Due to increasingly limited budgets and mounting pressures to reduce healthcare costs, it's more important than ever for hospital executives to identify supply chain inefficiencies. Not only that, they need to correct them immediately to maximize the amount of resources dedicated to improving the quality of patient care. Today's hospitals are employing a number of creative strategies to promote supply chain efficiency and advance quality care.
Medical Device Solutions
One possible solution is evaluating responsible medical device strategies. One medical device solution that offers immediate cost savings with no capital investment is the purchase of reprocessed single-use devices (SUDs). Reprocessing programs are employed by more than 50 percent of U.S. hospitals and all of the U.S. News & World Report "Honor Roll" hospitals. Reprocessed devices can be solutions for addressing medical, economic and environmental responsibilities without compromising safety or efficacy.
Hospitals can expect to pay about 50 percent less for a reprocessed medical device vs. what they would pay for the same device labeled as "single-use." By implementing reprocessing programs, hospital administrators and supply chain managers save an average of 50 percent of the purchase price for each device, and also eliminate special handling and waste management costs that would be incurred if the device were discarded into the waste stream without further re-use.
The cost savings add up quickly, resulting in a more efficient supply chain for the hospital. According to the Association for Medical Device Reprocessors, if just one or two percent of all medical devices labeled by the manufacturer as single-use were reprocessed, the healthcare industry would save almost $2 billion every year.
Reprocessing allows hospitals to deploy resources to enhance patient care through quality initiatives. Each hospital can decide where to re-direct their cost savings based on greatest needs, which could include hiring staff or purchasing equipment. For some hospitals, cost savings from reprocessing can make the difference between hiring and firing a nurse.
In addition to direct cost-savings, some hospitals are experiencing an unexpected benefit from purchasing reprocessed devices. They are using the lower-cost devices as leverage when negotiating the price of single-use devices with OEMs.
Reprocessing programs can help hospitals see green in more ways than one. While positively impacting the bottom line, reprocessing programs also divert waste and support sustainability initiatives within facilities.
Let's use the OR as an example. It is estimated that the OR generates 20 to 30 percent of a facility's waste. Much of that waste is disposed of as regulated medical waste, which costs 10 to 15 times more to dispose than regular waste. Today, reprocessing is one of the most significant ways that operating rooms can reduce their environmental footprint. And while many sustainability initiatives can be costly, reprocessing saves money while improving environmental responsibility.
In addition to device costs, another issue facing today's healthcare supply chain is the effect of inconsistent data. Specifically, poor data impacts patient safety when the supply chain fails to deliver the right medical product to the right patient at the right time.
Supply chain integrity can be improved by implementing industry-wide data standards such as the GS1 system of standards, which includes Global Location Numbers, Global Trade Item Numbers and the Global Data Synchronization Network. The GS1 system enables accurate identification of medical products and locations, as well as continuous, automatic updates and synchronizing of standardized product information across all supply chain partners.
Let's focus on Global Location Numbers (GLNs). Each GLN identifier is a unique, 13-digit number for a specific location. Implementing GLN enables providers to replace the numerous custom account numbers for each location with one unique number (GLN) for each location. This simplifies the exchange of supply chain information and provides business partners with the opportunity to manage orders, shipping locations and payments more effectively. In other words, suppliers, vendors, distributors and hospitals executives all speak the same language when these standards are used, resulting in improved healthcare safety and efficiency with more effective traceability and improved order, invoice and inventory management capabilities.
Case in Point
Ascent, a division of Stryker Corp. and the largest manufacturer of reprocessed SUDs in the U.S., recently partnered with an early-adopter healthcare system to discover and document the necessary steps for GLN implementation. The customer was a physician-led healthcare system based in the U.S. The ultimate goal was to help the hospital standardize the purchasing process while configuring the system for inventory preference to maximize supply chain savings.
Ascent partnered with the hospital on a pilot to determine whether electronic transmissions were necessary to both utilize and benefit from GLN standards. The companies wanted to demonstrate that the standards could be implemented by a wider range of hospital systems, not just those using electronic data interchange.
The pilot showed that GS1 standards can improve the supply chain regardless of the methods being utilized to transmit. Whether your organization utilizes manual, fax or e-commerce processes, each of them can accommodate the GS1 standards and ultimately yield a more accurate, reliable, efficient and effective supply chain.
By investing the time and resources to improve the accuracy of the data utilizing the standards, the hospital's supply chain has been improved. The hospital wasted less time and fewer resources because there was no need to handle multiple data systems for medical devices. Ultimately, the GS1 system allows the hospital to improve patient care because those additional resources can be redirected and new efficiencies put into place.
By end of first quarter 2011, the hospital plans to be using integrated GLN transactions in over 35 percent of its purchase orders. This number will grow dramatically as more of the hospital's vendors find value in standardization.
Benefits of Standardization
Overall, the adoption of GLNs, GTINs and other GS1 standards will improve the safety and efficiency of healthcare with more effective traceability and reduced errors through verification. The standards also will reduce waste and cost within the entire supply chain, ensuring that the right product gets to the right place at the right time.
Specifically, synchronized product and location standards will provide increased order and invoice efficiencies, as well as improved inventory management capabilities. Finally, there will be regulatory benefits from medical device identification and efficient traceability. As more hospitals and providers adopt GS1 standards, these efforts will ensure quality care and patient safety.
Will Probst is the senior director of supply chain services for Ascent and is an APICS CSCSP Certified Supply Chain Professional.