Data integrity is a real problem in the operating room
By Robert Handfield, Aug 23, 2016
A recent visit to a mid-sized hospital in the Northeast United States provided a number of important insights into how great a problem material handling data integrity is in the daily life of those people who work in operating rooms across the country. The nurses, buyers, surgical techs, operating room specialists, and physicians who work on the front lines of hospitals, are having to deal with massive forces of friction that are reducing their ability to provide top tier patient care. The scenario described in this case study is being repeated in 95 percent of hospitals across the country. The operating room (OR) is also the primary source of revenue for hospitals, as 80 percent of all revenues taken in occur through OR activities. These facts alone provide ample evidence of the need for massive change in the way that hospitals manage their supply chain data.
The Parkdale (fictional name) Hospital is like many others you’ll find across the country. This one has about 450 beds, with its own warehouse that stocks items at a separate location. The hospital relies on Group Purchasing Organizations to order many of the thousands of items it carries in its different wards, as well as the drugs and biologics it must keep in its pharmacy.
Purchasing at “Parkdale”
The purchasing function at Parkdale consists of about nine people, who are primarily involved in transactional activities. One person orders supplies for the OR, another does non-medical supplies and services, and others manage the catheter lab, interventional radiology, and stock items. Stock items are those that are used on a repetitive basis. Another person manages IT supplies, and another hospital renovation services. Like many purchasing functions at hospitals, these individuals are often paid by the hour, due to strict budgeting in a world where purchasing is considered primarily a transactional activity with low value added. Their role is to “get stuff that physicians need, and don’t run out!”
The Operating Room purchasing staff has people who buy cardiac and non-cardiac parts, heart and vascular products, and the Physician Preference Items (PPI). The latter category consists of products that are custom ordered by physicians, especially OR surgeons, based on their specific preference. Many such items are selected by physicians based on different criteria, including:
They used the products in medical school, got used to them, and insist on using them in the OR,
Sales representatives convinced the physician it was a superior product and they should switch to it,
Physicians read about the item in a journal article or medical report, and are trying it out as they believe it is superior to the old alternative, or
The physician is being courted by a medical products company through perks or benefits which is leading them to choose the product.
In some cases, purchasing works through the local Group Purchasing Organization (GPO), which operates under the theory that buying in bulk will render lower prices. By combining volumes from multiple hospitals, the theory continues, GPO’s can pass on the savings to hospitals, and collect a fee of 5 percent, leaving hospitals with a savings over what they would pay otherwise. However, “lower prices” is contingent on something called “contract compliance,” a term that is often poorly understood and not well defined for hospitals by GPO’s. Although GPO’s state that you can “choose to opt in or opt out” for any product, the reality is that compliance to the terms of the contract often fail to fully disclose that GPO’s make much of their money on rebates with the manufacturers or medical products, much more than the 5 percent they charge the hospitals. This renders the entire manufacturer-GPO-hospital relationship opaque and difficult to truly sort out whether savings are real or not.
The Parkdale purchasing officer notes that “We have an on-site person who works for the GPO under a consulting agreement. They are in charge of helping us with PPI items as well as purchased services. We are working with a new GPO, and they are supposed to help us identify how we can convert our items over and get compliance and lower prices for the OR and also for orthopedics.”
“We struggle even with simple items to get agreement. For a simple tourniquet product, it took us two years to get physicians to agree on a single product. We thought it would be easy to negotiate based on the simplicity of the items, but this was not the case. We tried to negotiate with a book of business based on forecasted usage, but there are always new items coming up, so we have to negotiate with them to give us the same pricing on new products unless they are revolutionary. And we have to trust that they won’t sneak behind our backs and raise prices.”
The Head OR Nurse’s Perspective
A meeting with the head nurse from the OR provided a glimpse into some of the many challenges that occur in this environment.
“We are constantly challenged with trying to get part numbers for the parts and products that are coming into the OR, as every part has to be entered into the computer during the surgery. We had made a decision not to add new vendor parts for pins, plates, and screws for implants, but could not get all the surgeons to agree on the list. To get agreement requires getting the department of surgery involved, and this gets complicated.
During a surgery, we often find that there is no description for an item, because there is a 30 character limit in the system in the description field. So for instance we might be using a 15mm screw in the surgery, and the nurse is at the computer during the surgery trying to record this into the patient log. But maybe she can only find a 13mm screw, so she puts that into the record instead. Or perhaps she just enters MISC and adds a note to the record saying that this is missing in the catalog. Or maybe she just writes it down on a piece of paper and hands it over to the recording nurse, Judy. This can occur for multiple parts and items.
For every surgery, there is something called the PPI card. This card is supposed to contain all of the PPI items for a particular surgery, that have been pulled out of the surgery stockroom by the people prepping the OR cart for the surgery. Every cart has the items loaded onto it, based on the PPI card. But we still find that the items on the PPI card can’t be found in the system.
The sheet of parts comes from the OR and has to be sent over to the Cost and Budget department. But I spend an hour a day just cleaning up the part numbers on the systems. We have a person who does nothing but work through the part sheets correcting the part numbers. We have had to learn how to do this ourselves, as there was no IT support, no documentation on how to fix it, and no information on how to convert data from one system to another.”
Despite being a multi-million dollar revenue source, the operating room is dependent on multiple people having to fix it. In the words of one physician, “this is a $2 trillion dollar cottage industry.” And even though IT departments are 20 times the size they were 10 years ago, the support for physicians and nurses is less than it ever was.
The Head OR Nurse expressed this challenge: “I feel very frustrated, because I went into nursing because I wanted to help physicians and patients. However, I am spending more time on the computer searching for items than I am working with patients. Many of our nurses are becoming equally frustrated, and we are seeing many of them quitting because they say they can’t stand working at this job any more, as there is too much computer time spent searching for items in the catalog.”
These types of data integration issues are fundamental to addressing the many shortfalls in our healthcare system. This is an activity that the SCRC will be dedicated to improve in the coming years.
This post originally appeared in Robert Handfield’s Supply Chain View from the Field.
About the author
Rob Handfield is the Bank of America University Distinguished Professor of Supply Chain Management at North Carolina State University, and Director of the Supply Chain Resource Cooperative. He also serves as an Adjunct Professor with the Supply Chain Management Research Group at the Manchester Business School.
The SCRC is the first major industry-university partnership to integrate student projects into the MBA classroom in an integrative fashion, and has had 15 major Fortune 500 companies participating as industry partners since 1999. Prior to this role, Handfield was an Associate Professor and Research Associate with the Global Procurement and Supply Chain Benchmarking Initiative at Michigan State University from 1992-1999, working closely with Professor Robert Monczka.
Handfield is the Consulting Editor of the Journal of Operations Management, one of the leading supply chain management journals in the field, and is the author of several books on supply chain management, the most recent being Biopharmaceutical Supply Chains, Supply Market Intelligence, Supply Chain Re-Design and Introduction to Supply Chain Management (Prentice Hall, 1999, 25,000 copies sold, and translated into Chinese, Japanese, and Korean). He has co-authored textbooks for MBA and undergraduate classes including Purchasing and Supply Chain Management 5th revision (with Robert Monczka) and Operations and Supply Chain Management 2nd revision (with Cecil Bozarth).
Handfield received the Emerald Citation of Excellence award in August 2011, for an article cited as one of the top 50 articles from the 300 top management publications worldwide that have had a proven impact since they were published. In 2009, he was nominated as an Honorary Fellow of Contract & Commercial Management (FCCM) by the International Association of Commercial and Contract Management. This honour is bestowed on individuals who have made exceptional contributions in the field of contracting and commercial management. Handfield is regularly quoted and has published op ed pieces, and is quoted in blogs and global news media such as the Wall Street Journal, Financial Times, the San Francisco Chronicle, Spend Matters, Microsoft Live, Ariba Live, Inc., CIO, CFO, the Supply Chain Management Review, and other media.