, capital funds, etc., very few will reach out to the materials management department to get help in the day to day management of mission critical cardiology supplies," Mac Krell said. "Having R.N.s and techs manage product databases, manipulate inventories to avoid expiration, cross level stock, analyze physician utilization patterns, etc., is at best a profound distraction from their clinical value. Senior hospital administration should recognize the value that professional materials management can bring to a busy cath lab and should help navigate any inter-
departmental political issues."

Mac Krell acknowledged that most cath labs and operating rooms in U.S. hospitals should, but have yet to, convert to perpetual inventory management beyond traditional medical/surgical supplies. "This is unfortunate because by moving from non-perpetual to perpetual inventory management models, cath labs avail themselves of a host of improvements in stocking, tracking, budget management and expense management," he noted. "All that’s required to do this is an effective inventory tracking application and a means of controlling the receipt and disposition of the actual product."

But that may require additional help from outside the hospital. "Without a partner, the average materials team doesn’t have the bandwidth to truly support the perpetual inventory management needs of even a modestly sized cath lab, not to mention radiology, endoscopy, surgery, etc.," he said. "Materials directors should be looking for strong vendor partners with innovative technologies that optimize universal communication media like the Internet, have deep pockets and resources devoted to the continuous enhancement of their technologies and services and a strong commitment to the optimization of the healthcare supply chain.

"Product recalls are an excellent example of how new technologies can help," he continued. "If the hospital’s key inventory system is Web-enabled and supported by a vendor that is continuously monitoring a huge product database and the appropriate FDA alerts, it will be the inventory system vendor’s responsibility to alert materials managers and department directors that recalls are taking place. O&M’s QSight, as an example, has an alert for this very purpose."

Who should approach whom?

Whether materials management should approach the cath lab director to offer assistance and consulting or the cath lab should ask materials management for help depends on a number of factors. Turf protection is one.

"[The cath lab’s] biggest fear is that they’re going to lose control of supplies," Schrader said. "The docs will get mad and may move to another facility. That’s the kiss of death to a cath lab director. They need to minimize the risk but maximize the opportunity. Materials management should get in there and contribute without putting up roadblocks."

Capacity and pain are two others. "If materials management has enough [human] bandwidth, then materials management should approach the cath lab," Wass noted. "But the cath lab tends to be protective of their turf, even if they’re in dire need of help. Oftentimes it comes down to the personalities of the two players and it comes down to who has the greatest pain and who has the capacity. There’s no single answer."

Both parties have to recognize the warning signs, however, according to Carpenter. "The clinical settings are overwhelmed with responsibilities of providing care," he said. "Think of Maslov’s hierarchy of needs. As long as things aren’t broken there’s not going to be initiative. They’ve got their hands full. To expect the clinical department to go above and beyond to do inventory management is a tough expectation." But this is what materials management does every day and why they’re increasingly being asked to offer critical assistance in these clinical areas, he added.

Consignment copout

For what’s perceived as a quick and easy answer, many cath labs and materials management departments turn to consignment. Their faith in it may be misplaced, Carpenter and Mac Krell contended.

"The average materials manager believes that consignment is inventory management," Carpenter noted. "It’s not a process of managing inventory. It’s an accounting function. Good inventory management requires behavioral change."

When it comes to managing high-cost supplies, materials management simply misunderstands consignment’s function, Mac Krell argued. "Departments favor consignment as it address the issue of uncertainty – clinical staff don’t know if the physicians are going to adopt the new products or they simply haven’t budgeted for the item and don’t know how much or how little they should stock," he said. "That’s the positive. The downside is that hospitals pay more to consign products, via a consignment surcharge, and they create tracking nightmares for themselves in a Medicare audit situation in which they are tasked with tracking the eventual payment from the P.O. for the specific consigned item to the serial number that they used on a specific patient.

"While it is generally recognized that some consignment is necessary, hospital materials management staff should be using technology that enables them to address the issue of uncertainty by illuminating usage patterns quickly," he added. "Once usage patterns for the highest-use items can be established, materials managers should promptly require those vendors to renegotiate their pricing agreements in exchange for adopting a traditional buy-sell model."

Gaining street cred

Materials management can gain the cath lab’s favor by assigning or providing someone to oversee inventory, which frees up a dedicated clinician’s time to focus on patient care, according to Wass. "Visibility establishes trust," he said.

But the materials person has to be using the right technology to do it, be it a Web-based system or RFID. "As soon as the cath lab goes out of stock once, materials management loses credibility," he noted. "That’s why there is a ton of [just-in-case] inventory in there. Clinicians have learned not to believe automated systems and assume usage is being accurately recorded."

It’s as simple as using one stent one week and then another twice in one day the following week. Calculations will be off by 100 percent, he added. RFID, for example, affords little to no human intervention and includes fundamental self-correction. "We help them understand what’s being used and how it’s being used, with a granularity heretofore not available," he said.

Carpenter quantified such "just-in-case you need it inventory" through InnerSpace’s database, which shows that 51 percent of stock keeping units (SKUs) for non-stock items go unused in any 12-month period. To put it in perspective, think of the smaller departments having to carry that load over a smaller procedure volume. While the larger ones may be able to do it better, a one-room department can benefit as much as a six-room department, he noted.

"Given the confidence in their ability to support the clinical mission, clinical department heads, we believe, would gladly relinquish the day to day management of inventory – within certain parameters – to supply chain professionals," Mac Krell indicated. "What materials directors can do if they want to control this supply area – or radiology or the O.R. – is to present reasonably priced, minimally disruptive technology solutions to the clinical teams. Identifying these solutions will require research and education on alternatives, interfaces, requirements, etc.

"Some of the things that resonate the loudest with clinical operations directors extend right past supply control to patient charge capture, physician procedural cost reporting/analysis, expiration avoidance, vendor management, etc.," he added. "If materials managers are able to educate themselves on these requirements at their hospital and then offer to coordinate the evaluation of technology and service alternatives, they will become an invaluable partner in the effective operation of the cardiology department."

Schrader reiterated what one senior level materials manager told him: "Go down and buy the cath lab director a cup of coffee. Talk with him and get to know him. Get to know his business. Both the materials manager and the cath lab director have expertise to share. Work as a team to do that."

And don’t stop there, Schrader advised. Materials managers should leverage the overall volume needed for the variety of heart-related clinical specialties, ranging from diagnostic imaging to cath lab to interventional radiology to vascular surgery. Materials managers should follow the blood wherever it flows, he said. HPN