How ASCs can eliminate lurking OR inefficiencies to drive down costs

The average ASC spends a whopping $230,000 on supplies and keeps $100,000 to $120,000 of inventory on hand per surgical suite. Having so much cash tied up in inventory is presenting new challenges for ASCs as they deal with external financial pressures, such as receiving lower reimbursements than hospital outpatient departments.

Supply costs can consume 17 to 25 percent of an ASC's net revenue. While grappling with these expenses, ASCs must maintain high quality service and low costs as they prepare for value-based payment models. Focusing on operating room supply management is a prime way to rein in expenditure.1

During a May 17 webinar hosted by Becker's ASC Review and sponsored by Cardinal Health, Marvella Thomas, MSN, RN, a senior consultant for clinical operations in Cardinal Health's ambulatory division, discussed challenges ASCs face when looking to cut supply chain waste in the OR and various ways to overcome these challenges.

Identify barriers to efficiency and benchmark costs

Ms. Thomas explored supply chain management challenges ranging from the diversity of procedures provided in an ASC to dealing with physician preferences.

The traditional practice of stocking "just-in-case" inventory — keeping supplies on hand out of fear of not having something the surgeon might request — presents a major barrier to efficiency. These supplies often sit unused on the shelf until they expire, creating waste.

On top of that, ASCs struggle with costly product duplication and meeting physician demand for preference items and the latest technology.

"There's not a day that goes by without some new and better product being introduced into your OR," Ms. Thomas said. "Rarely, if ever, is there clinical evidence to prove that this new widget improves patient outcomes. And frequently, when the new widget arrives, the old one never leaves."

The same products can often be found in seven-plus locations, including surgical suites, specialty carts and case carts, and nurses' locker rooms. Duplication frequently occurs in suture inventory, according to Ms. Thomas; the same suture and needle may be stocked in 18-, 24- and 36-inch lengths. She pointed to gloves as another likely source of supply chain waste.

ASCs can take better control of OR inventory with a few key strategies. The first step is informing stakeholders about the actual cost of supplies, product duplication, variations in procedure cost and the cost of excess inventory.

To grab physicians' attention, centers can benchmark costs per procedure. For nurses, realizing what supplies actually cost can have a significant impact on behavior. One facility Cardinal Health observed saved over $21,000 after the number and cost of towels in custom packs was written on the schedule, spurring a competition to see how many towels were actually needed to support clinical needs, according to Ms. Thomas.

Consolidate and control product flow

Once stakeholders are invested, supply chain leaders can begin consolidating vendors and products. Consolidating can be as simple as moving from three vendors to one or reducing the number of OR locations where items are stocked, according to Ms. Thomas. A simple yet effective way to consolidate is in non-physician commodity products, such as soaps and hand sanitizers.

ASCs should also ensure the right products are used for the right task. Ms. Thomas recalled a facility that was opening 12 surgical gowns to elevate a knee for a surgeon during knee procedures, costing about $50 per procedure compared to only about $15 if towels were used instead.

ASC supply chain leaders can also use standardization to reduce costs, again starting with non-physician commodity products. This could involve reducing the number of OR locations where individual products are stored or combining individually pulled products into procedure specific kits or packs.

"You need to make sure you're working with vendors to identify [consignment] opportunities for those high-cost products such as orthopedic and spine implants [and] lenses, and see if you can include the instrumentation that's needed for these implants," Ms. Thomas said.

Instituting processes to control new product flow and vendor access in the OR is another way to significantly reduce waste and needless costs, Ms. Thomas said. This method requires developing and implementing a policy on new product entry, forming a committee to oversee new product requests and controlling vendor access to staff.

Take the first step

"To get where you want to go, you have to know where you are today," Ms. Thomas said.

ASCs can take the first step toward effective OR supply chain management by establishing a baseline goal. This could be to reduce inventory dollars, SKUs, cost per procedure or overall supply spend. After making that determination, supply chain managers should devise an action plan, assemble a team of stakeholders to determine appropriate solutions and finally, put these strategies into action.

To learn more about OR supply chain inventory management, listen to the webinar here. To learn more about Cardinal Health, click here.

[1] Source: Becker's ASC Review

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