Healthcare Supply Chain Automation in High Cost Areas

Healthcare Supply Chain Automation in High Cost AreasIt seems counter-intuitive.  Some of hospitals’ highest cost areas—like ORs, Cathlab or interventional radiology—lack accurate, automated hospital inventory management control and charge capture.

These are the areas that house your most expensive supply items—like implantable medical devices (IMDs) used in orthopedic surgeries; and the catheters, stents and balloons used for angioplasty.  A single device can cost thousands and can represent 50% to 72% of the total costs for corresponding diagnosis-related groups.[i]

Yet, between 70%-73% of implantable medical device (IMD) monitoring and tracking is still done manually—even at the nation’s “Most Wired” facilities. [ii]

Manual capture of IMD data during surgical procedures can cause all kinds of problems:

  • Inaccurate data capture
  • Poor data sharing between areas
  • Lost charges
  • Poor hospital inventory management (leading to stockouts, shrinkage, expired supplies, theft and compliance issues)
  • Higher downstream costs in billing, accounts payable and other areas due to manual paperwork and rework
  • Valuable clinician time spent on supply tasks

It’s estimated that the health care market loses more than $5 billion every year due to the inadequacy of current solutions in the implantable device supply chain.[iii]

So what can be done to capture charges and increase the accuracy and sharing of supply information in these critical areas?

New Point of Use supply cabinets that use integrated radio-frequency identification (RFID) technology automate critical supply functions and integrate process and information flow between clinical, billing and inventory systems.

RFID Point of Use (POU) Supply cabinets for specialty areas come in two varieties: shelved cabinets that house stents and balloons, and cath rack cabinets that hold vertical hanging catheters as well as stents and balloons.  Software integrates the cabinets to other hospital billing and materials systems.

Here’s how they work.

A nurse swipes his/her badge and takes the supplies needed for an upcoming procedure.  The hospital point of use system automatically tracks the supplies removed.

When the procedure is finished, unused items are put back.  The cabinet automatically returns unused items to inventory, bills the correct patient for used supplies and sends an electronic request to the materials management information system (MMIS) to have those items replenished.

The low-touch RFID technology and software integration to other systems offers many advantages:

  • Reduces supply spend
  • Increases charge capture
  • Provides more accurate supply and clinical data
  • Shares data with other systems
  • Frees clinicians from supply tasks
  • Ensures that the right supplies are available when you need them

One provider executive for cardiovascular care and imaging stated that inventory management is an important component of healthcare reform. “Automating the inventory management process can reduce supply costs, increase revenue and streamline quality control. Inventory technologies set PAR levels, maximize rotation of stock and minimize staff time. The technology also flags products recalled by the FDA.” [iv]

Automating hospital inventory management in your high-cost specialty areas can save you big.

McKesson point of use supply chain solutions have been shown to:

  • Reduce unofficial inventory by 30%
  • Improve charge capture by 20%
  • Reduce staff time by 15%[v]

And the labor and non-labor savings can go straight to your bottom line.

Find out how leveraging the latest RFID technology can help support your supply chain, manage costs and improve clinician workflow in a no cost webinar from McKesson.

[i] Controlling Implant Costs: HFMA Roundtable; 2006.

[ii] Seeing Device Costs Clearly; Research by Bob Kehoe, Hospitals & Health Networks; 2011 (as part of their Fiscal Fitness / Supply Chain series.)

[iii] Seeing Device Costs Clearly; Research by Bob Kehoe, Hospitals & Health Networks; 2011 (as part of their Fiscal Fitness / Supply Chain series.)

[iv] Inventory management: cutting costs (but not care) in the Cath Lab; Clinical Innovation And Technology; http://www.clinical-innovation.com)

[v] McKesson Website; http://www.mckesson.com/providers/health-systems/department-solutions/supply-chain-management/mckesson-point-of-use-supply/