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Integration of Inventory Control Systems

Where are you today with your inventory control system? Where would you like to be? Inventory control systems (ICS) are in place in all hospitals in a wide variety of applications. This discussion will focus on high-end dollar use items that are typically managed by a self-made manual system, a bar-coded system or a facility-wide hardware cabinet, all with varying degrees of success.

Inventory problems continue to challenge the best and brightest in healthcare. While there’s a plethora of products, ideas, software and hardware, solving these problems still comes down to how well they’re managed at the end-user level.

Hospitals have reached some common ground with just-in-time inventory of highly disposable products like tape, gauze and 4 x 4’s, etc. Areas that are drawing a lot of attention are high-dollar specialty products, with products in catheterization labs, cardiovascular and operating room suites representing the largest portion of high-end items in any hospital inventory.
Hospitals continue to look at the best inventory systems to track, account and re-order very high-dollar expendable items like pacemakers, implantable defibrillators, stents and heart valves.

There’s a wide variety of ways to track and account for these items. They may be expensed when received and then moved to a specialty cost center. Many hospitals have gone to a perpetual inventory of high-end specialty items to try to capture inventory costs and identify what’s invested in inventory at any given time, which may vary from $1 to 4 million.


Why an inventory system?

There are many reasons to track high-dollar items, but the most important are to ensure that supply items are available when the next patient arrives, and that the items are appropriately charged.

The FDA and other regulatory agencies also require health systems and physicians track their use of medical devices, particularly implantable devices such as coils, pacemakers, defibrillators, stents, shunts and valves.
Operating suites, cardiac catheterization labs and vascular suites are just a few of the areas that must be able to track, account for items for reimbursement, and re-stock with minimal or no delays. Ownership of the system often falls to a manager close to the end user of the product. More often than not, a self-made manual system is used.

What follows is a look at the pros and cons of the most commonly available systems.


Manual inventory processes

Most operating room suites, cath labs and endoscopy suites use a manual process for tracking device use and the materiels management associated with that device. There’s a continuing need to monitor devices by personnel who are familiar with the products and how they’re used. Staff monitoring can improve the accuracy of the appropriate charge and where the item was used. In fact staff record-keeping is integral to the success of any inventory system.

This type of record-keeping can be tedious and time-consuming, however. It requires high vigilance on the part of personnel and is sometimes prone to error due to the flow of work in the laboratory. This is very much a silo-type system and provides limited access to all the required information. In this case, the information would be available to only this department, and other pertinent information, residing in other systems, would not be accessible unless shared through a manual process. Data for device use is logged in several places, but only accessible manually and not electronically.

There are two big challenges here: to ensure that all information resides in a database for ease of reference by hospital personnel, and to provide an accurate record to device manufacturers for their patient reference databases.

All managers want to improve tracking systems for the cost, use, inventory control, security, and regulatory tracking perspectives. A more automated and integrated system can be the first step. Here are three possible options:

Inventory control software is offered in a variety of systems. Cardiology inventory systems are an option package in all hemodynamic systems. These systems may offer a bar code option that can be integrated into the hospital information system (HIS)/materiels management inventory system. For these systems to be reliable, an ongoing audit trail must be kept by staff closest to the use of the product. This ensures that appropriate charges are made and inappropriate charges are corrected before they impact patient billing and inventory supply orders, particularly if just-in-time ordering is in place.

These systems have limitations. The fact that there are no industry wide standards in healthcare devices limits all inventory systems. Adopting a bar code system also requires an investment of time and resources at either the department and/or hospital materiels management level.

At either level, an inventory system supported with bar codes can be a giant leap in implementing an inventory management system. Instead of expecting staff to track and manually input data, the system provides an audit trail and improves the capture of used items. Again, a continued investment of time and maintenance is necessary to build and maintain the ever changing database of items.

A less-costly option is a silo-driven system. The issues around this type of implementation are those of interprocess communication. The information is in an isolated environment that does not interact or provide context with any of the other patient information that is available within the enterprise. Investment can be minimal but still provide you with some electronic process when other options are far too costly: the estimated cost for a department specific silo-driven system will vary between $150,000 -250,000. This silo, low-cost option will also require a staff member to monitor, maintain and modify the inventory of items to keep it current. It will allow the department specific use levels for monitoring and tracking of high dollar inventory device items.


Self-made inventory systems:

A second option is to develop a self-made inventory system to monitor, maintain and keep the order supply chain moving. This is a silo-type arrangement that limits access to the system, and daily maintenance is necessary to keep the supply chain full.

This option is often less than ideal but is used in more specialty areas than most facilities like to admit. It requires the least amount of materiels and resources to develop a tracking system. It may be appropriate for sites with lower volume. It works well in managing specialty products but can be limiting as volume increases. It does provide an audit trail but may require at least 1.0 Full Time Employee (FTE), if not more, to maintain.

This system often fills daily needs and requires minimal investment. It’s usually maintained in or near the source of use. It can be a cost-effective system if assigned personnel have a strong familiarity with the products, since personnel can be used in other needed roles. Investment is minimal, and the system provides you with a tracking system for high-end dollar specialty items.


Cabinet inventory systems:

The third option is a cabinet/ATM-type inventory system that offers security with a password requiring a time-out feature, which is now mandated by HIPAA. As hospitals plan for the integration of systems across their enterprise, some facilities see these systems as an option.

Several years ago cabinet inventory systems were a hot item for high-end products. Pharmaceuticals are the key area in which these systems have been adapted and are most successful. Often the features and functionality of these systems are applied to management reporting to ensure patient safety.

But interest has lately moved away from adapting these systems for high-end specialty products. Adapting an enterprise inventory system to specialty areas outside materiels management requires a significant investment of money. The amount is contingent on the cost of cabinets that support the shapes of the products used. This can be a problem with catheters that may be 100 to 110 cm in length. Making space to support inventory in areas adjacent to the end-user is the next big stumbling block.

These systems can be fully integrated with other inventory systems requiring a password and security timeout as mandated by HIPAA. This can be cumbersome for end-users who may need to change products frequently based on patient needs in catheterization lab suites or cardiovascular OR suites. The systems also require personnel to consistently monitor specialty products as requirements change.

The cost associated with these highly integrated systems is significant with a conservative range $500,000 to 900,000, and facilities that have invested in them rarely have applied all the features and functionality of cabinet or ATM systems. They do remain an alternative for some facilities.

Of course, inventory management systems are not, and should not, be isolated systems. They should be integrated into the rest of the facility management systems. For hospitals, this means integration into the hospital information system (HIS).

Order sets should be developed to include the basic load-out of materiels required to perform the procedure under consideration. This allows materiels management to verify that supplies are available for the procedure. If the procedure is scheduled 24 hours in advance, this may allow “just-in-time’ delivery of the materiels required.

In addition to prior knowledge, interfaces back to HIS allow materiels use to be traced and accounted for in the master inventory. For this to be possible, interfaces must be instantiated between the inventory control system and HIS. This involves network connections and HL7 coding to transmit Admissions Discharge and Transfer messages (ADT) orders and results between ICS and HIS. For HIS that do not do materiels management, the interfaces between ICS and materiels management may be direct. In addition, these systems may not use standards-based HL7 messaging schema.

More and more hospitals and health systems are reviewing new software and tools offered through information systems to drive down costs and improve supply chain efficiency and patient care.

For the past nine years, Hospitals and Health Networks, an AHA publication, has identified the 100 Most Wired Hospitals and Health Systems. The most-wired list is based on a comprehensive survey tool that asks hospitals to report how information technology is applied to five key areas: safety and quality, customer service, business processes, workforce and public health and safety. This year’s survey collected responses from 568 hospitals and health systems representing 1284 hospitals.

The survey notes that Radio Frequency Identification Device (RFID) technology and bar code technology are being used efficiently, and costs are diminishing. Survey results also point to the use of automation of medical, surgical and pharmaceutical supplier activities through better adoption of electronic purchase orders and the application of both automatic and semi-automatic online systems. Some health systems have adopted RFID to minimize scanning inventory materiels at the point of use in order to reduce lost charges for these products.

A department-based or enterprise-wide system to support purchase of an affordable system for inventory can pay for itself within two to three years. While there’s no concrete evidence, hospitals seem to be carrying fewer high-end inventory products than they were five years ago in these specialty areas.

Here are some considerations for selecting an inventory control system:

  • Develop an integrated and collaborative plan for clinical services and ultimately for the enterprise.
  • Research all systems that offer integration of services and compatibility with installed systems.
  • Ensure that the upgrade and/or selection of an inventory control system and/or related software specific to cardiology or operating room services presents an opportunity to implement a system across multiple departments.
  • Don’t make a decision specific to a single department unless there’s an ongoing strategy to incorporate these systems into enterprise planning.
  • Selection across a service line can be beneficial in terms of cost savings and end results for large-dollar ticket items.

In conclusion:

Inventory Control Systems are becoming a requirement for the smooth running of any materiels-dependent service. These systems should be part of an integrated strategy for materiels management for the enterprise.

The systems should also be integrated into systems used for patient management, materiels management, resource management, billing and scheduling. Adherence to standards or the ability to use standards-based practices is also necessary. When this is taken into account, your facility can manage its inventory in a manner that’s financially, legally and medically sound.



2007 Most Wired Survey and Benchmarking Study, Hospitals and Health Networks.



Jan Carr
Regional Director
Abrio Healthcare Solutions, Inc.
Brentwood, TN


Gregg A. Cohen
Director, Medical Technology
Abrio Healthcare Solutions, Inc.

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