Getting your supply system under control

Outpatient Surgery Magazine (ghostwritten)

A few years ago, we realized that our surgery center , Glasgow Medical Center in Newark , Del. , despite all of its successes, had a fragmented supply system that was failing to capture potential savings.

Many people on staff were involved in various aspects of ordering supplies and no one was coordinating the whole process. M oney was slipping through our fingers because no one had the time to routinely compare prices, root out discounts and work closely with all the staff to identify savings in ordering and inventory processes .

A welcome growth spurt just made matters worse. Glasgow is a 13,000-square-foot facility, with four operating rooms and two procedure rooms. Volume has almost doubled in the past few years, as more doctors in new specialties arrived. That meant the supply system was even harder to coordinate and yet more potential savings were being lost, an unacceptable prospect at a time of tightening reimbursements.

At a large hospital, the obvious answer would be to hire a materials manager, but that's not so obvious at an ASC. Few surgery centers have this position, even though many of them – including our own – really do need one person to bring the whole system together.

A good materials manager is a combination traffic cop, overseeing the flow of supplies, gumshoe detective, ferreting out the best deals for her facility, and savvy shopper, convincing vendors to agree to the lowest price possible.

We were lucky because Flavel, our nurse administrator, had been a materials manager at a large acute care hospital and understood the value of the position.

Flavel convinced our leadership that we needed an upgrade in our supply system. At that time, supply levels for thousands of items were recorded in three or four different spiral notebooks, like your kids use for homework, which were worn and dog-eared from constant thumbing.

On a notebook page, it's hard to keep running totals of each supply item and compare them to a “par level," which is what the optimum number should be for each item. For example, you can have s ix catheters costing $1,000 each on the shelf, but if you only need a par level of four, you are wasting $2,000 right there. Without a materials manager, our busy staff simply did not have the time to establish par levels for all but a few products.

Our staff also did not have the time to sit down and compare competing prices from different vendors and figure out which product is truly the best for us, as a materials manager does. We also were failing to get the extra discounts vendors give for on-time payments because we hadn't been getting the deadlines to our folks in accounting. Everybody was just too busy.

Creating a new post for the organization

Flavel obtained permission to hire our first materials manager for three days a week. For the first time, we would have someone who has the time to coordinate selection of supplies, manage contracts with our vendors, compare prices and oversee maintenance.

Linda started in the position in May 2003. Her previous work as a surgery nurse at Glasgow was a tremendous asset. It meant that she could knowledgably compare products from vendors and readily understand the needs of our physicians and staff.

Linda is a self-starter. Although she didn't get formal training, she asked a lot of questions. She still calls me when she runs into a problem. Of course, most ASCs don't have someone experienced with materials management, but it isn't hard to link up with consultants and attend seminars.

Linda still spends about one day a week at her old job in the OR. Her new office is in the non-sterile supply room, surrounded by boxes of supplies that she has ordered. She meets with staff once a month to discuss supply costs and utilization. There never was that kind of consistent communication before.

Controlling supply would have been well nigh impossible if we had not moved from the spiral notebooks to recently purchased AdvantX computer software from Source Medical in Birmingham , Ala . , which we also use for scheduling . The new system puts all the information at our fingertips. It's much easier to scroll down a screen than to thumb through a notebook.

It took 10 staff members a month of evening and weekend work to input 23,000 separate supply categories into the computer, but it was worth it. The computer keeps a running total in each supply category as staff members subtract items from the list after each procedure and add items when supplies arrive.

Introducing key efficiencies

Nurses in some specialty fields still do some ordering, but Linda coordinates the whole supply system and tackles issues that never got much attention before.

She worked closely with staff to come up with par levels and load them into the computer so that they could be compared with actual counts. We encouraged staff to think hard about how many supplies they really needed and reduce par levels for many items.

Linda also finds items that should be sent back to the vendor because they were overstocked or are no longer used. For example, she noticed that no one was using a particular hernia patch. When the items were sent back, we received our money back minus a 30 percent restock fee.

Linda finds the time to surf the net, phone vendors and haggle over prices. In a major coup last December, we saved $30,000 in the purchase of a TV tower for the OR. Some of the parts were less expensive demos and we reaped further savings because it was the end of the supplier's fiscal year. The company was unloading last year's model and sales reps were willing to slash prices to meet their sales quotas. Knowing these things pays off.

Of course, just because you find a less expensive product does not mean your physicians and staff will accept it. That's where Linda's close relations with people in the OR can help. She often asks them to just try one case of a new product and see if they like it.

She can also run interference with the manufacturer when physicians and staff grow mistrustful when subtle changes are made in a product, such as removing a ring from a sponge or a cap from a syringe.

Our supply system also depends heavily on physician and staff support. For example, they tell us when stocks are running low by writing notes on four erasable boards in different parts of the facility, which Linda checks regularly.

Some of the savings we reap are not immediately tangible, such as persuading vendors to extend warranties from one year to two. Others are win-win situations with an immediate payback, such as when we went from paper to cloth gowns. We saved 65 percent on the cloth and our patients and staff were happier, too.

Making sure savings don't slip away

With a materials manager in place, we are picking up savings that used to slip away.

We make sure that we get extra payments as a reward for on-time-payments, which can be as high as $336 a month, by enacting a three-day limit to turn around invoices.

In another case, our group purchasing organization, MedAssets, based in Alpharetta , Ga. , negotiates discounts for us. We then have to make sure that the manufacturer is giving us the discounts that MedAssets negotiated, but due to lack of coordination, that was not always done. By routinely c omparing the price on the vendor's bill with the price stated in the contract, Linda found we had not been getting a 60 percent discount due for sutures, which she immediately requested.

Surgery centers with busy staffs would probably want to work through a distributor that can provide a long list of items from many different manufacturers. But with more time for research, Linda found bigger discounts -- saving 13 percent to 18 percent, in some cases -- by buying straight from the manufacturer.

As a result of a these actions, we identified at least $41,000 in savings just in the first eight months of Linda's work, from May to December 2003. In addition to the $30,000 saved in the TV tower purchase, we saved $11,000 in measures such as buying the cloth gowns and getting the discount for the sutures.

We haven't put a price tag on other improvements, such as from having fewer overstocked items on the shelves and a more smoothly functioning supply system.

We can also point with pride to some basic changes in how we operate.

We have, among other things, established a consistent communications and reporting mechanism with the materials manager, maintained a positive and consistent working relationship with our vendors, and reduced inventory to a workable minimum par level.

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