11 Supply Chain Mistakes That Cost Surgery Centers Money
1. They don't participate in a GPO. Any surgery center can participate in a group purchasing organization, Ms. Geier says. She says some surgery centers think GPO prices are not available to them because they don't have a partnership with a management company, but that is incorrect.
"They need to do research with their state societies or just contact the GPO — there are many out there who will work with [individual centers]," she says. A GPO is an effective way for surgery centers to achieve cheaper prices through greater buying power, which a small facility can usually not attain on its own.
2. They don't load inventory into the computer. "The most important thing when doing all your inventory is to have it loaded into the computer," Ms. Geier says. "This is typically an area where surgery centers fall down." It takes time to load inventory into the computer, so many facilities put off the task and say "We'll do it later," she says. Unfortunately, putting this off can have dire consequences for your facility's organization and costs. She recommends the following "best practices" for loading inventory into a computer system:
• Allow only one person to load inventory. Ms. Geier says only one staff member should load inventory to ensure standardization. For example, if several employees are allowed to load inventory into the computer, they might load the same item under several different names. For example, "gauze sponges" could be loaded under "sterile gauze sponges" or "sponges." "Instead, you should create a category, and that employee should only load the item using that category," she says.
• Load to the lowest common denominator. Make sure items are loaded to the lowest common denominator: unit price. Unit price is the smallest measure of supplies usage, and even if you are ordering supplies by the case, you want to know how much the surgery center is spending every time that particular item is used.
• Load by location. Make sure inventory is loaded into the system by location where the supply is kept, Ms. Geier says. "Many surgery centers don't load by location, and then when they do their yearly inventory count, they can't find the supplies, or they have to look in multiple places to count the items," she says.
• Make sure purchase order numbers are in sequences. Purchase order numbers should be in order, and surgery centers should print reports from the computer system to make sure they can account for every single purchase order. "You should be able to account for every single PO number," Ms. Geier says.
3. They don't update preference cards on a regular basis. Make sure the surgery center's physician preference cards are up-to-date by asking physicians and their teams to check them on a regular basis. Invlovle the surgeon in the review. The surgeon may not know his or her preference items , so also involve the team that works most closely with the surgeon to review the items and point out anything out-of-date.
Ms. Geier says new surgery centers should complete this process during the initial start-up phase and then review cards a few months into operations. "If you're a busy center and you've been open for a while, I would do it at least twice a year," she says. Only one person should be authorized to actually make the changes to the cards, to ensure language is standardized and there are no miscommunications.
4. They let nurses hoard supplies. Ms. Geier says some surgery center nurses tend to "hoard" supplies, stashing a few items in a special location so that they never run out during surgery. "It's a problem, because you've paid for the item, but nobody knows where it is except one or two people," she says. She adds that nurses tend to over-stock ORs, leaving a lot of money tied up that the materials manager may not know about.
She says fixing this problem comes down to conducting walk-arounds and employee education. Nurses should be reminded not to stock more than a two-day supply of goods in ORs and bedside stands, and supervisors should patrol ORs regularly to make sure supplies are not being secreted away for future use.
5. They over-order on supplies. In addition to hoarding, Ms. Geier says ASCs frequently order more supplies than they need. She says the first step is to determine how often your manufacturer delivers. If they deliver twice a week, you don't need to order a month's worth of supplies ahead of time. She adds that the surgery center materials manager should look at the schedule every week and order "what you need and a few extras," just in case. "I often go to a center and look at the shelves, and I tell them I see stacks of dollar bills sitting there," she says.
6. They don't order enough pharmaceuticals to handle the shortage. Pharmaceuticals are an exception to the ordering rule, because shortages are making it very difficult to require some drugs essential for outpatient surgery. "We're seeing an extreme shortage with drugs, so when you can get drugs, you should order as many as you can," Ms. Geier says. She says expiration dates should not matter too much with drugs like propofol, which is used so much in the surgery center that it won't expire before you run out.
7. They don't take advantage of consignment options. Many surgery centers fail to take advantage of consignment options, which can save ASCs significant money, Ms. Geier says. Certain manufacturers will consign almost anything in a surgery center and bill the center once a month.
If the surgery center hasn't used an item or opened the package, you don't have to pay for it until it's used. "If it's not on the shelf, it's presumed used," Ms. Geier says. Consignment is a great way to make sure you stock enough supplies for unexpected cases without paying for supplies that you'll end up not using.
8. They don't track implants. Surgery centers are required by CMS to keep implant logs and follow up with patients in case of infection. Ms. Geier works as a surveyor for the AAAHC, and she says she sometimes asks for an implant log and hears, "We put the sticker on the patient chart." She says that's not the same as an implant log — surgery centers have to track for infections on cases where implants are used one year after implantation. Surgery centers should also track implants to make sure they're getting the best price and that their vendor contract matches what they're paying.
9. They don't understand their vendor and distributor relationships. Vendors and distributors can be great assets to surgery centers if they make the effort to work with them. For example, distributors can provide reports on service levels, stock levels and shipping rates — information that can help ASCs identify pricey services and thereby reduce costs. She says it's important to have a "go to" person from your distributor who can explain your options and communicate price changes.
Ms. Geier says vendor relationships are equally important, since sales reps can be allies or enemies in the ASC. She says it's important that reps understand aseptic technique, as well as what they can touch and not touch. Many cetners are now requiring the use of The best vendors will train their sales reps on these standards. Ms. Geier says it's also important to build a good relationship with your sales reps, since they are generally close to your surgeons. You need a vendor who will really work with you to find the lowest price at the best quality, instead of undermining your authority by going straight to the surgeon.
10. They don't understand freight charges, restock charges and back order rates. Ms. Geier says surgery centers often look at the price of an item but not the impact of freight charges. "You need to know if you're going to pay for a commercial carrier," she says. You should also know whether you have to pay a restock charge in the event that you have to send an item back. In addition, you should know whether the company allows you to buy items individually or whether you must buy in bulk, as well as whether they require minimum orders.
Back-order rates can be a problem with pharmaceuticals, and surgery centers must have a protocol in place, Ms. Geier says. If a drug is in short supply, you need to know the back-up drugs you'll use instead. "Another major inventory problem is that nobody is checking to make sure invoices are accurate," she says. When a product comes in, you should compare the packing slip to the purchase order. If you ordered 10 items and only eight arrived, you now have two on back order and should not be invoiced until those products come in. Before paying invoices, the PO should be matched to the packing slip, which is also attached to the invoice.
11. They let items expire without sending them back. Ms. Geier says every time an item arrives at your surgery center, you should mark the date with a sticker. Don't write on the box with magic market, because then you won't be able to return it if you don't open it. Instead, write the date on the sticker, and if it's unopened after six months, send it back.
She also recommends checking all your expiration dates to ensure you don't have products sitting around that will expire before you can use them. In certain cases, surgery centers take every individual item from separate boxes and dump them all into the same bin, meaning the expiration dates have to be checked for each individual supply instead of just the package. She recommends keeping supplies organized by expiration date so that staff members know which to use first.
Learn more about ASCOA.
© Copyright ASC COMMUNICATIONS 2012. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.
To receive the latest hospital and health system business and legal news and analysis from Becker's Hospital Review, sign-up for the free Becker's Hospital Review E-weekly by clicking here.