Supply Chain Management Inventory Control

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The Basics

ASCs 2010 Conference, May 19-22, 2010

Supply Chain Management

Inventory Control

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The Basics of Supply Chain and

Inventory Management

• Integration • Control • Strategic Focus • Supportive Structure • Empowerment • Physician Support • Consistency • Skill Set • Organization

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Integration

The supply chain can no longer be viewed as a “back dock” support service that provides products and services

required by clinical staff. The supply chain must

have appropriate

integration with clinical systems, revenue cycle, IT and clinical

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Integration

• Weekly Meetings with Director of Nursing,

Administrator, Business Office Manager

• Staff Meetings

• “How much does this cost?”

• Reporting

• Education

• Do your employees know that materials

management can exceed 35% of your operating

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Control

• Who is ordering supplies and signing contracts?

• All GPO relationships, inventory management, purchasing, vendor relationships and contracts, along with financial and inventory reporting should funnel thru your organizations supply chain.

• Materials Managers must play an integral part in an organizations annual budget process.

• Utilize your GPO budget impact projections and pharmacy drug price forecast.

• Financial Statements

• Read and understand your impact on monthly statements

• Revenue Cycle

• Understand the reimbursement for each case, specifically implant intensive procedures.

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Strategic Focus

• Supply Chain management should focus on total impact of care, not just cost. The strategic value should affect both the patient outcome and the cost of care.

• Spend time in the OR

• Materials Managers should review all clinical benchmark reports

• Focus on procedure specific outcome indicators for quality, risk and safety.

• Learn the differences in Anesthesia, Pre Op and PACU medications and their affect on clinical outcomes.

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Supportive Structure

• Maximize your GPO contracts

• Have 1 primary and 1 secondary GPO • Have a market basket run annually

• Take advantage of all rebate opportunities

Position yourself to take advantage of

supply chain opportunities.

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Supportive Structure

• Regional Contracting • Service Contracts • Reprocessing • Office Supplies • Shredding Companies • Floral Delivery • Foodservice

• Fully integrate your Information Management System

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Empowerment

The Basement or the Broom Closet

The physical location of the materials manager should be positioned to enforce central

purchasing, improve inventory management and to aid in the redesign of logistics and

procedures across the organization.

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Empowerment

• Solutions for space restriction:

• Daily transaction

meetings with Business Office Manager/Accounts Payable to review

disputed invoices – price changes

• Weekly meetings with Administrator & DON

Ideally, the materials office should be in close proximity

to the Business Office Manger or Accounts Payable

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Physician Support

• You must pick your champion

• Administration and DON are critical to this process • Provide proper and accurate data and metrics

• Continually increase awareness of supply issues and strategic importance

• Staff meetings • Board meeting

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Consistency

• Accurate Reporting of supply

costs, variations and price increase/decrease must be reviewed monthly

• Case costing reports, both supply usage and

revenue/cost reports must be run quarterly

• Semi annual inventory value reports should be reviewed

• Materials Managers must engage with their peers as a unified industry in order to have a strong voice when engaging manufacturers. • ASC Foundation

benchmarking

• Your Management Groups benchmarking

• Benchmark within your facility

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THE NEW SKILL SET

With the ever changing landscape of healthcare and challenges with reimbursement, materials managers can no longer focus solely on processing requisitions, placing orders and stocking shelves. In order to

move towards a focused strategic outcome, materials managers need a new skill set.

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Analytic Skills

Evaluate Spend History and Cost Benefit

20204 IV ADMIN SET PRIMARY *NF1251 CS/50 (OLD# NF1250) 01/01/09 – 01/01/10

303639 B BRAUN MEDICAL NF1251

Vendor Total: $5,600.43 Contract MS50608

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Analytical Skills

Average of Contribution Margin2 Primary Payer

Code Procedure LS MCR RR MDCR

11423 EXCISION, BENIGN LESION INCLUDING MARGINS, EXCEPT SKIN

TAG (UNLES -$193.95

20552 INJECTION(S); SINGLE OR MULTIPLE TRIGGER POINT(S), ONE

OR TWO MUS -$7.09

23412 REPAIR OF RUPTURED MUSCULOTENDINOUS CUFF (EG,

ROTATOR CUFF) OPEN; -$699.91 25605 CLOSED TREATMENT OF

DISTAL RADIAL FRACTURE (EG,

COLLES OR SMITH T -$127.18

29870 ARTHROSCOPY, KNEE, DIAGNOSTIC, WITH OR WITHOUT

SYNOVIAL BIOPSY (S -$49.43 62311 INJECTION, SINGLE (NOT VIA

INDWELLING CATHETER), NOT

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Analytical Skills

Code Procedure Count of Code Procedure Sum of Contribution Margin Average of Contribution Margin

29881 ARTHROSCOPY, KNEE, SURGICAL; WITH MENISCECTOMY

(MEDIAL OR LATERAL 49 95,913 1,957 62311 INJECTION, SINGLE (NOT VIA

INDWELLING CATHETER), NOT

INCLUDING NE 73 23,607 323

45385 COLONOSCOPY, FLEXIBLE, PROXIMAL TO SPLENIC FLEXURE;

WITH REMOVAL 14 15,151 1,082 45380 COLONOSCOPY, FLEXIBLE,

PROXIMAL TO SPLENIC FLEXURE;

WITH BIOPSY, 32 14,649 458

26989 UNLISTED PROCEDURE,

HANDS OR FINGERS91665) 1 11,924 11,924 20680 REMOVAL OF IMPLANT;

DEEP (EG, BURIED WIRE, PIN,

SCREW, METAL BAND 6 11,715 1,952 63030 LAMINOTOMY

(HEMILAMINECTOMY), WITH DECOMPRESSION OF NERVE

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Project Management

Experience

• Leverage cross functional expertise from physicians, clinical staff, finance and administration to reduce

cost while improving patient care.

• Develop a case study on different methods and products (implants and

supplies) for Hernia Repairs and their affect on financial and patient care.

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Facilitation Skills

The materials manager must posses the professional skills to communicate effectively across the organization.

The materials manager must posses

facilitation skills to ensure that different points of view are considered when

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The New Skillset

• Microsoft Excel • Amerinet Inquisit • ASC Association • GPO publications • Professional Society (CPM, HCPM)

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Different Theories of Supply Chain

• Just In Time Inventory

• The process of monitoring inventory in such a manner as to minimize cost associated with inventory control and maintenance.

A just in time inventory strategy can significantly cut the operational expenses of a business in regards to the

amount of inventory that must be stored at any one time and the amount of taxes that must be paid on larger

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Just In Time Inventory

• You MUST have a solid understanding of your

inventory needs and the amount of time in which shipping and delivery can be consistently met.

• This process can only be managed if a current and accurate data base is maintained.

• You must negotiate a minimum order charge with your distributor/manufacturer.

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Consignment Inventory

Management Solution

• Beyond Implants – distribution is now offering supplies on consignment.

• Reduces operational cost. • Start with custom packs

• You must be able to accurately account for usage. • BOM/AP involvement

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Standard Supply Chain

This can be very successful for organization of inventory, maximization of GPO contracts, and accurate database maintenance. The

enhancement of technology in IS systems, EDI order capability and barcode technology has greatly increased the efficiency of supply chain in ASC’s.

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Managing your Database

Inventory No Inventory Description Vendor Name Vendor Item No Vendor UOM Vendor Conversion Factor Vendor Cost Contract No Contract

Exp Date Manufacturer

Manufacturer No Vendor No Expense Ledger No 30120 LINER SUCTION CANNISTER 1500CC *65651-515 CS/100* CARDINAL

HEALTH* 65651-515 CS 100 124.36 MS50392 T1 12/31/2009 CARDINAL 65651-515 CARDINA 50100-00

37006 MASK ANESTHESIA ADLT LG SZ 6 *DYNJAAMASK6 CS/20*** MEDLINE INDUSTRIES* DYNJAA

MASK6 CS 20 26.8 MS60401-T1 12/31/2009 MEDLINE DYNJAAMASK6 MEDLINE 50100-00

37024 SCISSOR POTTS TENOTOMY CURVED 6" *CH5675*** CARDINAL

HEALTH* CH5675 EA 1 60.01 MS80832 7/31/2011 V.MUELLER CH5675 CARDINA 50100-01

37031 KNIFE SURG HDL#3 METRIC SCALE 5" *SU1403-001*** CARDINAL HEALTH*

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Managing Your Database

Case # Patient Name Doctor Date CPT Code Code Procedure

Clinical Labor Minutes Primary Payer Net Revenue ($) Procedure Supplies 8454 BALDWIN, C NALQASSEM 07/01/09 45380

45380 COLONOSCOPY, FLEXIBLE, PROXIMAL TO SPLENIC

FLEXURE; WITH BIOPSY, 380 MCR 375 17 8456 GILLIAM, L NALQASSEM 07/01/09 45380

FLEXURE; WITH BIOPSY, 340 MCR 560 37 8458 MELENDREZ, D NALQASSEM 07/01/09 45380

FLEXURE; WITH BIOPSY, 310 LL760 629 17 8436 JONES, E NALQASSEM 07/01/09 45385

FLEXURE; WITH REMOVAL 345 MCR 563 17 8406 COX, J NALQASSEM 07/01/09 G0121

G0121 COLORECTAL CANCER SCREENING; COLONOSCOPY ON

INDIVIDUAL NOT MEETIN 315 MCR 731 37 8415 MARRUJO, M NALQASSEM 07/01/09 G0121

INDIVIDUAL NOT MEETIN 240 MCR 356 17 8442 LUNCEFORD, G NALQASSEM 07/01/09 G0121

INDIVIDUAL NOT MEETIN 270 MCR 356 17 8473 SANDOVAL, R NALQASSEM 07/01/09 43239

43239 UPPER GASTROINTESTINAL ENDOSCOPY INCLUDING

ESOPHAGUS, STOMACH, AN 210 BCBS27630 1,182 36 8486 NICHOLS, R NALQASSEM 07/01/09 43239

43239 UPPER GASTROINTESTINAL ENDOSCOPY INCLUDING

ESOPHAGUS, STOMACH, AN 175 LL760 814 36 8482 BURCH, S TFROST 07/01/09 31536

31536 LARYNGOSCOPY, DIRECT, OPERATIVE, WITH BIOPSY;

WITH OPERATING MICR 270 BCBS27630 1,352 60 8475 REESE, S TFROST 07/01/09 30140

30140 SUBMUCOUS RESECTION INFERIOR TURBINATE,

PARTIAL OR COMPLETE, ANY 320 TRC 862 50 8477 KNOX, D TFROST 07/01/09 30140

30140 SUBMUCOUS RESECTION INFERIOR TURBINATE,

PARTIAL OR COMPLETE, ANY 355 TRC 1,440 52 8467 RUIZ, R TFROST 07/01/09 42820

42820 TONSILLECTOMY AND ADENOIDECTOMY; YOUNGER

THAN AGE 12) 330 LS 480 68 8468 TORRES, F TFROST 07/01/09 42820

42820 TONSILLECTOMY AND ADENOIDECTOMY; YOUNGER

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Thank You

Amy Gagliardi, Corporate Purchasing Director Phone: 708-492-0531