For some hospital supply chain teams, working with the Operating Room or Surgical Services department can be a chore or depending on personalities, a necessary evil. But for one Midwestern multi-hospital system, it actually represents a mission, and the feeling is mutual between the two departmental teams.
Together, they digitally transformed the OR and procedural area supply chain inventory processes using industry best practices and focusing on improving clinical workflow.
“While there are many collaborations in the healthcare setting, one of the most important to the success of our department is the relationship with supply chain,” said one OR director who declined to be identified, along with the naming of her organization. “As one of the larger departments within [the hospital], we fully rely on the supply chain team to ensure we have the adequate supplies needed to facilitate procedures.
“In my tenure [here], we have encountered at least three different once-in-a-lifetime disasters, all of which greatly impacted our department, as well as the supply chain field,” the OR director continued. “Through each problem, the supply chain team walked together with us to identify solutions, access products, communicate changes, and ultimately allow us to continue delivering exceptional patient care. It is evident that customer service is a top priority for this team, and they make our department and [the organization] overall better.”
How did Supply Chain help the OR?
They established a lean concept representing the process of managing daily improvement within and between either department. They review goals and metrics, identify challenges, and generate solutions together as part of a culture of continuous improvement, creativity, and innovation to develop, engage, and empower team members.
They also created dashboards depicting data from multiple sources, including the electronic medical records system (EMR), materials management information system (MMIS), enterprise resource planning system (ERP), and other supply chain automation technology and programs for financial systems. They also implemented a bill-only process and technology to give teams and supply vendor partners visibility into what products are being used, enabling efficient downstream billing.
“Adopting a digital supply chain has enabled [the OR] to pivot away from ‘analysis paralysis,’ giving teams opportunities to solve potential problems proactively,” said the Supply Chain manager. “[The OR] can now work smarter and minimize care costs.”
From these joint efforts, they’ve been able to reduce supply costs per case, inventory on-hand within the OR and procedure rooms, product expiry date on shelves, product waste rate, and billing cycle times, while increasing the charge-to-cost percent ratio.
While the outcomes look fine, achieving the results took time, both indicate.
Of course, not every healthcare organization has or wants to take the time until the clinical, fiscal, and operational pain becomes too great. Further, not every healthcare organization sees its Supply Chain and OR/Surgical Services teams collaborating and working together on a routine basis.
Successful relationships between Supply Chain and OR tend to begin with an intentionally friendly meeting, collaborative ongoing planning, and open communications that spark a quick win, clinical supply chain experts agree. This fluid process develops trust and sows the seeds for longer-term cooperation, they indicate.
How can Supply Chain nurture a collaborative relationship with the OR that nets a quick fiscal and/or operational win – whether it be cost-cutting or revenue-generating exercises akin to that Midwestern facility? Seven experts share their ideas.
Cory Turner, CMRP, senior director, Healthcare Strategy, Tecsys, Inc.
“We are so often working in silos that we can’t see the forest for the trees. Quick wins can sometimes be as simple as getting together in the same room to begin conversations around one another’s processes to find gains. Nurturing these kinds of cross-functional teams can often unearth more long-view optimization opportunities as well. One example could be to introduce a process that monitors expiration dates, since some supply chain management systems don’t track this automatically.
“Product standardization is a fairly reliable exercise to help health systems reduce costs and gain operational efficiency. With access to the right data insights, giving some proper attention to this routine practice can reduce waste and improve supply availability, while enabling supply chain to streamline its operations.
“OR/Surgical Services could consider optimizing preference cards with a data-driven analysis. This would involve using data analytics to analyze the usage and costs of supplies and equipment for specific procedures, and then using this information to optimize the preference cards. This translates into cost savings by reducing the amount of unnecessary or duplicate supplies and equipment being ordered. Additionally, it can also improve the efficiency and quality of care by ensuring that the right supplies and equipment are readily available for each procedure.
“Consider investing time and energy today in order to build your ‘quick win’ engine for years to come. For example, the Sterile Processing and OR departments at a North Dakota hospital embarked on a joint venture to digitize their preference cards so they could leverage data analytics to optimize them on a regular cadence, rooting out inefficiencies each time. This data enabled them to identify and remove duplicate items from preference cards, as well as standardize products across different procedures. Furthermore, this approach helped the hospital improve their inventory management, reduce waste, and enhance the overall patient experience.
“To date, they have seen nearly $4 million in one-time inventory savings and surgical supply optimization across disciplines, and improved the accuracy of their preference cards to over 90%. Add to that, they have recovered countless resource hours in supply chain from resolving the constant flow of unused items.”
Tom Redding, senior managing director, Healthcare Services, St. Onge Co.
Ash Crowe, senior project manager, Healthcare, St. Onge Co.
Steve Suhrheinrich, chief customer officer & co-founder, Curvo Labs
“Finding a quick win in OR/Surgical Services: The concept of a ‘quick win’ is relative, and dependent on the strength of relationships and shared goals and intentions. Let’s assume that the OR/Surgical Services and Supply Chain teams work well together and are eager to collaborate on shared cost-savings initiatives. I recommend focusing on utilization projects where simply sharing historical practice pattern data can shine a light on savings opportunities and bring surgeons along for change.
“Successful use of data and analysis for quick wins: Bone cement utilization in total knee procedures is one example of a relatively quick win. There are at least two ways to look at bone cement utilization: 1. The number of units used per procedure and 2. Antibiotic bone cement versus non-antibiotic bone cement usage per case.
“‘Orthopedic Network News’ [A Curvo Labs-owned newsletter] reports that 45% of total knee cases use only one unit of 40g bone cement per case and 52% of cases use two units. This is equivalent to 1.4 to 1.6 units per case on average. How many units do your surgeons use? Even if your average utilization across the organization is equal to this benchmark, do you have outlier surgeons? The best way to show this practice pattern is through bar- or line-graph visualization. Plot each surgeon on the x-axis and the average units used per case on the y-axis. You can also plot the average cost of bone cement per case using a line graph on a secondary y-axis. You will likely find outliers.
“‘Orthopedic Network News’ also reports that only 25% of total knee replacement procedures use antibiotic bone cement. Antibiotic bone cement costs two to five times the price of non-antibiotic bone cement. There are clinical reasons to use antibiotic bone cement, so you’re not going to debate that. I recommend that you create a visual with the surgeon's name on the x-axis and the number of cases where bone cement is used on the y-axis. Group by antibiotic and non-antibiotic bone cement utilization per case. Use the secondary y-axis to plot the average cost per case of bone cement. Again, you will likely find outliers.
“Use practice patterns to drive conversations: The point of these exercises is to show practice pattern differences between surgeons and let them discuss. Once you feel confident in your data and visualizations, host a meeting with the surgeons to share your findings. With defensible data and good visuals, you won’t need to say much. Just report the facts, which are national benchmarks and your organization's per-surgeon utilization. For the best effect, don’t hide the surgeons’ names on the graph. This strategy has proven to work over and over. I bet you’ll see change and cost savings right away.”
Angie Haggard, CEO, RDA Healthcare
“When organizations are looking for a quick win in the OR, collaborating with Supply Chain is critical. One solution that consistently delivers increased efficiencies and, at times, reduced labor requirements, is a Rapid Improvement Event (RIE). Where there are broken processes across multiple roles and/or groups of people, a Rapid Improvement Event quickly identifies the problem and uses real-time collaboration to identify the solution. An unexpected outcome of RIEs is a higher-performing and more collaborative environment for post-RIE individuals.
“A Rapid Improvement Event is like an archaeological dig — on the surface, it doesn’t appear to be of great value. However, as we have experienced many times before, when you dig into the details and everyone walks through the process together with a common goal, discoveries of hidden treasures abound. Typically, the solution to achieve the improvement is quite simple. One of my favorite examples is a hospital OR that wanted to decrease their OR room turnover time by 20%. RDA facilitated a Rapid Improvement Event that included OR leadership, clinicians, Environmental Services (EVS) and Supply Chain. Over the course of two days, the current flow was mapped and the gaps to close for an optimal future state were defined. In short, there were two root issues causing the repeated OR room turnover delays:
1. Post-case, it was unclear who was to remove the trash from the OR suite. EVS had been told that nurses were to remove the trash. Nurses were waiting on EVS to take out the trash. Solution: It was agreed that EVS would take out the trash moving forward.
2. EVS did not know when an OR suite was ready for cleaning. The intercom system nor the wearable communication devices would always work in the facility. Solution: Supply Chain recommended an interim solution of a walkie-talkie in each OR suite, and one for EVS leads to carry so they could receive communication that an OR suite was ready and send communication once the rooms were completed.
“The result: 21% decrease in OR room turnover time.”
Karen Niven, senior director, Clinical Value Analysis, Premier
“An evidence-based, value-analysis process can balance issues related to quality, patient and staff safety, revenue enhancement, and reimbursement optimization across the care continuum via:
· Appropriate utilization and standardization;
· Pricing optimization;
· Implementation of cost-savings and cost-avoidance initiatives;
· Identification and elimination of waste, redundancy, and inefficiency.
“In short, it enables standardization and reduced supply chain costs without sacrificing quality.
“Premier’s 2022 Value Analysis Guidebook provides the following recommendations to support a lean approach:
· Include all involved team members across departments at the table for discussion for identifying need(s);
· Determine inventory management strategy and supplier capacity;
· Understand clinical requirements, areas of use, and current outcomes;
· Determine the need for process improvement vs. a new product;
· If considering a conversion, evaluate the cost of conversion as part of the total cost of ownership.”
Estucia De Verteuil-Brathwaite, consulting director, Vizient Inc.
“Standardization of medical tape allowed for a reduction in waste and created more efficient and leaner practices. And from a clinical perspective, the single-use rolls (versus the multi-use rolls) improved infection control measures by reducing hospital-acquired infections (HAIs) caused by cross-contamination. This effort generated immediate and long-term savings with reimbursement by reducing the financial impact to the healthcare system’s bottom line.
“Another successful example involved sourcing clinically equivalent equipment covers. The organization achieved the same clinical value and cost-savings by reducing the number of suppliers and reducing product variation and SKUs. This allowed for the establishment of reasonable PAR levels and additional shelf space, a lean process.”
To aid the top revenue-generating department, start early and often
‘There is no small idea that can’t result in large dividends’
Short of the OR/Surgical Services leader directly reaching out to Supply Chain for financial/operational assistance, Supply Chain likely may be recruited through C-suite concerns or may spot economic issues via information systems data triggered by the CFO.
Regardless, should the C-suite — comprising the CEO, CFO, COO, CMO and CNO — discover budgetary issues that can affect the number and quality of healthcare services to be provided to the community, they turn to external consultants and suppliers or to internal consultants and facilitators, which typically involve Supply Chain for project management.
Seven clinical supply- chain experts offer their tips targeting costs.
“Start with lunch. It’s sad to think of the Supply Chain leader wondering if the OR/Surgical Services could use the supply chain’s help. If this relationship hasn’t already been established or it’s not flourishing, it’s time to mend some fences. Start with lunch and get to know your partner on the OR/Surgical-Services team.
“Start with clinical category teams. I’m a big believer in cross-functional teams. This leverages the expertise inside the organization and creates collaboration. Start by setting up a clinical category team with supply chain, informatics, finance, and surgical services participation. Choose one of the highest-profile implant categories like orthopedics, spine, or CRM. Bonus points if you get a physician on this team.
“Bring data and insights. Supply Chain needs to come to these meetings armed with data and insights. Share practice pattern differences and pricing differences. Track and share product and price creep. The clinicians on this team can be your translators to the surgeons. Before you know it, surgeons and the OR/Surgical-Services teams will be coming to Supply Chain for insights and new ideas. You’ll truly be strategic partners, and that’s where the fun is.”
Steve Suhrheinrich, chief customer officer & co-founder, Curvo Labs
“Supply Chain leaders should meet with the OR/Surgical Services leader on a frequent basis to proactively determine the needs and/or potential opportunities. For organizations that have an effective value-analysis structure, the monthly value-analysis meetings are a good forum to uncover the OR pain-points and needs. In addition, this same forum will be a place to not only identify the problem but to identify the solution and track the implementation progress of the solution. Some Supply-Chain leaders proactively schedule a 1:1 monthly meeting with the OR director, even if they do have an effective value-analysis structure.
“A monthly meeting helps to establish and/or maintain lines of proactive two-way communication between the OR and Supply Chain leaders. OR leaders have valuable insights that can benefit Supply Chain (e.g., physician changes, practice changes, forecasted case volumes, etc.). Supply Chain leaders also have valuable insights that benefit OR leadership (e.g., initiative updates, logistics insights, staffing updates, etc.). The OR is the highest revenue-generating department in the hospital. Monthly meetings via value analysis or one-on-one are not only critical, but necessary.
“There are many technology and benchmarking tools that exist to analyze cost, quality, and outcomes, and identify potential opportunities for the OR. If your organization has these tools, great! Review the reports and/or have someone on your team review the reports as they will uncover potential opportunities.
“Look for the low-hanging fruit (e.g., highest-spend, non-contract spend, expired contracts, etc.). Note: Before sharing any data with the OR or clinical leaders, double-check the data to ensure it is accurate! Data can be your best friend or your worst enemy. Once you have verified the accuracy of the data, share the information with OR leadership to initiate opportunity discussions. If your organization does not have these analytics or benchmarking tools (e.g., ECRI), it is worth the investment to evaluate potential analytics and benchmarking technologies.”
Angie Haggard, CEO, RDA Healthcare
“Communication between the departments is a crucial part of any organization’s success. The key is not to wait until there’s a problem, but to proactively establish rapport. Having standing meetings between departmental leadership can foster enough transparency where, when adverse situations arise, there is a culture of collaboration that allows them to more easily identify issues and pivot to make adjustments, resulting in potential savings to the organization. Those savings may surface in contract renewals, new product additions, trunk stock or even where to stage supplies in the OR. There is no small idea that can’t result in large dividends.”
Cory Turner, CMRP, senior director, Healthcare Strategy, Tecsys Inc.
“Supply Chain leaders can assess the inventory replenishment requests for OR/Surgical Services through their ERP system to identify potential improvement opportunities. The potential opportunities could include: Misalignment between demand and available product unit-of-measure, excess order frequency, excess expedited shipping, misalignment of consignment, and bill-only activities versus charged to the patient, and demand with multiple clinically equivalent products. Supply Chain has a bird’s-eye view to understand the transactional activities that occur within the OR/Surgical Services. Supply Chain leaders can create the financial case that existing supply management practices are not working effectively, and build the case to conduct an operational assessment.”
Tom Redding, senior managing director, Healthcare Services, St. Onge Co.
“Supply Chain has so much data they could use to propose a project to OR/SS. Has one service line started using new products or new vendors? If so, is there a possibility to consolidate, to work toward contract compliance, renegotiate contracts or make a bulk buy? Are there products that aren’t being ordered anymore? If so, could they have their PAR levels reduced or be removed entirely, freeing up much needed space?
“There are so many questions that Supply Chain can start to investigate with the data available to them; this preparation before going to the OR/SS allows them to have smarter questions and get more direct assistance from the clinical team.”
Ash Crowe, senior project manager, Healthcare, St. Onge Co.
“Creating a multidisciplinary team of stakeholders, including supply chain, clinical, finance and other individuals – and with strong communication – is key to success. Today, clinicians and supply chain leaders are working more closely across departmental lines to understand the broader impact of opportunities and reduce siloed decision-making.
“As one tangible example, a clinically integrated supply chain team could look at the return on investment (ROI) for the use of corner guards and instrument tip protectors, as a way to reduce rework required if the instrument set is contaminated due to the perforations in blue wrap. While these products move cost from consumable to reusable instrument containers, they can also help reduce overall cost caused by the re-sterilization of instruments, which can lead to delayed procedures and employee rework.
“There is also an opportunity for organizations to complete a value-analysis maturity scoring matrix to determine opportunities for overall enhancements of processes and cost savings.”
Karen Niven, senior director, Clinical Value Analysis, Premier
“Supply Chain plays an integral role in the sourcing of commodities and implants, and acquiring clinical products at a reduced and competitive cost. The Supply-Chain department conducts contract and pricing reviews/audits to ensure suppliers remain current and in compliance with their contract, and thus, avoids price increases, off-contract utilization, and unnecessary spend.
“A clinically integrated supply chain is paramount to achieve optimal quality, operational efficiencies, and cost savings. The expertise of Supply Chain comes into play through management and oversight of spend and budgeting within the OR/Surgical-Services space, as well as in assistance with product standardization and reducing product cost variation. The Supply-Chain leader brings expertise in the following areas:
· Contracting and sourcing. Specifically, Supply Chain’s awareness and understanding of supplier contracting terms and negotiating processes, pricing and acquisition costs, fiscal OR and sourcing pipeline/dashboards/budgets that OR leadership would not necessarily be aware of.
· Supplier partnerships and relationships.
· Technology. Supply chain software interfaces with the OR/Surgical-Services department’s information systems to track, capture, and update pricing, and control purchase orders.”
Olander Pilson, senior consulting director, Vizient
Rick Dana Barlow | Senior Editor
Rick Dana Barlow is Senior Editor for Healthcare Purchasing News, an Endeavor Business Media publication. He can be reached at [email protected].
