Tips for efficient inventory management in the OR: 4 thoughts from a Cardinal Health leader

Inefficient inventory and supply chain management processes can be a significant money drain for ASCs, which already function on tight margins.

ASCs must assess current processes to identify inventory and supply chain practices — such as opening, but not using supplies during a procedure — that create financial waste.

By reducing waste and improving inventory management, ASCs can not only achieve a more efficient supply chain, but also help support profitability, according to Marvella Thomas, RN, a senior consultant for Dublin, Ohio-based Cardinal Health.

Ms. Thomas shared strategies ASCs can use to identify waste and strengthen inventory management with Becker's Hospital Review. She also discussed these strategies during a May 17 webinar on the same topic.

Editor's note: Responses have been lightly edited for length and clarity.

Question: ASCs face many challenges every day. What are the two challenges ASCs should tackle first that will result in the biggest return on investment?

Marvella Thomas: I think the first challenge would be supply chain management from an ROI perspective. A lot of centers have too many supplies, duplication of supplies or poor management of their storage and supply utilization. Some facilities use empty operating rooms to store supplies, instead of using those rooms for procedures. Some need to open those rooms, but just don't have a place to put their supplies. I think a better strategy for supply management and storage really opens up opportunities for additional services and procedures.

The second challenge ASCs should address is streamlining their billing and coding processes so they can reduce the revenue cycle time and maximize reimbursements. Often, time is lost in billing because material managers are trying to validate implant purchase orders and supplies used. They're tied up with a lot of other clinical activities and can't get to that function as quickly as they'd like to. So making sure POs are validated quickly to get billing out the door as soon as possible should be a priority.

Q: It can be difficult for ASCs to quantify exactly how much waste they need to eliminate. What best practices can you offer ASCs for how to measure waste reduction?

MT: A good way to quantify waste is to track open and unused supplies for a two-week period. Statistically, that probably gets at about 80 percent of what's being wasted on a regular basis. Attributing dollars to items that are not used will help quantify the cost of waste per procedure. If unused items are coming from custom kits they probably need to be removed if they are not being used consistently. If they're coming from single sterile items being picked, but really not needed, the ASC needs to look at preference cards. With these supplies, the most important thing is to segregate your hold items. This reduces items from being opened unnecessarily, especially if the ASC is using per diem staff or if some staff members are working in a service they're not familiar with.

I would also look for other areas of waste that don't improve patient outcomes, such as clinicians who break scrub after they set up for a procedure and have to open a new pair of gloves. And then you have to look at wasted time. Each minute in an ASC's day equals potential revenue. Are they cleaning rooms in between procedures with a product that has a 10-minute kill time, as opposed to something with a two-minute kill time? ASCs need to look everywhere for opportunities to reduce waste. It's not just in supplies.

Q: How can ASCs ensure employees and leaders understand the need to optimize supply chain processes? What advice can you offer for where to start and how to build a team focused on the same goal?

MT: First and foremost, they need to make sure everyone on the team knows how much supplies cost. A lot of times, team members just don't realize the expense tied up with even some of their commodity supplies. ASCs need to share their supply spend as a percentage of revenue with the team. For most centers, the supply spend percentage per revenue is 17 to 25 percent. So if an ASC's percentage is higher, that's an area they need to work on.

Let your team know how you're measuring supply spend and have them come up with ways to improve your ratio and dollar spend. It's important they know what your baseline is and where you want to get to. Per diem or part-time staff may also affect improvement efforts. You need to make sure they know what the goals are too, since they may not have a clear understanding of what you're trying to accomplish.

Q: Who can ASC leaders go to for help in identifying ways to reduce waste and cost? How can they find these partners?

MT: Vendors are the first place to look. Share your goals and supply strategies with your vendors and ask how they can help you meet these goals. It is important they work with you on these goals. If they don't have any answers, I would probably look elsewhere for collaboration. In addition, ask if your vendors can provide clinical and supply chain experts to identify your current state and opportunities for improvement. It is a great place to start. If you don't know where you are today, it's really hard to plan where you want to be tomorrow.

If you belong to a multi-facility organization, use your peers as internal consultants to look at your operations. Sometimes all it takes is a different set of eyes to look at what you're doing. Try to look at your facility objectively and challenge the status quo. A lot of facilities know exactly what their opportunities are, but they don't have the time or resources to develop an action plan, so they just need to make it a priority.

More articles on supply chain:

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