Improving ASC inventory management: 3 initial steps to take

With supply costs as one of the two largest expenses for ASCs (the other being staffing), it is imperative for surgery centers to make improving inventory management an ongoing priority.

To be successful in today's ever-changing, ever-challenging healthcare environment, ASCs must run a lean, efficient operation, and that extends to inventory management.

When inventory is poorly managed, a number of problems can occur, which include over-purchasing supplies, letting supplies expire, losing supplies and purchasing the wrong supplies, all of which will negatively impact the bottom line. On the other hand, an ASC with a well-managed inventory can reduce their costs and run a more efficient operation.

A well-managed inventory can help reduce case delays and postponements by ensuring the correct amount of supplies are available on the day of surgery. In addition, storage can be organized effectively and more accurate purchase orders can be made, reducing the need to discard expired supplies. Just increasing the number of "inventory turns" (the number of times an organization goes through its average inventory) by one in a year can save an ASC a substantial amount of money.

Fortunately for ASCs, there are electronic solutions that can help achieve more effective inventory management. But before the benefits of these solutions can be realized, an ASC must make a coordinated effort to prepare for updates to their inventory management. The number of supply items in an ASC makes the old adage of "garbage in, garbage out" a substantial problem if proper implementation of a computerized inventory system is not followed.

Here are three critical steps any ASC can take to either prep for electronic inventory management or improve their inventory process.

1. Identify stakeholders. While inventory management may seem like the responsibility of the materials managers, it is actually the responsibility of everyone in the ASC. As such, it is imperative for an ASC to identify and involve anyone who has contact with the ASC's inventory.

This includes staff members who are involved in:

• ordering supplies;
• stocking supplies;
• choosing supplies for a case;
• building physician and procedure preference cards, which typically include supplies and devices;
• scheduling cases and updating medical records, as devices used in a case are noted; and,
• coding and billing, as the use of certain supplies may need to be coded and billed for.

It should also include physicians, as physician leadership is critical to supply consolidation efforts. Remember to involve at least one physician from each specialty in your ASC.

2. Collaborate on inventory management protocol. Typically, ASCs allow the materials manager to establish the inventory management protocol; however, this approach can be problematic. If the protocol is not understood by other staff members, locating supplies in an efficient manner will be difficult for anyone other than the materials manager and even more difficult when the materials manager is unavailable.

Therefore, it is critical for the inventory management protocol to be developed through collaboration. Get together with the stakeholders so you can establish rules and processes for ordering new items, categorizing items, tracking expirations, identifying what general ledger account items should be tied to supply items for easy reconciliation with accounts payable systems, noting whether a supply is billable or not, and addressing any other questions essential for effective management.

While the materials manager should put together the initial protocol, the draft needs to be reviewed, discussed and, if necessary, revised so the protocol is understood and accepted (and ultimately followed) by all stakeholders.

3. Develop a common language. One of the biggest obstacles to effective inventory management is the lack of common language to describe supplies and devices. For example, if a circulating nurse uses a different term for an item than the term provided by a vendor and used by a materials manager, the nurse may believe the ASC is out of stock when, in fact, it is stocked under a different name. This miscommunication can result in ordering unnecessary supplies.

To avoid the chance for such confusion, make sure the language used to describe supplies is a regular topic of conversation between stakeholders. It is best to never assume a supply will be described the same way by everyone.

Conclusion: Make supplies a priority
With supplies and devices typically representing upwards of 25% of net revenue1, ASCs must give inventory management the attention it deserves. By treating inventory management as a global responsibility and not just the responsibility of materials management, ASCs will be able to use their investment in inventory management technology to further support the management infrastructure that is already established and more easily identify opportunities for additional cost savings and improved efficiencies.

Rhonda Hixson is a principle solution architect for AmkaiSolutions and Surgical Information Systems. Rhonda has more than 20 years of experience in the ASC industry designing and implementing office solutions specifically engineered for the ASC environment.

"Operational Benchmarks: Ambulatory Surgery Centers," Avanza Healthcare Strategies, accessed March 8, 2016, http://ow.ly/ZcS8o

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