Tag Archives: inventory

Ensuring the Resilience of Your Supply Chain – Team, Strategy and Tools – Part 2

Excerpts from a Conversation with Intalere Senior Advisory Specialist, Tracey Chadwell

In our previous post, we introduced the concept of supply chain resiliency, and shared insight on building your team and several strategies you can undertake as you move through the process.

Now that we’ve got the team and we’ve got some of the strategy in place, what are some of the tools that are most important to implement to help you get ahead of the curve? What are some of the things that you can do in utilizing opportunities through the various partners on your stakeholder team?

It’s very important to build relationships with local, national and non-traditional suppliers. Obviously, suppliers can provide you access to products, but as we learned during COVID, having a variety of resources is important.

We were going places like Home Depot, which is not traditionally thought of as a supplier for medical supplies, but they were able to provide things like N95 masks and other types of protective equipment. To keep those relationships very, very vital, you need some pre-planning to develop needs-based allocation strategies to ensure access to your supplies.

This can be done through the suppliers directly, especially the local suppliers, but it also needs to be done through your distributors who can also assist with identifying alternative products, strategic sourcing and risk share models, as well as storage of products and inventory management. Some of them offer an opportunity to serve as your warehouse or your storage area and will bring the supplies to you on a regular basis so that you don’t have to allocate that extra space normally required for inventory. Speak with them about possible opportunities to see how they can assist.

Suppliers/Distributors will sometimes initiate allocations to prevent excessive ordering and to promote the availability of needed products to other healthcare providers. We saw some of this happening during the pandemic, where it may benefit specific facilities, but it also hurt others down the line with not having product availability. That’s something we need to work with our distributors on proactively, so that we have our products, but our neighboring facilities have their products as well.

Your GPO can be an incredible resource in that they can help determine reliable sourcing methods, purchasing partnerships, etc. Many GPOs are now looking at onshore/nearshore sourcing, diversifying sourcing and product substitutions, so that we’re not in a position again where we are not able to get products because of where they were made. They are looking at non-traditional suppliers and vetting them to ensure providers are not taken advantage of.

Another area that’s incredibly important is that transparency is the name of the game along the entire supply chain. We need tools that are going to help put data together and provide actionable information and provide transparency.

Some larger organizations are implementing ERP or enterprise resource planning, a cloud-based solution that basically allows you to find the product from when it hits your door to when it’s actually being used on the patient. With that, you have the visibility to utilization and inventory levels, and can see where it’s being used, how it contributes to cost of care and how it actually flows through your financial software.

We’re seeing a lot of system integration and interfaces come up. That allows for data flow between different systems so that you can put the big picture together and see what’s going on with your inventory systems, your staffing models, your patient information and more.

Item master cleanup is incredibly important because if you’re not using accurate data, the decisions you make based on that data are often flawed. There are services that provide item master cleanup and maintenance that are worthwhile in resolving this issue.

For smaller facilities, we’re seeing a lot of solutions coming out that are procure-to-pay. From ordering all the way through finance, it’s a chance to integrate what’s going on. Many of these solutions can be scaled down to fit smaller institutions. It basically makes it almost like an Amazon-type setting. You can put your ordering in and it helps with your three-way reconciliation, you can do inventory management and you can do charging from it with barcodes. And again, this would all feed into the financial software.

Finally, there are stand-alone inventory management systems so that you can see what’s there, how much you’ve got on stack and what they have on the units. Again, all of these systems help you in knowing what’s there, knowing what the availability and usage is, and can really help you do some predictive analytics and determine what needs to be ordered when, how much to keep in stock, develop your par levels, etc.

To go one step further in looking at workflow efficiencies, we also have robotic process automation (RPA). Basically, any repetitive process can be set up so that it is done by a software “robot,” freeing you up to spend more time for example with enhancing your revenue by addressing accounts payable, versus making repeated calls to insurance companies for refiling or for pre-authorizations.

That’s another area we’re seeing more and more because in going virtual, a lot of things fell by the wayside due to the fact we didn’t have processes in place for them. Having these types of solutions in place now makes us much more viable and sustainable. If something like that should happen again, and you can continue these processes, continue generating revenue, continue communicating with patients and insurers, you don’t have to fall behind or play catch up when you get back to the office.

These are just some of the best practices that can be helpful to anyone depending on where they are in their level of supply chain maturity.  

Something that really came out during the pandemic is just making sure that you’re prepared and you’re proactive in working with those other sourcing alternatives. Whether it be reuse or other alternative systems, they all work together to make sure that you don’t have a drop in service or you’re still able to ensure that you’re taking care of patients and customers at the high levels they have become accustomed to from your organization.

We Can Help

For further information on any of our resources to help you deal with your supply chain challenges, visit our website at intalere.com. You can review our recent Supply Chain Resiliency podcast and infographic, as well as success stories and recent blog posts on a wide variety of supply chain topics.

9 Reasons for Inefficiencies in Supply Management

by Tracey Chadwell, Senior Director, Advisory Solutions, Intalere

In recent blog posts, we discussed the idea of supply utilization management and building a sustainable process to identify gaps in supply chain strategies and create new behaviors that bring savings to your healthcare facility’s bottom line.

One area of particular scrutiny is waste in the supply chain. Waste and inefficiencies in the consumption of products is where 79% of all new supply chain savings are hidden. That includes things like inferior products, value mismatches and misused, misapplied, or misappropriated products, which must be identified and eliminated.

In some cases, supply chain can evaluate, select and contract for a product/service/technology, but hospital staff use too many, use wrong products, choose feature-rich products, waste products, or vendors upsell new, higher cost products inside the new contract. That is why a cross-functional team with representation from supply chain, finance, operations and clinical segments, along with a process that includes checks and balances, is so important.

Furthermore, redundancies in supplies and unnecessary deviations in inventory processes lead to variations in practice, many times sacrificing clinical and operational excellence for personal preference or comfort.

What are some of the main reasons for waste in the supply chain that we need to guard against?

  1. Tradition – Products, services and technology need to be reviewed regularly to ensure relevancy beyond the old adage of, “this is what we’ve always used and it’s been fine.”
  2. Poor or inaccurate performance specifications – Most items are purchased from manufacturer-supplied data, not based on required performance expectations, and, therefore, are either over- or under-performing, resulting in waste and inefficiency.
  3. Wasteful and inefficient practices – Excess inventory, discards, redundant motion, unnecessary practice variation, irrational consumption.
  4. Old technologies – Some products may be inefficient or need maintenance to keep operational. It’s important to evaluate “useful” life to ensure these products are still meeting needs.
  5. New technologies – Conversely, new products and tech purported to be faster, better, cheaper may be less reliable, more supply intense and, thus, more costly.
  6. Lack of accountability – No one “owns” the value chain to oversee the life and cost of an item used by numerous departments.
  7. Lack of input from key stakeholders – Customers aren’t consulted prior to product or service decisions, so inappropriate use or changes occur. Comprehensive stakeholder involvement helps identify flawed thinking or assumptions so better decisions can be made.
  8. Feature-Rich Products – Value mismatches provide more than what is functionally required. For example, pacemakers with over 100 features that cost 50% more, when only 10-15% of its features are medically indicated.
  9. Standardization vs. Customization – It’s rare that one product is able to meet all requirements of all users without incurring waste, inefficiency and a higher cost than necessary. Customization, or building products according to individual specs, will meet the requirements of approximately 80% of the users. The other 20% require higher or lower specs to fit their needs, which may mean buying different products for them. Doing so may actually reduce waste and inefficiency by 10-15%, thus lowering overall costs.

Identifying and understanding these possible hurdles and how best to make critical adaptations, create new behaviors, and revise policies and procedures to mitigate them, is an important part of bringing sustainable savings and a strategic supply chain to your organization.

We Can Help. Intalere helps you better understand the strategic nature of supply chain and provides resources that can assist in bringing efficiency and savings to every area of your supply chain. Reach out to see how we can help. Contact Customer Service at 877-711-5600 or customerservice@intalere.com  or your Intalere representative.

Intalere Member Best Practice Spotlight – Mankato Surgery Center – Managing the Supply Chain and Inventory Efficiencies

ISSUE

Mankato Surgery Center was noticing variables in the year-end physical inventory counting, inconsistencies in product nomenclature, inaccuracies in identifying consignment inventory, and inaccuracies of the physical counts that lead to significant over-valuation of inventory and difficulty in determining profitability.

SOLUTION

A newly created multi-disciplinary Inventory Efficiency Workgroup identified the general assumptions and developed a project scope. The objectives for the project were to eliminate the duplication of labor that occurred during the annual physical inventory of correcting entry counts and to eliminate the erroneous inventory valuation during the annual financial audit. After thorough auditing, benchmarks were created. The multi-disciplinary workgroup team approached and solved the issues from different focal points.

OUTCOME

It was determined that the Item Master List was the pinnacle of the overall issues. Seven percent of products on the Item Master List were identified as inconsistent nomenclature and product misidentification. Staff spent more than 60 hours correcting the Item Master List. Further, the annual financial audit showed inventory was overstated by 94.4% and by removing vendor-owed inventory from the Consignment List, the correct inventory value was calculated. It was also found that the Implant Inventory was set at an artificially high quantity to save computer key strokes, so this was eliminated, thereby, eliminating the artificial high-value of inventory.

ABOUT MANKATO SURGERY CENTER

Mankato Surgery Center, accredited by AAAHC, is a multi-specialty, physician- owned ambulatory surgery center located in south-central Minnesota. Mankato Surgery Center focuses on providing the highest quality ambulatory surgical care with state-of-the-art surgical equipment and technology, and highly skilled and trained staff.

Check out the project video and view the Mankato Surgery Center page in the 2018 Intalere Best Practices Compendium.

Member Best Practice Spotlight – Crystal Run Health – Central Pharmacy Implementation Lowers Costs and Improves Quality

Issue

An Intalere Consulting Services Assessment of Crystal Run Health’s entire supply chain processes identified areas of best practices as well as areas that needed improvement, one of which was the method in which pharmaceuticals were supplied to caregivers. The process was very fragmented, undertaken manually, had a high incidence of waste and a duplication of inventory across all facilities. It also did not provide a method of accessing more valuable pharmaceutical contracts.

Solution

After reviewing the assessment findings, Crystal Run began implementation of a Central Pharmacy. The first step was to identify what was to be achieved through this initiative and then locate adequate space that was close to being centrally located. An ROI strategy, which would be presented to the executive team, was prepared with the assistance of the Intalere Pharmacy Specialist Team, as well as the pharmaceutical supplier. Discussions were held with internal stakeholders to gain their insights on what was needed in order to simplify their processes in obtaining pharmaceuticals.

Outcome

After only three months following implementation of the Central Pharmacy, Crystal Run noticed an immediate 10% reduction in inventory being held on hand, with a 15% reduction in inventory levels expected throughout the organization. This has resulted in a monthly savings of approximately $62K. The cost to fully implement the Central Pharmacy was approximately $48K and the annual cost increase will be approximately $50K. However, total annual savings in acquisition and inventory cost reductions, as well as decreased waste, is estimated to be $1.8M, therefore, a savings of $1.3M annually is expected through the implementation of this program. In addition, caregivers have embraced the new program and no major issues have been reported.

About Crystal Run Health

Crystal Run is committed to improving the quality and health of the communities it serves. Crystal Run’s multi-specialty medical practice has evolved to more than 450 providers and more than 50 medical specialties. With more than 25 locations, Crystal Run provides the best healthcare to New York’s Hudson Valley, lower Catskill region and Manhattan.

Check out the project video and view the Crystal Run page in the 2018 Intalere Best Practices Compendium.