Inventory management in the clinical care areas of hospitals is a matter of serious concern. The fact is, even many of the best hospitals do not have accurate, up-to-date data about the supplies they’re buying, using, and storing in operating and emergency rooms, pharmacies, cath labs and other facilities. It’s a costly problem, to be sure. At any given time, the average 350-bed hospital has roughly $2 million in clinical supply inventory in its operating rooms alone. Yet up to 30% of the items – or $450,000 in inventory – may not be in the item master. These items were likely purchased without the benefit of approved contract discounts, which could have reduced the cost by 20% or more. At a time when hospitals are doing everything possible to contain costs, that’s simply wasted money.
The nation’s third largest hospital company, Universal Health Services (UHS), recognized in 2004 that they needed to seek a partner to help them tackle a significant problem with their clinical supply chain process. UHS executive management recognized that they needed to ensure they were consistently purchasing supplies at the best price at all of their facilities, which included 24 acute care hospitals and behavioral health hospitals and ambulatory centers nationwide. Seeking the confidence that their hospitals were charging properly, and also according to Medicare guidelines for all procedures, the UHS executive team made a strategic capital investment in a McKesson materials management system. This system would facilitate consistent utilization reporting and help UHS maximize their purchasing power. However, three years later, only 16 UHS hospitals were live on the new system. Implementation had stagnated due to operational challenges. Frustrated, the UHS executive team feared they would not realize the significant savings and return on investment projected from the capital invested in the system. Facing increasing financial pressure, the team decided to focus on rapidly completing implementation of the materials management system at the remaining eight facilities over the next eight months.
The UHS executive team considered bringing in consultants to oversee the process. Their Group Purchasing Organization (GPO) also offered to provide the service of managing the implementations. Since UHS already relied on the GPO to manage and report on their total supply spending, they seemed a logical choice for this role.
UHS brought in Management Health Solutions (MHS) and MHS proposed deploying a consultative team that would uniquely focus on the clinical supply process management with an in depth appreciation of work flow and clinical processes. After careful consideration, UHS selected MHS to help accelerate the system implementation in the remaining facilities, citing their familiarity with industry best practices “without consultant speak”, deep understanding of item file data flow, and grasp of UHS hospital operational challenges.
“MHS took what had historically been an almost impossible task and broke it down into the simplest elements,” said Tim Weldon, VP of Materials Management for UHS. “They understood the problems we faced and addressed them and then built a rock-solid, 100% defined process that ensures accuracy.
”Today, UHS can accurately measure their supply spend across all but one of their 24 acute care hospitals. In addition, with MHS standardizing the item file, UHS can be confident that they are billing correctly and consistently across facilities according to Medicare guidelines.
“No longer will we have to rely on our GPO to tell us our total supply expenditures,” said Weldon. “We can finally take advantage of the state of the art system we purchased and run internal utilization reports by hospital, procedure, vendor or manufacturer.”
“The thing that impresses me most about MHS is their ability to react,” continued Weldon. “They built a process that ensures accuracy. We have confidence we never had before due in large part to the process MHS put in place.”
UHS is more than satisfied with their choice of MHS.
About Management Health Solutions (MHS):
Management Health Solutions (MHS) is the only provider of full service clinical supply chain services that include clinical inventory valuation, clinical content management and clinical inventory management solutions.. MHS’s services “close the loop” in healthcare systems by linking a hospital’s clinical inventory with its purchasing system data and inventory management processes. By connecting these sources, MHS helps identify the gap in purchasing of medical supplies, and provides analytics to support and drive improvement initiatives. MHS offers the health care industry fast, accurate, reliable, and cost effective clinical supply inventory management services. And with a management team that has over 30 years of experience in the areas of health care supply chain management, materials management and information technology, MHS is a recognized leader in their field.
Since their inception in 1999, MHS has grown from a vision of providing a quality product for healthcare industry inventory services to a full-blown data cleansing and supply chain management company. Born from the desire to supply a quality physical inventory service for ancillary areas and pharmacies in the healthcare industry, MHS first took the material manager's end-of-year inventory nightmare and streamlined the process to provide those managers with a seamless inventory experience. Today, MHS is the recognized solution for major hospitals across the country who are seeking the ability to closely look at their entire supply chain process while reducing their total cost. MHS’s solutions provide these hospitals with a thorough clinical inventory, item master reporting and the data to manage all processes in the clinical supply chain.
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