5 Ways an Inventory Management System Can Improve Efficiency in ASCs

This article is written by Jon Pruitt, vice president of procurement solutions at Provista, LLC.

ASC administrators have their magnifying glasses out and are closely examining their operations to find new ways to reduce costs, improve volume and expand services. For most surgical centers staff salaries and benefits represent ACS's largest fixed cost. However, keeping talented professionals is so critical to growth and attracting new patients that administrators consider it a last resort for cost cutting. What operators might not realize, though, is that implementing an inventory management system can help them significantly reduce costs as their supply chain represents their second largest operational expense. Implementing an inventory management system not only improves efficiency, it also reduces the hassle factor for those responsible for supply chain activities in the ASC.

One of the factors complicating inventory management is that often the responsibility for managing materials is a part-time job for several people, but no one's full time occupation. Since it's not a formalized job function, centers may adopted an ad hoc approach based on immediate need and continue that process. For example, some ASCs use spreadsheets to track products and expenses simply because it's how things were done in the past. The problem with manual inventory management systems is that they can be inconsistent or poorly documented which reduces staff productivity as people search for documentation to reconcile price differences between the purchase order and the invoice, or wait for purchasing information to be scanned or faxed. Not only that, if data is being entered by hand it's a given that mistakes will occur.  

A surprising result of a Provista survey conducted in late 2011 was that a slight majority of ASC manager respondents, about 53 percent, still use a paper system to manage their materials inventory. Another 23 percent use a spreadsheet to track purchases, and 18 percent use their distributor's ordering platform to manage purchasing. Fewer than half use inventory management software, most of which are integrated with their practice management or electronic medical record systems.

So why make the switch? Here are five ways an inventory management system can help ASCs achieve a more efficient supply chain:

1. Simplifies the ordering process.
An automated system eliminates time-consuming paper processing and provides easy-to-use applications that foresee supply thresholds and automatically prepares re-orders. This saves staff a great deal of time identifying what materials your center is running low on and filling out reorder forms. Another pitfall of using a piecemeal approach of tracking supplies is that purchases may be duplicated in different systems potentially resulting in too much of one product or another.

2. Reconciles cost paid with contract price.
No more guessing about whether you are over-paying for a specific product. Many inventory management systems automatically generate reports and easy-to-use dashboards that provide instant information on price reconciliation information so you can easily monitor pricing consistency across multiple locations.

3. Centralizes purchasing for multiple locations. ASCs with multiple locations enjoy the added value of a centralized system that aggregates supply purchases to achieve best tier pricing. The system can also direct delivery of ordered supplies to the correct location so that you're not paying additional shipping or delivery charges to distribute materials to different sites.

4. Establishes a formulary.
Utilizing an inventory management system's infrastructure, you can create a product formulary, to improve the ASC's ability to monitor adherence to contract purchases and identify costly variances for follow-up and resolution. Not having a centralized, consistent source of information is not only inefficient but can also lead to overpayment and missed opportunities for quantity discounts.

5. Provides a complete purchasing solution – not just medical-surgical supplies.
An inventory management system can provide the same efficiencies regardless of the product or supply type. Cumulatively, this saves a lot of time and reduces waste and overpayment.

Using a comprehensive inventory management system can benefit ASCs by providing clear insight into actual usage and costs and by ensuring that operators are not overpaying for goods and services. Implementing an inventory management system will help ASC leaders achieve their overall business goals of reduced operating costs and improved performance. At the end of the day, ASCs that are run efficiently are better positioned to grow and serve their patients.

Jon Pruitt is the vice president of procurement solutions at Provista, LLC, a leading supply chain improvement company.

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