Explaining a Billion Dollar Problem in the Healthcare Supply Chain

An orderly is sent for an extra pillow for a patient on the floor: central supply scans the pillow out, and a replacement is queued in requisition software and automatically ordered shortly thereafter. A prescription is filled for the same patient on the floor, and the order is scanned and attached to the patient’s EHR. The patient is later sent for an MRI, and his wristband is scanned on arrival for the procedure.

The O. R. implant tracking process

The operating room represents the second largest budgetary spend area for a typical hospital. Yet, when implants or consumables are used during surgery, the items are logged manually, literally written down on scraps of paper or the cloth covering the mayo stand by the surgical technician in the sterile field. In addition to handing off and keeping track of the implants, the technician must manage instruments, provide irrigation, and perform tissue retraction for the surgeon as well. Some implants are returned to the tray, and others are “wasted” as they were deemed not optimal by the surgeon. Towards the end of the implantation part of the case, all of this information is relayed verbally to a sales rep, who has a pre-printed inventory control sheet, which is filled out. The items are then manually input into the EHR (electronic hospital record) by the room circulating nurse. Then, the nurse must re-write the list of used implants onto a hospital specific form and placed in the patient’s paper record. Lastly, this implant list is copied and sent to purchasing, where items are again manually entered into the hospital inventory management software (MMIS).

Looks sort of “old fashioned”, doesn’t it? Now, of course not all hospitals follow this exact process, but most follow a process that is not too far from this scenario. The point is that the process always includes numerous, manual steps to track what is used in the sterile field during surgery. Most of the implants used have long, complex numbers. And, this is just half of the story. While some hospitals replenish and re-order their own orthopedic implants, many (including most of the the large metropolitan medical centers) do not.

OR Implant Replenishment and Restock Process

Many hospitals also rely on a sales rep to refill and reorder the implants used in surgery at the end of the day. In this situation, the sales rep goes downstairs to SPD ( the sterile processing department) and waits for his implant trays to emerge out of decontamination (where they are cleaned and washed.) He then restocks the missing implants in the trays with inventory (or back stock) located at the facility. Then on the ride home, he calls in the order for what he took from the back stock. The order must be placed at the end of the day, so that the back stock can be restocked via an overnight shipment the following morning. Because of the late time of day the order is placed, there are no purchase orders available from the hospital. The order is placed “PO to follow”. Sometime later (up to weeks later) the rep will then call on the purchasing department to collect POs (purchase orders) for the orders, so they can be billed. Often the hospital has no system of checks on these orders, so effectively they don’t connect what is being used up in the OR with what is being ordered by the sales rep. They just give the rep a PO. Incredibly, the hospital puts a commissioned sales rep in charge of what can be a multimillion dollar service line, with limited checks and balances. Then, the process starts all over again, usually 7 days a week, 52 weeks per year - OR surgery (particularly trauma surgery) never stops for vacations. Again the point here is that the restock process is an extremely manual process as well, often with a commission based sales rep managing a multi million dollar line of hospital business.

The Fall Out

The fallout on such an archaic supply chain system for hospitals is real in terms of cost. Estimates range for up to 5 billion dollars of waste and fraud in the system. Hospitals have realized the benefit of resupply automation in every area of the hospital: pharmacy, central supply, even food services. And outside the hospital, scanning at point of use is used for supply chain management in every modern industry in the world. Yet, its still not used in the biggest profit center in the typical hospital: the operating room. The question is: Why not?

There are a number of factors, some obvious and some perhaps not. The operating room is a different environment from a factory floor or a retail store. To a large extent, the culture in the O.R. is walled off from the rest of the hospital. Best practices for other departments simply do not work in the O.R. or are resisted and not even tried in the O.R. due to its insular nature. Some hospital operating rooms have started to scan and track joints and other pre-sterile implants such as biologics that come in packages with barcodes on them. However, the large majority of implants (and instruments) are in trays that are used inside the sterile field, and inventoried at the hospital. These implants arrive at the hospital in packages with barcodes, but they are taken out of the packages in put into trays so they can be sterilized. The implants themselves are often too small or too oddly shaped to be directly marked. As for the trays themselves, they must undergo rigorous and harsh reprocessing each time they are used. Optical scanning technology (bar codes) has been attempted on the trays, but the marks simply don’t survive the cleaning and sterilization process. They lose contrast, and even the slightest abrasion renders them useless. Additionally, high precision hand-held scanners that can be sterilized and are functional to use in the operative field simply have not been developed.

Here lies the key point: the critical component for supply chain automation, scanning at point of use, has simply not be technologically feasible from within the sterile field during surgery.

Until now….

In our next article, we will explain on how the key to solving this problem, and the gateway to a vastly more efficient OR implant supply chain, is scanning implant usage in the surgical field as they are used. And, we will explain why Summate holds the key technologies and software for solving the implant supply chain problem for the global hospital industry.

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