Parkview Health (Fort Wayne, IN) has been named a finalist for ECRI Institute's 13th Health Devices Achievement Award for its implementation of an automated inventory management system to improve how perioperative supplies are managed. The radio-frequency identification (RFID)-enabled, two-bin technology that Parkview chose to implement has helped create a more organized inventory management process; it has reduced clinician involvement in the process, allowing them to focus on patient care; and it is expected to yield significant savings.

The Health Devices Achievement Award recognizes outstanding initiatives undertaken by member healthcare institutions to improve patient safety, reduce costs, or otherwise facilitate better strategic management of health technology. For details about the winning submission and other finalists, see The Health Devices Achievement Award: Recognizing Exceptional Health Technology Management.

ECRI Institute congratulates the applicant, Aaron Lane, and the rest of the Parkview Health team.

The Challenge

To improve inventory management of perioperative supplies; specific goals include reducing wastage of unused supplies by monitoring expiration dates, supporting standardization efforts, and reducing the effort required by clinicians.

The Context

Parkview Health lacked the centralized view of its inventory data needed to manage perioperative supplies in an optimal fashion. The organization depended on tribal knowledge, rather than system analytics, to manage supplies. As a consequence, the organization was limited in its ability to:

1. Proactively manage inventory expiration dates. Many items would be expensed-upon-receipt to departments and then, if they went unused because too many had been ordered, would be discarded when expired. Inventory obsolescence likely had a significant financial impact—perhaps totaling 5% of the approximately $70 million spent annually in perioperative areas.

2. Standardize on supplies. The lack of system analytics prevented preference cards (i.e., pick lists of the supplies needed for a procedure) from being optimized. Because preference cards could vary widely by procedure and by physician, Parkview needed a better way to track and compare pick lists in order to drive product standardization efforts.

3. Apply quality metrics to, for example, optimize inventory levels, improve replenishment efforts, assess carrying costs, or identify labor inefficiencies.

In addition, the existing process required that highly paid perioperative clinicians play a primary role in inventory management. This took time away from their core function of providing patient care.

The Process

Parkview's first step was to conduct a gap analysis, looking at the people, processes, and technology used to manage perioperative supplies. Subject-matter experts from across the organization—including clinical, supply chain, information services, and finance staff—participated in the analysis.

The gap analysis identified that the organization needed to:

1. Realign its workforce, transferring the management of supplies from clinical staff to supply chain professionals. The existing process, in which clinical staff had to spend some of their time managing inventory, took those staff members away from patient care.

2. Upgrade its asset billing practices, moving away from the organization's existing system of assets "billed to" storage locations, in which supplies were expensed upon arrival.

3. Upgrade its technology, allowing for automated replenishment, as well as automated tracking and recording of inventory selections on a per-case basis to support later standardization efforts for case carts.

4. Revamp its processes, conducting Lean Six Sigma workshops to maximize the capabilities of the new technology that would be deployed.

Parkview decided to implement an OR-specific software system that used RFID-enabled, two-bin technology to provide a more automated (less labor-intensive) method for informing the warehouse when a supply bin needed replenishment and for informing clinicians about the status of the order. The system functions as follows:

1. An RFID tag is attached to each bin, encoded with the supply item, bin par level, and bin location.

2. When the supply bin becomes empty—that is, when the last item is removed—the staff member takes the RFID tag from the bin and places it in a pocket on a SMART panel. The pocket reads the RFID tag's information and sends an order to the warehouse for replenishment. Until the bin is replenished, staff can access supplies from the second bin.

3. The status of the order is communicated to nursing staff through lights that activate on the RFID tags as they sit in the SMART panel, indicating if the replenishment has been processed, is on its way, or is on back order. The SMART panel also contains search functionality so that out-of-stock supplies can be found in other storage bin locations in a pinch.

The organization implemented the project as a pilot at its Parkview Randallia campus. The project included all inventory (with the exception of specialty implants) managed in the facility's ORs, cardiac catheterization labs, and interventional radiology and endoscopy departments. The budget for the project was $1.1 million, which included all internal resources required for implementation.

The Results

Parkview has deemed the project to be an overwhelming success, citing benefits such as the following:

1. The system has helped the organization right-size its inventory and has created a more organized environment.

a) Replenishment orders are now scheduled by timers that automatically send replenishment data to the warehouse, either through RFID replenishment cards placed on SMART boards (when a bin is emptied) or through set par levels.

b) Clinicians can more easily find the products they need when they need them. 

2. Significant savings are anticipated:

a) Five million dollars over the next five years due to the reduction of obsolescence. 

b) Six million dollars annually, associated with adjustments to just a few dozen preference cards. With better analytics to track the products used on particular cases, Parkview can now more easily evaluate variances between surgeons on like cases. The organization selected 30 case types for such an evaluation. Parkview calculates that it could save the six million dollars simply by switching away from outlier items and moving to the median cost on those 30 preference cards.

3. Most satisfying for the implementation team has been the positive response from clinicians, who have expressed thanks for having the inventory-management burden removed from their daily activities. 

Key Takeaways

This collaborative effort, which jointly benefited the OR staff and the supply chain team, helped remove the silos between the two divisions. The teams worked as one to achieve a common goal—one that resulted in clinicians having the products they need, when they need them, while having more time to care for patients. Not surprisingly, Parkview reports that its clinicians love the new SMART inventory locations.