Surgery Supply Chain - Meeting Customer Demands While

Surgery Supply Chain - Meeting

Customer Demands While

Managing Costs

William BaileyVice President

September 14, 2015

Magnitude of the Perioperative

Supply Chain Program

1

The surgery program generally represents more than 40% of total hospital supply expenditures One of few departments where supply expenses

usually surpass labour expenses

Inventory value highest of all departments

Standardization is the most difficult – specific product use related to individual surgeon practice

Complicated logistics/distribution systems Expensive inventory, “small job shop” requisitioning

Case carts, specialty carts, backup carts

Special requests, patient-specific items

Copyright © 2015 SHC

Agenda

2

• Roles and Responsibilities

• Product Cost Management and Standardization

• Vendor Relations

• Inventory Management

• Preference / Procedure Cards

• OR Supply Cost - Data Capture


Roles and Responsibilities

3

The perioperative supply chain requires dedicated, focused management


Fundamental Roles in the

Perioperative Supply Chain

4

Perioperative Supply Chain Coordinator

OR Inventory Technician(s)

OR Service Line Managers/Coordinators


Perioperative Supply

Chain Coordinator

– a Critical Program Element

5Copyright © 2015 SHC

The Role of the Perioperative Supply

Chain Coordinator

6

Supply evaluation, selection, procurement

Cost analyses (initiate and support)

Inventory management/minimization

Budget management/support

OR distribution systems

Vendor contact/coordinator


Roles Supporting the Perioperative

Supply Chain Coordinator

7

OR Inventory Technician(s) Inventory management / restocking

Order placement, tracking

Suite restocking

OR Data Analyst / IT Support Database management

Item file maintenance

Preference card maintenance, utilization reporting

Cost reporting


The Role of the OR Service Line

Manager / Coordinator

8

Outline of responsibility (supply chain) Trials/evaluations

Back table utilization

Case carts/care plans

Storage design/specialty carts

Scheduling/special requests

Link between clinical and financial program aspects

Primary surgeon interface

Requires dedicated administrative time,

10 to 20% devoted to supply chain!


Next Level Roles

9

Consignment / implantcoordinator Manage consignment inventory Coordinate invoicing, reimbursement, etc. Coordinate scheduling and receiving of

special requests and loaners

OR Instrument Coordinator / Specialist Organizing backup instrument inventory Super user - instrument tracking system Repair and replacement of

instrumentation Addressing issues related to excessive loss

and repair cost of instruments Managing the loaner instrument process


Overall, Labor Costs for Dedicated OR Supply

Chain Positions Should Range

Between 1% and 2%

10

0.50%

0.70%

0.90%

1.10%

1.30%

1.50%

1.70%

1.90%

$5M $10M $15M $20M $25M $30M

Percent Expenditures for Supply Chain Labor


OR Supply Cost – Data Capture

The single most challenging

aspect of getting cost per case

and item utilization data is the

inability to easily capture all

supplies used on a case!

12

Inaccurate preference / procedure cards

Difficulty in intraoperative documentation

Inability to find the right item!

No scanning capabilities!


Systems Overlay Technology Is

Available

13

Functionality: Interfaces MM System and OR System

Utilizes RFID and/or bar coding

Transmits supply usage to patient documentation system and inventory system

Consignment management, web-based

Where to acquire? Large suppliers / prime distributors

Inventory management solutions vendors

Home grown systems!


Intraoperative Supply

Charting Simplified

14

Item is Received and Scanned Into

Inventory – Utilizing Manufacturer’s

Barcode

Bill of Materials Created per Patient Episode

Inventory is Debited, Reorder Points Trigger

Requisitions

P.O.s are Generated, Orders are Placed

Orders are Received and Checked In

Bill of Materials - Charges

Detailed Cost per Case Data

Detailed Preference Card / Supply Utilization

Data

Added Items are Scanned / Assigned to

the Patient Episode

Items are Assigned to Preference Cards


Practice Variation Identification

15

OR supply cost per case Compare among

providers

Product alternatives / cost variations

Practice differences

Incorporate case time into analysis

Utilization Preference card items

Back table waste


Preference /

Procedure Card Management


Procedure Card Management –

Guiding Principles

17

Procedure file revision is first step 450 – 850 unique procedure descriptions

Procedure card management/changes restricted to clinical leaders

Contents/changes reviewed and approved by surgeons

Content utilization > 85%, returns < 15%


Example – Procedure Card Utilization

Analysis

18

Item

Procedure

Card Quantity Average Used

Utilization

Percentage

GARMENT COMPRES MED CALF 18IN ANTIEMBOLISM VASOPRE 1 1 100%

GLOVE BIOGEL INDICATOR 7.5 PF BEADED CUFF 1 1 100%

GLOVE SURG 7.5 LATEX BIOGEL OPTIFIT SUPER SENSITI 1 1 100%

CIRCUIT BREATHING ANESTHESIA HIGH POINT ADULT 1 1 100%

SOLUTION SURGICAL SCRUB BETADINE 4OZ 1 1 100%

CATH ROBINSON 14F 94140 1 1 100%

PAD MATERNITY CURITY 1 1 100%

SPONGE SURG 4X4IN 16 PLY BANDED RADIOPAQUE VISTEC 1 1 100%

DRESSING TELFA LATEX FREEA 8X3IN ABSORB NONADHEREN 1 1 100%

PAD ADULT ELECTROSURG GROUNDING STD REM POLYHESIV 1 1 100%

DRAPE SURG 44X40IN UNDER BUTTOCK FLUID COLL POUCH 1 1 100%

ELECTRODE 22FR WHITE CUTTING LOOP BALL TIP ELECTRO 1 0 0%

LOOP ANGLED CUTTING 22FR 8MM SURG 1 0 0%

CANISTER SUCTION PPV 2000ML 1 1 100%

PAD SURG PREP 41X24IN CUFFED NONSTERILE LATEX FREE 1 1 100%

TUBING SUCTION 20FT 3/16IN MEDI-VAC CLEAR NONCONDU 2 2 100%

LEGGINGS SURG 48X31IN CUFF STERILE LATEX FREE DISP 1 1 100%

TUBING IRRIG 81IN .195IN SET TUR Y GRAVITY FLOW RO 1 1 100%

CABLE ELECTROSURG 10FT USA ELITE ACTIVE CORD SYS V 1 1 100%

ELECTRODE USA ELITE SYS 24-26FR BLK ROLLER BALL RE 1 0 0%

ELECTRODE USA ELITE SYS 24FR .012IN YELLOW CUTTING 1 0 0%


Procedure Card Management

Example

19

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

Jun-13 Jul-13 Aug-13Sep-13 Oct-13 Nov-13Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14Jun-14 Jul-14 Aug-14Sep-14 Oct-14 Nov-14Dec-14

Return Percentage - OR to SPD

Return Percentage


Product Cost Management

and Standardization

Success of the Perioperative Supply Chain

Program Requires Support From:

21

Administration

OR Governance

OR Management/Service Line Management

Materials Management


Guiding Principles – Product

Standardization and Practice Change

22

Quality patient care first, best practice identification and standardization

Physician champions

Due diligence in decision making


Product Procurement

and Standardization

23

OR-specific product evaluation team Right people at the table

Surgeons

Nursing

Purchasing

SPD

Physician chair

Decisions based on bestdemonstrated practice

Impact – efficient process, peer-driven, lower costs, reduced inventory, standardized practices, negotiating leverage


Product Procurement

and Standardization

24

Two purposes of the OR product evaluation and standardization team: New product selection, introduction, and evaluation

Product standardization Product lines (per management, clinicians)

Contract/GPO compliance (per purchasing)

Goals: All new products used are to be reviewed and approved

using evidence-based information

All factors will be addressed Quality

Cost


Product Procurement

and Standardization

25

Two correct avenues for non-standard product introduction: New product

Replace current product Totally new product/approach

Patient-specific, special request items Request 5 days notice

Both avenues require review/oversight Require opportunity to assess need and gather all pertinent

information Need Cost Conflict of interest

Sometimes oversight has to happen after the fact, but it should always happen


Vendor Relations

Interests

27

The hospital’s objectives:

• Quality patient care and service

• Low cost

The surgeon’s objectives:

• Quality patient care and service

• State-of-the-art supplies/equipment

The vendor’s objective:

• $ell, $ell, $ell


Understanding Vendors

28

The vendor’s desire is to: Sell products

Maximize profit margin

These goals are reached by: Building relationships with

clinicians

Being in the OR suite!

Avoiding hospital protocols

Avoiding duly diligent information processors (purchasing, OR managers, etc.)

Gaining product acceptance prior to pricing discussions (increasing negotiating leverage)


Vendors Build Relationships

with Clinicians/Decision Makers

29

Ego building

Bypass protocols

Avoiding duly diligent processes/people

Gaining product acceptance prior to pricing discussions

Always in the OR suite

Consulting/research agreements (now under scrutiny)

“Training” and “educational programs”

Problem solver/savior

Vendors are trained to develop relationships to maximize negotiating leverage


Maximizing Negotiating Leverage

30

Administrative support

Medical director/governance support

Negotiating leverageis only achieved whenthere is a crediblethreat to the vendor’sbusiness


Vendor Management

31

Utilize vendor tracking / credentialing systems

Define vendor access and conduct expectations

Appointment/granted access only

Badges and colored scrubs

Activities limited to specific, agreed-upon purpose

“While I’m here, try this.” – NO!

Vendors to disclose relationships, conflict-of-interest issues

Put into document, signed by all vendors Expectations/policies

Consequences


Vendor Relations

32

Consequences of non-compliance: Free product – “Thank you for the generous donation”

First warning – letter to representative’s boss

Second warning – removal of representative (temporary or permanent)

Third warning – prohibit all representatives of a company from visiting hospital


Inventory Management

Surgical Supplies

34

At least 50% (by dollar) of the items used in the OR are not used anywhere else in the hospital

Supply-related issues account for most of the non-clinical time for OR nurses

Supply 101 is nottaught at nursingschool (nor shouldit be)


Parameter/Level Setting

35

• Par level – 1.5 to 3 days on handStock item

• Reorder point =(annual usage/250) X order lead time

• Order quantity =(annual usage/250) X days to store

Non-stock item

• Check items at least twice the “days to store” frequency

• Forward review of surgery schedule (nursing, materials coordinator, SPD, etc.)

If manual inventory system:


Best Practice Concepts – Surgery

Inventory Management

36

Inventory is consolidated to the extent possible Secured/controlled environment (SPD) –

perpetual/automated inventory is possible

Unsecured area (OR core) – manual inventory system required

Exceptions: Omnicell or Pyxis systems

The case cart system is the primary mechanism for getting supplies to the case


Measuring Inventory Management

Effectiveness

37

Inventory turns =

Annual supply expenditures (all items)Average on-hand inventory value (owned items)

Inclusive of all surgery inventory in OR and SPD

Targets:

University hospital/academic medical center: 6-8

Major medical center: 8-10

Community hospital: 10-12

Ambulatory surgery center: 12-14


Reducing Inventory

38

Standardization

Product evaluation/selection process

Best practice establishment

Consolidation/ reducing locations Effective case cart system

OR suite/service group design

Inventory management/control

Planning

Level/parameter setting

Consignment

Vendor/distribution options JIT

Prime vendor relationships


Obsolescence Management

39

Run slow/no moving product lists at least every six months

Categorize by: Commodity type Vendor

Route to OR managementand service line managerscoordinators for review/decision

Get stuff off the shelves! Credit Sell Donate


Objective of Supply Chain

Cost Management

Identification and standardization to best practice should be the primary goal – shared by all

If you first pursue quality, costs will fall out!


Surgery Supply Chain -

Meeting Customer Demands

While

Managing Costs

Discussion

Documents

Surgery Supply Chain - Meeting Customer Demands While