Collaboration
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| Hospitals are dependent on their ORs to ensure quality patient care as well as a healthy profit margin. But for the OR to be truly effective, the processes on which it depends must not only be efficient, but also aligned with the OR’s schedule. Materials management plays one such role because having the right supplies at the right time is a crucial aspect of creating a successful OR. Communication, i.e., verbal and the electronic exchange of data, is a key component so that all parties understand the others’ needs. |
The operating room (OR) represents the proverbial heart of an organization because its schedule determines the pace of the entire organization. Across the system, patient schedules are logged, staff is allocated and organizational issues are prioritized based on how they impact the OR.
Because of its broad impact, surgical services and surgeons are beginning to recognize the need to operate more effectively and efficiently.
As a result, the dynamics between the OR and materials management are changing. More materials management departments are taking on supply responsibilities in the OR and in some cases, using the OR’s processes and applications.
To align surgical services with materials management and better align it with business objectives, tightly integrated processes and supply management systems are required.
Necessary efficiencies
Aligning the two departments will lead to optimal use of the OR’s space, reductions in delayed or cancelled cases, enhanced Safe Medical Devices Act tracking, cost savings, improved case costing and reduced surgical case turnover time, which will ultimately lead to increased revenue for the health care organization.
The volatility and often immediate necessity of OR operations can lead to added pressure on staff, which could have dire, fatal consequences for a patient.
In this critical department where life and death intersect, there is no room for error.
Hospitals have not historically relied on an electronic link between suppliers, materials management and OR services, often disconnecting organizations that should be working hand-in-hand.
That is why an operational shift is required to automatically integrate supply and surgery schedules. This ultimately leads to increased quality of care and enhanced operational efficiency.
The shift can be accomplished with increased communication to ensure that purchasing is aware of scheduled procedures, supplies that are needed and the estimated volume of surgery related to these areas.
A method to track this data should be established and lines of responsibility and accountability should be clearly delineated.
The tracking method may include an integrated materials management information system, supply management application on a materials management system or surgical services information system.
State-of-the-art technologies such as radio frequency identification tracking, handheld communication devices in the OR and e-commerce make reducing costs throughout the process achievable as well.
Assessing inventory
Streamlining, automating and integrating processes can enable hospitals to proactively ensure products are available and accessible when needed in the most cost-effective manner possible.
If the OR needs a pacemaker today for tomorrow’s surgery, overnight delivery is extremely expensive.
However, if organizations are planning appropriately, these extraneous costs could be avoided by automatically ensuring coordination between people, supplies and equipment.
When a patient arrives for surgery, the room, surgeon and staff should be scheduled and all essential equipment and supplies should be ready.
Ensuring this happens requires both parties to agree on the new processes and that executive management fully supports the initiatives.
Further, the organization needs to identify whether the OR’s system can communicate with materials management or whether the materials management system should take over the supply management process using the materials management applications.
The provider also needs to determine whether the OR’s system can communicate with materials management requisitions, changes or additions.
Once methods are established and processes are tested and implemented, the provider must constantly oversee the process and routinely review the methods. This will make it possible to identify necessary changes and ensure more efficient communication.
From a financial perspective, a hospital’s inventory is considered an asset. Although most OR stock is not considered inventory, there is a need to reflect the financial value of that asset, so that at any given time, an auditor can measure the value of the stock.
In the high-pressure, fast-paced OR setting, surgical services staff is constantly balancing patients, juggling cases, performing pre/post-operation follow-up and staff management. They rarely include careful materials tracking as an integral part of the process.
For example, some providers use handheld technologies in the OR to estimate the value of the OR inventory at the end of each day.
In other cases, providers integrate the OR systems into the materials management information systems to provide perpetual inventory value of the OR inventory with the case cart system.
However, the future of inventory tracking lies in RFID technology. It streamlines the process because it tracks items and lot/device/regulatory compliance with little human intervention.
Also, RFID tags make it possible to automatically order goods and replenish inventories.
Typically, OR materials are high-priced items, of unique types and sizes. If the surgical schedule is driving OR inventory needs, then understanding the supply chain management implications of each type of surgery is essential to improve the process and reduce materials management costs.
An integrated OR system provides an automatic communication link, allowing for timely executive reporting, financial statements and department budget projections versus actual reports.
Organizations need to determine where they stand with regard to connecting materials management to patient financials and general financial systems because integration is the key to changing processes and determining which methodology to use, e.g., map systems data elements, test, and implementing revised processes.
All required items are automatically routed from purchase or inventory to the OR without information being re-entered. The entire organization would benefit from integrated, real-time visibility into all aspects of materials management by lowering overnight shipping costs, reducing overstocking and subsequent restocking fees.
Improvements also would occur in the following areas: facility management able to free space for other purposes, risk management, stock rotation/fewer outdates and contract throughput.
Finally, the organization could decrease the need for manual intervention and reduce the chances for human error.
Improving cost effectiveness
The fundamental shift of aligning schedules requires establishing a proactive process, as opposed to a reactive approach to materials management.
A comprehensive vantage point across the organization in terms of trends and historical needs is critical to such an initiative. The answer lies in an enterprisewide, single source of real-time data.
In the manufacturing industry, vendors lay out a project well in advance by using a daily production schedule and plotting an hourly schedule, along with lists of necessary materials. Also, manufacturers know that priorities shift and emergencies occur without warning.
Having an established, standardized production schedule allows them to take control of those few constants within their control. The same principles and mindset can be adopted in the OR, which will lead to improved processes and lower costs.
In any scenario, most surgeons can project approximately how many and what types of surgeries they will likely perform in a given month based on historical analysis, demographic generalities and past percentages.
If a hospital conducts a year-over-year analysis, trends and phases of both elective surgeries that are planned in advance and emergency surgeries could be determined.
The process underscores the organizationwide movement to continually improve business practices that also will improve the quality of care more cost-effectively.
Surgical services analysis can help improve the process by decreasing cancellations, improving case turnover and increasing procedure rates per day, which allows for greater revenue-generating opportunities for surgeons and the entire organization.
By leveraging business intelligence, providers can compile and analyze historical and trending data and deduce averages to plan usages and then purchase supplies accordingly.
Organizations can implement a supplier portal to improve supplier communication, enable competitive bidding using actual volumes, realistically project volume drivers and needs, manage and maintain contract commitments, and use demand and inventory planning to improve communications and reduce costs.
Standardizing the supplies that are predictable can allow providers to shift to a scheduled purchasing scenario and draw their suppliers more tightly into the process.
An integrated, enterprisewide view of all processes would give administration the necessary information to make accurate predictions.
Expensed versus perpetual
The impact of integrating materials management and OR processes becomes obvious when one considers the following hypothetical scenarios, which outline a 7 a.m. cardiac surgery scheduled for the morning of March 3.
Expensed scenario: Rather than ordering three boxes of sutures to support the probable schedule, the OR orders 10, knowing that the sutures will be used eventually.
The extra sutures lead to high inventory costs, without any formal process for direct management of this stock.
Additional costs also exist. Because this hospital is not using predictive purchasing, the sutures were ordered on an as-needed basis.
Since the need was immediate, the order is scheduled for rushed delivery, leading to unnecessary shipping and handling expenses.
The overflow of sutures leads to more inventory in already cramped stockrooms. In some recorded cases, nurses and materials managers stockpile materials to ensure consistent supply, secretly hiding high-demand parts.
In a typical hospital system, where inventory is booked as an asset, the OR inventory is not booked as official inventory. Most items are ordered and expensed at the time of receipt, even though these stocked parts should be tracked as hospital assets.
In an expensed inventory scenario, the hospital system simply performs an annual estimated inventory to record it as an asset.
Perpetual scenario: The OR schedule drives what is kept on hand and what is scheduled to be ordered. Projected surgery volumes drive quantities and types of items ordered.
This type of demand planning scenario allows for organized ordering and the upkeep of a perpetual inventory in the OR. In this situation, the OR is well equipped for cardiac surgery, anticipating the OR’s needs well in advance of the surgery date.
In this situation, there is no need to pay for rushed shipping charges or bulk purchasing costs. The correct sutures are there when the surgeon needs them.
Another potential cost increase could result from product expirations or product returns of excessive stock, which oftentimes can include a 15 percent restocking fee.
The OR stockroom is fully aligned and in-tune with the OR’s scheduling needs. Space is allotted for required materials and necessary supplies, with a perpetual system in place for anticipating ongoing requirements. Storage space can now be used as new OR facilities, paving the way for new channels of hospital revenue.
OR personnel are required to track receipts and notify vendors when a medical device is implanted; conversely, organizations must notify vendors if a part is ever extracted.
With an automated system, the receipt of goods is electronically tracked in the materials management system, transmitting information to the OR system when items are delivered and noting the items’ serial numbers by patient. With an integrated, perpetual supply system and RFID, this process can be tracked and submitted automatically.
Leveraging purchasing needs
Health care organizations can proactively drive buying processes by using the link between surgery systems and the OR to electronically process purchase orders.
If items are automatically received and tracked, then all medical devices can cleanly transfer to OR services, eliminating the need for manual inputting and routing throughout the hospital.
With an automated, integrated supply chain management system, hospitals drive supply chain activities based on real-time demand information, armed with accurate data on pricing and availability.
This results in maximizing value in the supply chain, while increasing revenues. Allowing hospital systems to gain more control over their purchasing habits provides multiple benefits.
Organizations can better track, predict and project supply needs, which enables providers to enhance contracting relationships by having closer communication, improved awareness and higher contract compliance.
They also have the ability to reduce costs by increasing volumes, to improve change management and raise confidence in the system to dictate the entire organization’s needs.
Leveraging predictive purchasing can help providers set price ranges with suppliers and standardize pricing models for materials that are predictable.
Providers are empowered to drive down supply costs. If providers and suppliers have better visibility into what is being used and what they will likely need, both parties can drive down costs based on OR schedules and demand drivers.
By proactively managing incremental needs, an organization can smooth out the day-to-day ordering processes, which will allow for more streamlined demand and a more manageable supply chain process.
Further, the ability to better manage recalled goods will reduce time and effort in managing the supply processes between the OR and materials management.
When hospitals receive word that a certain product is being recalled, many organizations have to manually look through logbooks to establish relevancy within their stock and compare the notice with the records of other devices.
In the absence of a fully integrated, automated system, a recalled item could be used in surgery while the manual review process is under way.
Larger health care systems are especially affected by the need for an integrated, automated link between the OR and materials management, particularly when surgery centers are more expansive than in a typical hospital.
The big picture
Reducing supply chain costs represents a hospital’s largest opportunity for savings; and the OR represents a hospital’s largest opportunity for revenue.
By increasing OR and materials management efficiency via an enterprisewide, integrated and automated solution, providers can realize planning, procurement, order fulfillment and supplier relations value.
As a result, organizations can proactively streamline and automate processes; achieve better control over budgets, contracts and processes; negotiate better supplier prices; track performances; and manage purchasing contracts and compliance.
Leveraging an integrated supply chain management system can enable health care systems to automate all key supply chain activities.
Using a unified data model, the hospital can manage huge volumes of information and procure/manage materials as economically as possible by integrating critical data from all source applications to provide a true, 360-degree view across the entire enterprise.
A single source of truth provides the organization with one accurate view of its entire supply chain to allow the enforcement of lean principles across increasingly complex, global supply chains.
Armed with this knowledge, hospitals can gain efficiencies and streamline administrative activities to allow surgical and enterprisewide staff to concentrate on optimizing patient care delivery.
Jamie Wyatt is vice president of health care industries, Oracle Corporation, Redwood Shores, Calif.
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