AUGUST 1999, VOL 70. NO 2 Gruhuni * BWMVI. B y d

Automating the Supply Chain in the OR

he University of Louisville (Ky) Hospital is a 404-bed, level one trauma and teaching cen- ter. It is a regional indigent care facility with a wide variety of surgeons and residents. The facility includes 19 ORs, in which approxi-

mately 9,000 procedures are performed each year- more than 50% of which are unscheduled.

In late 1994, the directors of materials manage- ment of the University of Louisville Hospital and three other metropolitan hospitals were challenged to streamline the supply process of these facilities while reducing costs. After looking at several mod- els, the directors determined that the most advan- tages would come from a closed-inventory system with automated point-of-service technology. With the automated system, facility staff members could keep items locked up and document the time and purpose of their use, achieving tighter security with all supplies.

Until this point, all facility employees could remove supplies from the open shelves as they needed them, and there was no good systematic method to track materials. Items often were lost,

and the materials management departments were required to absorb the costs. A similar scenario was occurring in the ORs, further compounding the problem.

After using the system for a three-month vali- dation process at the University of Louisville Hospital, net costs per patient day decreased by 13.4%. Based on this, a hospitalwide automated supply system was approved.

PUNNING The first step in planning the new system for the

University of Louisville Hospital was to clearly iden- tify the hospital's goals. Operational goals were to

proactively define supply needs, create a mechanism to control stock and non- stock supplies in the same way, capture usage information, and provide surgery department staff members with a mechanism to help manage materials.

Financial goals were to reduce inventory, reduce cost per procedure,

capture usage information and charges, and have the ability to report

At the University of Louisville (Ky) Hospital, staff members from the materials management and surgery departments have worked together to automate the supply chain The goals were to remove supply activities from clinical staff members whenever possible, obtain and apply information for better product ordering and use, reduce personnel in the materials management department, and improve perioperative nurses' ability to obtain supplies-all at a decreased cost to the facility This article describes how, after imple- menting point-of-service technology for all surgical supplies, the facility realized a cost-per-procedure savings of 1 600 and increased satisfaction among staff mernbers in both departments AORN J 7 0 (AUg 1999) 268-276

monthly perpetual inventory. The clinical goal was to reduce the amount of time clinical staff members spent ordering and find- ing supplies and troubleshooting problems.

Data collection. The director of materials management was responsible for the ongoing finan- cial validation of the system. Before implementation, he collect- ed 12 months of data on the supply

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cost for each hospital unit that would be used as a comparison after implementation. He met with the chief financial officer to obtain agreement on data col- lection techniques and determine which statistics would be used as benchmarks.

To be conservative, they decided to use patient days-as opposed to adjusted patient days-as the statistic for inpatient units. To accurately define activities that drive expense, the statistic for the labor and delivery and the emergency departments was visits. For surgical services, which was divided into the main OR, same day surgery unit, postanes- thesia care unit, and anesthesia department, the sta- tistic was number of procedures.

Scope of project. In planning the hospitalwide implementation, the ORs, which would play a large role in the success of the total system, presented an entirely different set of challenges from the rest of the facility. As in most ORs, staff members were used to being self-sufficient with regard to their materials management process-in contrast to the facility’s other departments, which were managed entirely by materials management. Although the central supply department (CSD) typically stocked the ORs with routine products based on an exchange cart system, OR staff members were managing between 80% and 85% of their line items them- selves. Of the more than 4,000 line items in the ORs, only approximately 800 were supplied as routine stock. If point-of-service automation was to be suc- cessful, it had to managed internally by OR staff members and only supported-not managed-by the materials management department.

Preautomation system. Before implementa- tion, the OR exchange cart system for stock items consisted of 14 supply carts that were duplicated and exchanged by the CSD each day. Perioperative nurses ordered nonstock items on an as-needed basis by submitting paper requisitions to the purchasing department for order placement. Stockouts (ie, inability to locate supplies) were a frequent problem that became the norm and created a high level of stress. Although staff members from the materials management and surgery departments had a good relationship, there was little confidence in materials management staff members’ ability to be a resource for the ORs.

Before the automated system, a physical inven- tory was conducted every year that required approx- imately three months of preparation and involved everyone from OR staff members to senior man-

Perioperative nurses

wanted to ensure that any

changes to the system would

support their practice.

agers. To improve this function, it was essential for the new system to provide a perpetual inventory that accurately tracked expense activity and identified opportunities for additional savings based on usage patterns. Tracking monthly inventory levels would allow a better comparison of expenses to procedure volume.

Through the planning process, it became evi- dent that an automated system would provide the tools to address these concerns and meet the facili- ty’s goals. The difficult part was convincing University of Louisville Hospital staff members that the system could be installed without compromising product availability and risking patient care.

Staff member reaction. At first, surgeons resis- ted the automated system based on their concern that it would take too long to obtain supplies. In addition, some surgeons believed they would not be able to procure supplies before surgery. This con- cern necessitated that all surgeons be given access and training to use the system. They also were assured that keys to the towers would be available in case there were technical problems.

Perioperative nurses recognized the need to solve the supply problem but wanted to ensure that any changes would support their practice. They were given the opportunity to help determine the location of items, and backup supplies were made available until they were familiar with the system.

Staff members in the CSD had used automated technology in the medical surgical units; thus, they were familiar with the equipment and able to help with implementation in the surgery department. A materials management staff member acted as the liaison between the CSD and the ORs to coordi- nate inventory and troubleshoot problems as imple- mentation progressed. The director of materials

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The tower doors

unlock &er the user

in and Elects the

ed pair wiring. One console is located in the CSD and is used to print refill lists, notify the department of stockouts, and pass usage information to a data- base for review. This console services all areas except the surgery department and is maintained by the CSD.

The other console is located in the surgery department for exclusive use by OR staff members (Figure 1) . The surgery department console is set up as an entirely separate facility, and OR staff mem- patient name* bers manage their own database with assistance from the materials management department.

The majority of equipment for the surgical con- sole is placed in the core of the surgery department because of the uncertainty of the caseload and the fact that most of the ORs are not procedure-specif- ic. Only two of the nine tower locations are actually in ORs; the remaining towers are placed in various core and recovery areas.

Towers. Each tower has four doors and several shelves and drawers (Figure I). Plastic bins with item labels are placed on each shelf. Small items such as orthopedic and neurologic implants are placed in the drawers. The 19 ORs, including one same day surgery unit, use approximately 72 towers to house between 4,000 and 5,000 line items. There are nine locations for automated towers within the surgery department, and each computer keyboard

supports several towers. Supply towers can be placed convenient- ly by the automated medication system (Figure 2 ) .

Identification codes. Each user has an identification code that allows access to towers that they have been cleared to use. After logging in, the user selects the appropriate patient name, and the tower doors unlock. When the user removes items, he or she pushes the “take” button for each item removed. This tracks inven- tory and sends this information to the console. The patient informa- tion originates from the schedul- ing system and is maintained in the automated system throughout the patient’s surgical experience (ie, the day before the patient’s surgery, the day of surgery, the day after surgery). This allows

management also was available to answer staff members’ questions. Many staff members were not prepared for the magnitude of the job and the per- manence of the process; however, the willingness to find a solution to the hospital’s problems brought everyone together.

DESCRIPTION OF SYSTEM The automated system is made up of two con-

soles that receive information from several towers or cabinets, which house supplies at several loca- tions. The system has a client-server relationship in which each tower operates independently but is con- nected to a console via serial connection over twist-

Figure 1 Each of the depanment‘s 72 towers has four doors and several shelves and drawers. Staff members appreciate the ability to see supplies without having to open the tower doors.

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staff members to obtain supplies for the next day’s procedures and return supplies if not used.

Exclusive technology. To achieve the full benefit of this technology, it must be used exclusively and in its entirety. All items used in the ORs are housed in the automated towers, with the exception of sutures, which are carried on consignment. Non- charge items (eg, tape, needles) are placed on carts or trays, and their containers are kept in the towers. Through this process, these items can be tracked and replenished as they are used.

Figure 2 Placing the supply towers by the automated medication system provides one-stop convenience for staff members.

IMPLEMENTATION During the implementation

phase, perioperative nurses became actively involved in the details. Staff members from the materials manage- ment department took on more of a support role, which was critical to the acceptance of the system by perioperative nurses. Staff members from both departments made a conscious effort to define their roles so that they knew what to expect from each other. This combined effort between departments helped build trust among the disciplines.

As each section of the system was completed, materials management staff members provided backup supplies, which OR staff members kept on hand to ensure that patient service was not inter- rupted. After everyone knew where items were located and were confident that they could gain access to the system, the backup supplies were removed.

Ongoing support. Weekly meetings were held for all staff members, including representatives from clinical nursing, engineering, and information systems. Expectations and problems experienced during each leg of the project were discussed. In one of the first meetings, staff members identified a need for a knowledgeable representative from the system’s manufacturer to be on site throughout the implementation. To address this, a manufacturer representative was appointed to help set up equip- ment, train staff members, troubleshoot problems, answer questions, and attend the weekly meetings.

Definingphases. It was important to define the

phases of the project and transition plans for each phase, The directors decided the first phase would be the orthopedic and neurologic implant area because it had high-dollar inventory, was having problems maintaining supplies, and was used by fewer people-making it easier to train staff mem- bers and fine tune the system. The second phase included the neurologic core, the anesthesia supply core, and several specialty areas. Next, staff mem- bers tackled the main core, which required the largest number of towers.

Nursing role. Several weeks before implemen- tation, the towers were moved to the surgery area. Nurses took responsibility for organizing the sup- plies in a way that was conducive to their routines and schedules. In general, items that were used together were stored together for easy retrieval. After all items were organized to everyone’s satis- faction, the towers were moved to the desired loca- tion, but not turned on or locked. This allowed nurs- es time to become familiar with the location of items and to choose better locations for items if nec- essary. The towers were turned on and locked after staff members were satisfied that all items were appropriately located.

The full installation was complete in three months. Throughout that time, staff member involvement in the placement of supplies was pro- moted. As a result, staff members began to trust the

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system as each section was implemented. The manufacturer representative became involved on a clinical level with nursing staff members, and they trusted her to meet their needs to the best of her abil- ity. Staff members’ growing trust created enthusi- asm for each new section being implemented. By the time the core surgical area was to be implement- ed, staff members were familiar with the system, and nurses from all areas and shifts had contributed to the location of the supplies.

SYSTEM TRAINING The automated software is user-friendly; thus,

staff member training was not difficult. Before implementation, the equipment was placed in the lounge and stocked with candy, providing users with a fun way to practice removing supplies. In addition, one-on-one instruction was offered in all areas as each unit began using the equipment. Interested sur- geons were trained on an individual basis by the coordinator of their areas.

The larger issue involved ensuring that all staff members knew the location of items and were able to find them quickly. Having the cabinets available ahead of time and having several staff members par- ticipate in the organizing of the supplies facilitated this. Accurate labeling and clear doors also helped in locating items. In addition, the towers featured lights that guided staff members to selected items.

CHALLENGES lmplementation of the new system presented

several challenges, which staff members worked diligently to solve.

Staff member acceptance. One of the most dif- ficult hurdles was showing staff members that the technology could be used effectively in the ORs. Nurses and physicians were concerned that the sys- tem might add extra steps to procedures or add time to obtaining supplies. Many nurses disliked the technology and complained to the installation ven- dor that the system would make their routine extremely difficult. The director met this challenge by strongly promoting staff member involvement and by having managers and key individuals support the project and stress the value of the improvement.

Surgeons and anesthesia care providers ulti- mately accepted the system as it proved its reliabil- ity. They came to appreciate its organization and the ability to see supplies through the doors.

Stockout problems. As the project was being

One of the most difficult

hurdles was showing staff

members that the technology

could be used effectively.

finished, staff members discovered an increasing number of stockouts. Nurses were concerned that a problem that they had thought to be improving was now in worse condition than before-threatening the acceptance of the system.

After reviewing the problem, staff members found that as supplies were being eliminated from other locations and stashes were being depleted, the par levels that were originally set needed to be adjusted upward. Staff members solved this prob- lem by keeping in the CSD a backup mobile cart of items that were frequently depleted. The backup cart alleviated anxiety and allowed installation of the rest of the equipment to be completed. In the end, the par levels were reestablished, and the backup cart has not been needed.

Lack of documentation. The trauma one status of the University of Louisville Hospital dictates that a wide variety of implant products be available. As a result, there has been a continuing problem of physicians taking items from the hospital to use at other facilities. These transactions may or may not have been documented. By identifying the other facilities as “patients” in the system, the hospital now can correctly bill these facilities for any sup- plies that are provided by the University of Louisville Hospital, and surgeons can continue bor- rowing items as needed.

More challenges. Other issues that continue to be addressed include procedure cart revisions, item descriptions, and restocking times for the CSD. There is not a standard approach to solving any of these issues. What must constantly be reinforced is the materials management department’s role as a support agent and facilitator and the surgery depart- ment’s ownership of its system. Based on business dynamics, it is unlikely that these issues will be

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permanently resolved, but an approach that proac- tively and routinely addresses them can ensure max- imum system efficiency.

RESULTS

plies could be tracked electronically. Nurses over- whelmingly responded that there is less stress because they know where everything is and that the supplies always will be replenished. Stabilizing sup- plies has brought organization to their days. They are able to view items without opening tower doors,

ing supplies for an emergency, and keeps staff mem- bers from searching for misplaced or lost stickers.

SuppZy ordering. Before the automated system, OR team leaders spent a great amount of time mon- itoring, ordering, and placing charge stickers on all

After the three-month implementation, all sup- supplies. After the installation, these functions became unnecessary. The team leader now can spend more time with patients and with staff mem- ber development. In addition, staff members no longer hoard supplies because they know the items they need will be in one place at all times. Surgery department staff members also now have the ability

to print nonstock “pick” tickets, which are sorted by vendor and used as reorder documents to decrease reordering time.

Table 1 COSl SAWN- Wrm THE AUTOMATED SUPPLY S V m M

1996 to 1997 1997 to 1998 Inventory improvements. Manual inventory counts have been reduced, and the need to Supply costs per procedure $31 9.95 $267.93

Central supply department (CSD) filler rate 95%* CSD distribution full-time equivalents 16.5 Materials management department purchasing full-time equivalents 17

* Percentage is approximate.

and having the towers close to the ORs has saved both time and extra steps. The system also has brought several other solutions.

Back order information. A consistent way to share information about item back orders was devel- oped. When an item is back ordered, staff members attach a gold notification sheet to the supply’s bin, allowing others to immediately see if an item is on back order or to open the tower and read the notice for more detail.

Time-saving kits. Kits were created to help nurses select items for infrequent procedures that require many supplies. When a nurse requests a kit from the tower, the lights on the panel automatical- ly guide the nurse to each item-increasing accura- cy and saving time.

Revised charge system. In the previous system, nurses had to collect charge stickers indicating the names and identification codes of items used. Today, use of the charge stickers has been eliminated, and staff members do not worry about charging for sup- plies. This saves OR time, decreases steps when open-

transport carts has decreased. In 99.4% the past, CSD staff members

counted, filled, and moved 14 10 carts per day for the ORs alone. Now they select and restock items at or below the minimum 14 threshold defined in the system. This has increased staff mem- bers’ job satisfaction by relieving them of the physical strain of

bending to count items and pushing heavy carts throughout the facility.

A perpetual inventory also was established, eliminating the need for yearly counts. In the previ- ous system, this process took nurses approximately 80 hours for orthopedic and neurologic implants alone. In the first 12 months of using the new sys- tem, implant inventory remained flat for the first time in seven years.

Main OR inventory has been segregated from the old system of general patient chargeable and nonchargeable categories to a system of addressing all charges individually by discipline. Facilitywide inventory was reduced by approximately $200,000 in this same period. Through better inventory management, expenses do not reach the peaks and valleys that they did before automation. Table I outlines savings experienced throughout the facility.

By tracking inventory, staff members were able to document a 16% reduction in supply costs per pro- cedure. At the same time, services for patients, peri- operative nurses, and CSD staff members improved.

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SURGERY SUPPLY RBSULTS Total OR costs per procedure decreased from

an average of $3 19.95 during June 1996 to May 1997 to an average of $267.93 from June 1997 to May 1998-a net savings of 16.36%. The supply system was the only significant variable that changed during this period. Previously, the surgery department saw an annual increase in cost per pro- cedure of approximately 2.5% to 3%.

Secure supplies. The CSD filler rate is now more than 99.4%, and there is immediate recogni- tion and resolution of stockout problems. Tower counts are reconciled every other month, and staff members no longer hoard supplies for emergencies. The counts allow staff members to register discrep- ancies by tracking how frequently supplies are removed without a staff person pushing the “take” button on the tower.

The towers keep supplies secure. There is no opportunity for dust to collect on sterile items. Towers can be wiped down with disinfectant and are on wheels to move for cleaning.

More availability. The facility did not experi- ence a decrease in implant expenses from automa- tion. The primary gain here was the ability to locate and track supplies and better manage inventory. Surgeons now request that all supplies, including consignment items, are part of the automated supply system because of better availability.

Physician access. Initially, attending physi- cians and orthopedic residents were permitted access to the system because of their concerns about obtaining supplies. In reality, their need for access to supplies has been infrequent. As the physicians learned to trust the system, resident access has been removed, and attending physician access is planned to be removed in the future.

Reducedpersonnel. As automated towers were installed throughout the hospital, the CSD has been able to decrease its distribution full-time equiva- lents by 39%. The materials management purchas- ing full- time equivalents have decreased by 17%. This was accomplished by attrition. No nursing labor was used to justify savings, and nurses have been able to spend more time on clinical activities as the caseload has increased.

Cooperation. One of the most beneficial advantages of the installation has been how the two departments have pulled together. It has facili- tated communication and awareness of all the steps in the process. Now both departments, which have

Managers must support the

system and give people the

ability to make decisions and

refine the detail of work.

different nomenclatures, can communicate effec- tively by identifying items by their towers, doors, and locations.

KEYS TO SUCCESS Surgery department and CSD staff members

have identified the following keys to the success of implementing an automated supply system.

Encourage mutual respect, good communication, and a willingness to do what is needed. Emphasize good planning. Appoint a system manager to design and improve the system as it is implemented. After starting, keep moving, and do not lose momentum. Remain flexible and remember that nothing is set in stone. Benchmark data to be able to answer the question of what has been accomplished. It is impossible to anticipate everything in the early planning. Have vendor support available to ensure that time frames match the facility’s goals.

- I

Moreover, managers must be actively involved in supporting and giving people in their departments the ability to make decisions and refine the detail of work in their areas.

INPAnENT IMPLEMENTATION As the surgery area was automating its supply

process, the system was being implemented in the inpatient units (ie, medical surgical unit, critical care units). These units were treated as a separate facility with their own set of needs and dedicated resources. This implementation process was entire- ly different from that of the ORs.

Approximately 97% of the inpatient supply items are housed in the CSD and are routine stock.

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The schedule for installing towers and implementa- tion was systematic and followed a defined timetable. Nurses' primary role was to design the layout of the towers according to their work pat- terns. Currently, CSD staff members perform all maintenance duties and provide ongoing support for inventories, replenishment, and par level changes. Unit staff members are given usage reports to deter- mine what items to reduce if necessary to accom- modate changes.

Similar to the other departments, financial results were significant in the inpatient units. After system costs, actual financial savings to the University of Louisville Hospital for June 1997 through May 1998 was approximately $525,000. The labor reduction component of this was approx- imately $150,000; expense reduction on a cost per statistic basis made up the remaining portion.

FUTURE PIANS Although this system brings a significant

improvement to the facility, staff members continue to find ways to improve the procedures. The system defines a process that always is changing and must be treated as such by both staff members and ven- dors. Based on this, inventory, along with par levels, is continually adjusted as needs change.

To ensure the effectiveness of the system, OR staff members are investigating adding expensive items that are difficult to find or that employees may be taking for personal use (eg, batteries, printer rib- bons). As the biggest compliance issue for nurses is returns, audits are performed twice per week on expensive items to ensure they have been properly accounted for. Education has helped in awareness of the issue and will be continued as an ongoing event.

Another plan is to expand the interfaces to the hospital system. This was not part of the original installation because of changes to the hospital's computer system. A patient billing real-time inter- face is being evaluated. Billing currently is managed by uploading data via a disk to the hospital's patient

accounting system. Another interface that is in plan- ning would eliminate the keypunch function for inventory relief and expense distribution and facili- tate direct pass-through of nonstock item orders to vendors. Most importantly, it would allow the point- of-service database to remain in sync with the mate- rials management information system. Changes made in one system would automatically apply to the other system. Currently, the manual system rep- resents the largest potential for error because of the need to key information into two systems.

Finally, staff members are expanding into other procedure areas of the hospital based on the success. By the end of 1999, the system will be expanded to the endoscopy, respiratory therapy, cardiopul- monary, vascular radiology, and outpatient oncology areas. Each area represents a new challenge, and the

system must be tailored to address each area's respective needs. A

Jim Graham is the director. of' niutcr.iuls niunagenient, University of Louisville (Ky) Hospital.

Martha S. Brewer, RN, CNOR, is the OR director, University of Louisville (Ky) Hospital.

Valencia Theresa Byrd, RN, BSN, is the orthopedic inventory teuni leader; Uniwrsit.y of Louisville ( K v ) Hospital.

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