How Centura Health eliminated waste and boosted efficiency in its supply chain

With rising pressure to maintain high-quality patient care and reduce spending under value-based care, hospitals are eagerly looking for ways to improve efficiencies and eliminate waste across operations. The supply chain, which represents one of hospitals' highest costs can account for billions of dollars of waste each year.

"The shift from fee-based, volume-driven care to value-based, patient-centered care propels us all into uncharted territory, no matter what role you play in healthcare," said John Roy, general manager of inventory management solutions at Dublin, Ohio-based Cardinal Health, during a webinar sponsored by Cardinal Health. According to Mr. Roy, the imperative to eliminate waste across the health system is "now falling on the shoulders of supply chain leaders."

However, many supply chain leaders have discovered their current processes may not position them for success under a value-based model. Supply chains that rely on manual inventory management processes are time- and resource-intensive, prone to error and significant sources of waste. To effectively reduce waste and improve supply chain efficiencies, hospitals are increasingly turning to automated systems with RFID technology that enables supply chain and clinical workflow efficiency, simplified ordering and replenishment of supplies, real-time tracking of supplies and seamless expiration and recall management.

An inefficient supply chain has system-wide repercussions

U.S. hospitals' supply chains create $5 billion in waste each year, with most of the waste attributed to poor inventory management, according to a GHX quantitative research study from PNC Healthcare.

Poor inventory management means nurses must spend more time on supply chain-related tasks, such as securing supplies and equipment, and less time with patients. More time spent by registered nurses with patients is associated with overall higher quality care. Unfortunately, 19 percent of nurses say "locating supplies and equipment" is the biggest waste of their time, according to an online survey of 403 respondents from SERMO.

The survey, which included responses from nurses, physicians, service line leaders and supply chain administrators, found that 24 percent of hospital staff had seen, observed or heard of expired or recalled equipment used on a patient. More than half (57 percent) of those surveyed recalled a time when a physician did not have a product that was needed for a patient during a procedure. Most concerning, 18 percent were aware of a patient harmed because needed supplies were not available at the right time.

"With these challenges there is a tremendous opportunity for the supply chain to create value in areas including efficiency, optimized workflows, improved charge capture and a greater control of inventory," said Mr. Roy. 

Case study: Centura Health's transition from manual inventory management to automation

Step 1: Identify the problem

Centura Health, based in Centennial, Colo., is comprised of 29 hospitals throughout Colorado and Kansas, as well as numerous physician offices and ambulatory surgery centers. Like other large health systems, Centura Health officials realized it needed to overhaul its inefficient supply chain inventory management processes, according to Ramy Hanna, vice president of supply chain management at Centura Health.

"We were using manual processes to manage all inventory for all of our facilities. I like to call it the 'great paper chase,'" said Mr. Hanna. "While this may be hard to believe, I've learned throughout this process that a manual approach is all too common in many hospitals today and it's a horrible burden. We knew we were struggling and knew we had to find an approach."

Centura Health's manual supply chain system lacked visibility to supply levels — both purchased and consigned — as well as consumption patterns, recalls and expirations. The lack of visibility significantly hindered any effort to forecast supply needs. Another consequence of manual processes: misaligned priorities and uncertainty of responsibilities with cross-functional teams. "We knew we needed to find a tool that allowed supply chain leaders to manage supplies and clinicians to manage other clinicians, as well as their patients."

After Mr. Hanna and his colleagues assessed the shortcomings of its supply chain, they realized that the health system's highest supply chain spend occurred in the cardiovascular and operating rooms, which is common across hospitals. Subsequently, they decided their first priority would be to tackle inventory management in Centura Health's cardiovascular departments, with future plans to implement automated inventory management in the operating room.

Step 2: Outline objectives

Centura Health's supply chain leaders knew automation was imperative, but the solution they chose had to satisfy several key priorities on their wish list, Mr. Hanna explained. These included:

  • Visibility of product across supply chain for multiple departments or hospitals
  • Improved ordering ensuring the right amount of inventory while reducing waste and expired product
  • Ability to view data at a procedural level, such as cost per case, supplier and physician usage
  • Scalable to grow with the health system as it changes

The solution would also need to satisfy stakeholders' individual priorities, such as eliminating product waste, simple documentation, integration with existing systems and protection of patient information, return on investment and getting clinicians back to focusing on patient care.

Step 3: Adopting the solution

Centura Health ultimately decided to implement the Cardinal Health automated inventory management solution, which was implemented in the health system's cardiovascular departments in phases.

Mr. Hanna's team chose a Cardinal Health inventory management solution because it includes RFID technology, which is imperative for managing high-value supplies in the cardiovascular department and operating room, such as guiding catheters, stents and pacemakers.  

"There are many advantages to RFID technology," explained Mr. Roy. For instance, it can help reduce the possibility of implanting an expired product. It is equipped to quickly locate products and it's easy and intuitive for clinicians to use — they can just take a product and go. Additionally, because each product's location is automatically tracked, you always know where it is. And because RFID technology is scalable, you can start small and introduce it slowly during a phased implementation.

The Cardinal Health inventory management solution includes a dashboard that provides clinicians with real-time, actionable alerts for expiration, recall, ordering needs and other measures. The dashboard identifies and alerts users to potential deviations from the norm. For instance, it can tell administrators which items are missing, consumption rates and patterns, and the exact location of trackable items.

"Analytics uncover powerful insights that can help control costs, reveal new savings opportunities, help avoid stockouts, increase efficiency and productivity and significantly reduce concerns over expired, obsolete and recalled items," said Mr. Roy.

Automated inventory management solutions and real-time data analytics leave supply chain leaders and clinicians with greater control over the supply chain and less worry related to expired, recalled or missing products. With the Cardinal Health automated inventory management solution, hospitals can see an ROI of more than 200 percent of their investment, eliminate waste and protect the bottom line. Clinicians can be confident that supplies are available and safe for patients while spending less time on onerous manual processes and more time focusing on their main priority: providing high-quality patient care.

To view the webinar on YouTube, click here. 

To view the presentation in PDF format, click here

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