A Mid-size Hospital Raises Periop Supplies to PAR Level
Realizing cost efficiencies and right-sized inventory through supply optimizations and LUM delivery
The organization
Mid-size stand-alone hospital with 19 ORs and 12,300 surgeries per year
The challenge
No systematic approach to perioperative supply management
The outcome
Established PAR levels and analyzed data to set up LUM periop supply delivery
A PAR level approach to maintaining hospital supplies is considered industry best practice.
What happens when a hospital has no systematic approach to perioperative supply chain management?
It’s hard enough as a mid-size stand-alone hospital to ensure the right surgical supplies are always on hand. Resources are lacking, technology is behind and surgical schedules vary.
“Since the pandemic, there’s been a bigger focus on surgical supply chain management,” says Jon Wekerle, Medline vice president of national field sales, perioperative. “If you don’t have a systematic approach in place, you’re potentially looking at inefficiencies, increased costs, risks to patient care and financial losses.”
Here’s how a hospital in the West partnered with Medline to get their periop supply inventory under control.
CHALLENGE
Lack of PAR levels can result in supply waste
What does it mean to have no periop supply management system in place? For this hospital:
- No PAR levels established: Periodic automatic replenishment (PAR) levels provide guidelines for maintaining appropriate stock levels of supplies. Without them, it’s challenging to ensure you have enough of the right supplies when needed, potentially leading to stockouts or overstocking.
- Overflowing bins: Excess inventory can lead to difficulties in locating specific items, increased risk of items expiring and increased storage costs. It also makes it harder to keep track of what is available and what needs to be reordered.
- Lack of storage space: When storage space is limited, it becomes challenging to organize supplies efficiently, increasing the risk of disorganization, damage and expired items. It can also lead to clutter, making it difficult for staff to locate necessary supplies quickly.
- Inaccurate item masters: An inaccurate master file can lead to incorrect orders, delays in restocking and difficulties in tracking supply usage. Accurate item masters are essential for proper supply chain management, as they serve as a reference for item details, including pricing, suppliers and usage history.
- High-value loss on expired items: Allowing items to expire represents a significant financial loss. High-value items, such as surgical implants or devices, can be especially costly when they expire. Proper inventory management, including tracking expiration dates and rotation of stock, is crucial to avoid such losses.
- No bin locations on preference cards: Preference cards are used to streamline surgical procedures by specifying the supplies needed for each case. Including bin locations on preference cards is important for efficient case picking. Without bin locations, new staff may spend extra time searching for supplies, leading to increased case pick time and mis-picks.
It was time for Medline’s supply chain experts to take a closer look at everything. And we do mean “everything.”
“The hospital’s supply chain leaders lacked documentation and thought they were wasting about $100,000 a year. It was actually closer to $500,000 in wasted supplies annually.”
Jon Wekerle
Medline Vice President of National Field Sales, Perioperative
ACTION
Capture data to launch cost-containment measures
Taking a look at everything is done through a perioperative walkthrough to gain understanding of the current supply flow from dock to point of use in the operating rooms.
Medline sent an eight-person team for one week to capture the unique device identifier (UDI) barcodes on all surgical supplies in six OR cores and sterile processing departments. They used this data to create an item master and identify expired items.
Using scanning technology, the team:
- Scanned 7,147 items
- Identified 2,507 SKUs
- Identified 145 expired items and 324 expiring in the next 60 days
The hospital’s supply chain leaders lacked documentation and thought they were wasting about $100,000 a year. It was actually closer to $500,000 in wasted supplies annually.
OUTCOME
Using optimized PAR levels and LUM supply delivery contains costs and right-sizes inventory
After each item was scanned, perioperative supply chain leaders used data analysis to:
- Set up new PAR locations and establish PAR levels. PAR locations are designated points in an organization’s inventory management system where inventory levels are carefully monitored, and replenishment orders are automatically triggered when inventory falls below predefined PAR levels. Their primary purpose is to optimize inventory control, improve efficiency, reduce costs and ensure a consistent and reliable supply of essential items.
- Employ new item master dashboard to clearly identify what items are set to expire in 30, 60 and 90 days, enabling better monitoring of these supplies.
Going forward, the hospital’s supply chain leaders will use the data to:
- Create ship-to and sort codes for lowest unit of measure (LUM) to the OR supply delivery
- Redesign the central sterile core to right-size inventory and drive efficient case picking with supplies clinically zoned and organized, color coded by specialty and new bin location to update on preference cards.
“Using the lowest unit of measure approach enables customers to order the quantity they need versus what’s available,” Wekerle says. “When you have to order supplies in bulk, you fill your bins and storage areas with too large a volume, raising the risk for outdates. Having the option to order in lowest unit of measure provides you with better space utilization and lower expiration risk.”
For example, if a customer needs only two items, they still have to buy a case of 30. Then they have to sit on 28 and remember to use them before reordering. That’s spending more money and taking up more space. By monitoring and restocking supplies at the lowest unit of measure, supply chain leaders can ensure they have just enough on hand without overstocking or running out of critical items.
Per Wekerle, “You then have an efficient, cost-effective supply chain workflow.”
