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EPGIDB VSAT 2010-2011 Supply Chain Management

Assignment 1

Improving Pharmacy Supply-Chain Management in the Operating


As expenses rise and payment declines, healthcare organizations are challenged to find innovative ways
to improve services cost-effectively without compromising quality Anesthesia services are ideally suited
for cost containment. Expenditures directly controlled by anesthesia providers represent approximately 4
percent of total U.S. healthcare costs.

Healthcare organizations should analyze their processes for providing pharmacy services and determine
where those processes can be improved to enhance care delivery cost-effectively.


Deaconess Hospital, a not-for-profit, 389-bed, acute care facility in Evansville, Indiana, like hospitals
nationwide, had experienced reduced payment and increased drug expense related to anesthesia care. In
addition, the growth of ambulatory surgery centers was challenging the hospital to remain competitive
and operate efficiently in an environment of decreasing volume and limited financial resources.

One area of potential improvement was related to the provision of pharmacy services to the operating
room (OR). Traditionally, involvement of the hospital's pharmacy services in drug distribution in the OR
had been limited to floor stock replacement with little or no accountability for or control of the drugs or
the charges.

The hospital endured lost charges due to physicians' illegible handwriting, pharmacy services' lack of
knowledge about physicians' orders, variations in charging techniques, and charging omissions. Because
the pharmacy department was located far from the OR, delays in drug therapy occurred.

The OR nurses were responsible for the preparation and set-up of medications for each surgery, which
added to nursing labor expense and took nurses away from direct patient-care activities. The storage and
inventory system in the OR encouraged overstocking, resulting in excess inventory and potential waste
due to expiration of medications.

Stakeholders for the SCM research

- The team included nurses, pharmacists, physicians, and financial, technical, performance
improvement, and clerical staff to ensure that all areas that could be affected by process changes had

- Key supporters of the project included managers of the OR and pharmacy, quality assurance
personnel, financial analysts, the chief of anesthesia, and the hospital COO.

Data collection

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EPGIDB VSAT 2010-2011 Supply Chain Management
Assignment 1

It included time studies, flowcharting, financial charge audits, benchmarking, and literature analysis. The
team also conducted a site visit at two facilities that had a successful process in place for providing
pharmacy services to the OR.

SCM improvement- Satellite pharmacy services:

Significant improvement initiative was the establishment of a satellite pharmacy service for the OR. After
considerable evaluation of various drug-distribution systems, the team determined that the surgery
satellite concept would provide the best solution for the problems identified.

- The satellite service provides a pharmacist and technical pharmaceutical personnel in the surgical
services department from 6:00 AM to 4:30 PM weekdays.

- An automated dispensing machine serves as a back-up system when the satellite is closed.

- The machine stores commonly ordered medications and provides an on-line mechanism for
accurate medication charging and drug-acquisition control.

- The charge nurse has access to the satellite for anesthesia trays and medications that are not
available from the dispensing machine.

Implementation of the satellite also resulted in the following improvements:

* Standard anesthesia trays reflected a standard drug formulary for anesthesia products;

* Anesthesiologists and pharmacists now are held accountable for controlled-substance acquisition,
disposition, and record-keeping;

* Floor stock was eliminated, minimizing waste;

* Bar-code technology was implemented for charging;

* Intravenous medications are prepared under an aseptic laminar-flow hood;

*The pharmacist provides the department of anesthesia with monthly education programs and information
regarding drug costs and waste reduction;

* Medications are delivered directly to the surgeon or anesthesiologist in the OR suite by pharmacy
personnel; and

* The pharmacist provides drug information to medical personnel immediately upon dispensing drugs.

The satellite pharmacy service has had a positive impact on the hospital. Before implementation, less than
50 percent of surgeries began on time. The percentage of on-time surgery starts rose to 64 percent in
November 1997 and 69 percent in July 1998.

The response time for medication delivery to a physician in the OR dropped from 15 minutes to less than
2 minutes immediately after implementation of the satellite pharmacy service. Improvements in the
narcotic-distribution process resulted in improved narcotic control, which had been recommended by the

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EPGIDB VSAT 2010-2011 Supply Chain Management
Assignment 1

State Board of Health, and assurance of compliance with new standards being established at that time by
the Joint Commission on Accreditation of Healthcare Organizations.

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