The Materials Management Team:
Uniting the Key Players in IC, OR, and Purchasing
By John Roark
Building relationships. Creating alliances. Opening the lines of communication. A strong materials management team makes a significant difference.
In too many facilities, materials management (MM) gets a bum rap. Its a matter of ignorance. Perceived as a gray area, many simply may not realize the vital role that materials management plays. The departments dramatic effect on bottom line, physician happiness and patient safety and satisfaction cannot be overlooked. Todays MM managers are taking an active role in educating facility hierarchy and raising awareness.
In some facilities, when MM looks to put processes in place to help control spending and standardization, the department is looked at as a roadblock, says Jean Sargent, CMRP, director of central service for UCLA Healthcare, Los Angeles. That can create animosity between the departments. The support really needs to come from upper management, to say, In order to control our costs and have standard patient care, these policies are in place, and they are enforced by administration. Administration expects that people are going to work together to meet these goals.
Its a constant educational process, says Mike Schiller, director of purchasing and supply chain systems at Childrens Memorial Hospital in Chicago. One of my personal goals here is to educate. You may not have the respect that you should in the materials arena, only because you havent really taken the time to educate senior management as to what it is you do as a materials manager. Ive held a number of meetings with senior management and laid out my supply chain agenda and direction for the organization for the next 12 to 24 months. I send out a monthly letter on behalf of materials Weve signed this contract saving us $9,000; weve converted these four products for a savings of $70,000 a year I focus on the savings potential, and what we bring to the organization. A lot of people dont understand the concept of a group purchasing organization (GPO), administrative fees, and the rebate checks that we get at the end of the year.
For years, purchasing here was at the back end of the process, continues Schiller. By conducting an internal audit, I showed senior management that in six purchase orders we left almost $600,000 on the table, because we didnt get involved in the beginning when we could negotiate price, terms and conditions, based on industry standards of what other organizations have paid for equipment. They ask how were going to fi x it, and I tell them we need to redesign this whole process so that purchasing is plugged in, and materials is plugged in at the front end.
Redesigning the whole process is often exactly what is needed to get a facility back on track. Bringing all the different factions into the loop and giving them a voice ultimately gives power to MM.
Without really effective communication between everyone on the team, it all falls apart, says Susan B. Kreiss, FAHRMM, an independent consultant, supply chain specialist, and president-elect of the Association for Healthcare Resource and Materials Management (AHRMM). I personally always make it a point to seek out the key players in the operating room (OR), infection control and key clinicians elsewhere, and make it known that I am available to them, that I am there to help to solve their problems not give them additional ones, and literally open the door to communication. Without it, were all lost.
Establishing a system of information exchange puts everyone on the same page, says Michael Lortie, CMRP, corporate director of materials management for Carondelet Health Network in Tucson, Ariz., who cochairs a value analysis team (VAT) that includes the OR director, OR materials coordinator and representatives from physicians, nursing units, intensive care unit (ICU), emergency room (ER) and other facility departments.
The VAT meets monthly to discuss standardization of products, questions on contracts available through the facilitys GPO affiliation, new products and other materials management issues and concerns. The facilitys OR materials coordinator, Diane Rodriguez, RN, BSN, serves as a bridge between the clinical staff and MM. One of the strengths that Diane brings to the team is that she has such a foundation from working in the OR, coupled with her nursing background, says Lortie. She has a great understanding of how these products work in the surgeons hands and how they affect the patient. That makes a significant difference, because theres so much new technology thats coming out, and so many new products. Its really important to understand how its going to function as youre making purchasing decisions. Thats what the role of the nurse offers in conjunction with materials management on a fi scal end.
Clinical resource management (CRM) should always be filled by an RN, says Kreiss. An RN brings to the table her clinical knowledge as well as some materials knowledge. This can very often sway the clinicians the way materials management cannot, because clinicians respect each other. We have more credibility when we have a clinical person on our team.
The most progressive facilities are now hiring CRMs, says Kreiss. In the places I have gone, people I have talked to, when they really want the job done, they use the CRM as part of their team.
Schiller utilizes a multi-disciplinary product standardization committee comprised of two co-chairs the director of purchasing and the director of the pediatric intensive care unit. The committee consists primarily of clinical educators throughout the hospital, infection control, central sterile, and our primary vendor distribution rep. Weve got OR anesthesia representation as well as a few other clinicians, some from our off-site areas. Its a real good mix a very diverse group that represents a good cross section of the hospital.
Our goal is to standardize on the products that we have, continues Schiller. Well review any product issues, entertain new product requests, and with our goal as product standardization, we look at our GPO contracts, and infection control review products specific to infection control issues. Well also look at capital and other equipment purchases; well evaluate new product requests, and also discuss any product issues with some of our current products. Well discuss product evaluation as part of our standardization on items, and well have sales reps come in. Well give them about 15 minutes to discuss just that product its not a dog and pony show its very specific. They talk about it, they answer any questions, and they leave samples. Before they leave, well determine if we want to go with a small-scale evaluation or not.
This open, honest dialogue helps the process, says Schiller. Were getting very good attendance, and a lot of people really feel that they are a part of the process now. In the past there was a lack of ownership, and therefore the meetings were not as well attended.
Often times, manufacturers sales reps will go directly to the surgeons, to dazzle them with bells and whistles, in an attempt to get an edge on purchasing. To get the upper hand, Kreiss arms her clinicians with knowledge.
I created an entire course of study under the umbrella of educating the clinical staff, Kreiss reports. One of my courses was on negotiation for clinicians. We realized that there was no way we were going to keep the sales reps away from the clinicians and the physicians. If you accept that, what you need to do is educate them on how to deal with the sales reps. The three most important tenets that I would stress are: keep preferences a secret; keep the spirit of competition alive until the deal is done; and work with MM as a team. Were not here to get you the product you dont want, or to force you into the product you dont want. Were here to get you the product you want for the price of the product you dont want.
If MM works hand-in-hand with clinicians, where we can sit on the same side of the table with each other and face the sales reps and look them in the eye and say, Were not going to use your product unless you meet our price, we can do anything.
The Up Side vs. the Down Side
If you dont have a well-run MM process, even with the GPOs, your institution can suffer financially, says Kreiss. Its the MM department thats aware of what contracts are out there, and actually can act as a champion for the products that are on contract, and can ease the way for conversion to a quality product, but at a lower price. A well-run MM department also gets the product to the right people at the right time -- what good is a good price for a product if its not there when the patient needs it?
Conversely, a weak MM department makes a facility a house of cards. They pay too much, says Kreiss. They run out of product, and eventually the whole process breaks down. It has happened in many places, and those are usually the places that are recruiting for new materials managers. Sometimes the job can be overwhelming because there is so much to be done, and MM departments very often are understaffed. Through nobodys fault, except that the volume of work is so big, things just dont get done. Institutions think they are saving money by not hiring personnel. But in many cases they are losing money because they dont have the professionals in place that they need.
Schiller agrees. Materials spent is usually the second largest expenditure in an organization, second to payroll. If you dont manage it, you could have millions of dollars in money tied up in inventory. You may have $4 million in inventory sitting in your OR thats doing nothing for you. Maybe you can lower that down to $3 million thats a $1 million one-time reduction. That million dollars can go to a capital purchase the following year, to get you revenue-generating equipment. It can get you equipment that allows you to provide cutting-edge medical services to your patient population. With a poorly run organization, you shoot yourself in the foot. You spend a lot more on a materials standpoint. Youve got stock-outs in inpatient areas, which leads to low morale among the nursing staff. Your patients arent going to be happy if cases have to be canceled or rescheduled, or if they dont experience the level of care that theyve come to expect.
Rage Against the Machine
Numerous software systems exist to make the supply chain system run smoothly. Timesaving tools have a facility-wide effect, automating processes, eliminating paperwork, and freeing up workers time. Schiller is passionate about automation, but he stresses that you have to be cautious with technology.
Todays systems are integrated, meaning that youve got a materials and a financial system that usually are all one application, he says. If you dont understand your current processes, and you just try to automate them, mistakes travel at the speed of light through your system. What would most likely be caught in a paper process because people are looking at it along the way does not occur any longer.
He offers a sobering example. Youve got a nurse who puts the requisition in on the floor, the system takes it and converts it to a purchasing order (PO). The PO gets released electronically to a vendor and you never see it. If you dont have your item file, if you dont have your processes properly defined, youre going to find out that youve got an electronic mess, and its going to become a huge mess in just a matter of days. When you start looking at the matching software functionality in some of these systems, youre matching your invoice price to your receiver to your purchase order. Youre going to get so locked up that youre not going to be able to pay your vendors because the system is not going to release an invoice for payment.
You have to understand your processes, understand the technology youre looking to implement, and figure out how it will compliment and augment your processes, says Schiller. You cant just say, Were going to go ahead and automate this and well be done, because youll have a mess that will take you months and resources to unravel. Now, instead of looking forward, youre looking in the rearview mirror, because youre constantly in a clean-up mode. Instead of, how do we take it to the next level?