Many hospitals have found success by integrating reprocessed ‘single-use’ devices (SUDs) into their existing operations models to drive product utilization through automated systems. In fact, reprocessing programs are currently employed by more than 50 percent of all U.S. hospitals, and more than half of the U.S. News & World Report “Honor Roll” hospitals.
Processed medical devices offer the best solutions
Studies show reprocessed devices are proven solutions for addressing medical, economic and environmental responsibilities without compromising safety or efficacy. Sisters of Mercy Health System (Mercy), which includes 28 hospitals in Arkansas, Kansas, Missouri and Oklahoma, has found reprocessing to be a savings engine – totaling $1 million in the past year.
ROi, Mercy’s supply chain division and a leader in healthcare supply chain management, has developed an industry-wide reputation for innovative, technology-driven, results-oriented approaches to improving supply chain performance. For nearly a decade, ROi’s integrated model has helped align the interests of all parties in the supply chain to drive greater efficiencies, reduce costs and deliver safe patient outcomes. The company now applies its tools and philosophies to increase efficiency in other healthcare organizations.
Mercy and ROi were recently named the national Supply Chain Excellence award winner, the top industry award at the 2010 Integrated Delivery Network Summit & Expo in Orlando, Fla. In addition, Mercy and ROi were recognized among the top healthcare supply chain operations in the world earlier this year, ranking second in the AMR Research Healthcare Supply Chain Top 25.
In 2006, Mercy and ROi initiated a reprocessing program with Ascent, the leading provider of reprocessed and remanufactured devices for the healthcare industry. Today, reprocessing is one of Mercy’s Top 12 Savings Initiatives.
“Mercy is constantly looking for more ways to provide the best in patient care quality while being responsible with resources, and reprocessing SUDs helps us do both,” says Stacy Howard, Mercy’s ROi director of utilization who led ROi’s reprocessing program. “We already have ten of our hospitals across a four-state area currently participating in the program, and the number continues to grow.”
While its reprocessing program has steadily increased savings month-by-month; ROi realized that in order to truly maximize the benefits of the program, a system-wide change was needed. Specifically, its purchasing process needed to be standardized, yet creatively configured for inventory preference. As a result, the Ascent supply chain team partnered with ROi to develop an approach that optimized its savings potential without sacrificing operational efficiencies. The team engineered a sustainable supply-chain model that consistently delivers inventory preference and savings to the end-users with no or minimal changes to their normal purchase process. Most importantly, the reprocessing savings engine now lives within the standard ordering process that ROi established for Mercy and has resulted in significant additional savings already.
Automating Item Preference Saves Time and Drives Compliance
With a strong corporate foundation in place, the ROi team first looked for ways to drive program compliance, and streamlining the purchasing process seemed like a great place to start. John Black, Mercy’s vice president of strategic integration for ROi, believed the purchasing process needed to be simple, and ROi also wanted to drive program compliance based on the way its physicians’ preference cards were set up in its Lawson system.
“I didn’t want our purchasing folks to have to sidestep our process in order to choose reprocessed devices,” says Black, whose team designed a new distribution model. “For the program to be a success, we needed to automate item preference, and ultimately minimize the time needed for the ordering process.”
After examining every step of Mercy’s ROi purchasing process, the team realized that by associating reprocessed devices with the same Lawson numbers as OEM devices, ROi could maximize the opportunity for physicians to choose quality reprocessed devices for a lower cost than purchasing OEM devices.
Creating a Blended Model to Increase Product Availability
Additionally, the supply chain team evaluated which distribution model would work best for inventory management and collaboratively decided to stock high-volume, common products within ROi’s Consolidated Services Center (CSC) model, and low-volume or specialty devices in a drop-ship model. The scope of items for the stock model was dependent upon the OEM item also being supplied within CSC, which made both economical and logistical sense for the hospital system, and allowed Mercy’s CSC to maintain a 99 percent fill rate for high-volume products.
As part of reinforcing this model, ROi also took this opportunity to align Ascent and Mercy’s GLNs, or Global Location Numbers, in support of the industry-established GS1 Sunrise initiative. One of the goals of the GS1 initiative, which calls for the adoption of GS1 Standards, the most widely used supply chain standards in the world, is to make it possible for the healthcare industry to standardize identification and traceability through supply chain. Taking the time to align the GLNs ensures the right product gets to the right place at the right time.
Finally, the team addressed the question of revenue management; in particular, how should billing for reprocessed devices be managed? ROi saw the opportunity to set a progressive precedent for Mercy, and was able to develop a blended rate for each product category, which was derived from the cost of both OEM and reprocessed devices relative to the amount of inventory the CSC maintained on each of its shelves.
Driving Results to Create a Savings Engine
With the involvement and support from multiple end-users at Mercy and at the CSC in Springfield, Mo., the new purchasing process for reprocessed and remanufactured devices was rolled out in full-force, with a positive response from physicians and noticeable savings for the health system. In fact, Mercy saw its cost savings jump 189 percent in just three months and is projected to save an estimated $2 million annually as a result of reprocessing.
Mercy’s success shows that reprocessing is a smart supply-chain strategy that can no longer be ignored, especially by hospital CEOs. It’s a top-down decision that can make a big difference; in fact, the Association of Medical Device Reprocessors reports that if just 1 to 2 percent of all medical devices labeled by the manufacturer as ‘single-use’ were reprocessed, the healthcare industry would save nearly $2 billion every year.
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