CHAPTER/II

RESEARCH
METHODOLOGY
 CHAPTER III

RESEARCH METHODOLOGY CONSTRUCTION AND

· VALIDATION OF THE TOOL OF DATA ·C OLLECTION

3.1 INTRODUCTION

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1
The review of literature presented in Chapter 2 identified various research

issues with respect to health supplies. In order to identify a comprehensive list

of dimensions that could be critical for effective implementation of DDIS,

another review of literature on the prescriptive, conceptual, practitioner and

empirical literature on DDS and DDIS has been undertaken. This facet of the

review covered WHO's action program on essential drugs, Software and user

manuals for drug regulatory authorities, Drug quantification software, Supply

Chain project software, and web sites of organizations active in drug

management.

The researcher considered a host of variables associated with supply chain

management and logistics at the initial phase of the study. During further

interactions with the major stakeholders of the field and through field visits and

focus group discussions, the variables were found to be embedded into a

limited number of factors that could be considered crucial for the smooth

running of the drug distribution system with specific reference to the

Government Health care system as it was prevailing in Tamil Nadu. The list of ·

critical factors I dimensions of the proposed DDIS and their signific&nce in the
I

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 context of stakeholders such as Health Administrators, Doctors and

pharmacists are presented in Tables 3.1 and 3.2.

+ 3.2 EMPIRICAL VALIDATION OF THE DDIS DIMENSIONS

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3.2.1 Data collection

The availability of hard evidence based on the rigorous research methodology

is mandatory for the development of reliable, valid, and pragmatic diagnostic

instruments by researchers, in order to enhance the process of theory building.

In addition, practitioners for the evolution and betterment of the DDIS can

effectively use such instruments and fmdings. This can only be achieved by

measuring the perceptions and experiences from the Health Administrators,

Doctors, and pharmacists involved in the system. Questionnaire survey has

been widely acknowledged as an efficient tool for assessing the perceptions of

individuals on a particular subject. Hence questionnaire was ~adopted as a tool

of data collection.

Table 3.1 Critical Factors of DDIS

EXPLANATION OF THE
I
CRITICAL
No. CRITICAL DIMENSIONS
DIMENSIONS
1. System of having the essential To prune the list of drugs based on generic
drugs list, based on WHO classification and treatment of diseases, WHO
recommendation (LOED) list serves as the reference

2. Forecasting of Drug To fix requirements and management control

Requirements usmg . DIS for procurement and distribution, forecasting
(FDR) coupled with comprehensive analytical data
avoids over-stocking and stock-out of drugs

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EXPLANATION OF THE CRITICAL
No. CRITICAL DIMENSIONS
DIMENSIONS
3. Procurement and distribution A well-defined system of procurement and
of drugs among Government distribution gives a detailed requirements
hospitals (PD) planning for all levels of medical institution
and they are connected electronically for MIS.

4. System of procurement and It is transparent and capable of m<:>dification

logistics of the new DDIS within a short time with 1 complete
(SPL) management control.

5. Specification codification m The standardization of packaging for the

the packing of drugs (CPD) supply and codification of all the drugs aids a
total management control with easy' access for
issues/ receipts.

6. Transparent tendering system Through electronic tendering, evaluation of

in the DDIS (TTS) tenders reduced to just a day against two
months, with greater supplier confi1ence.

7. System of centralized storage Hospitals draw drugs from the tentralized

in district warehouses for the warehouse in their districts through electronic
issues to respective hospitals passbook with budgetary provision. Based on
periodically (SCS) the type of hospital the drug list will be
limited.

8. Electronic passbook System EPS helps in maintaining the stock of the

issued to medical institutions drugs in the hospital as per budget allocation.
distributing drugs (EPS) It reflects the institutional performance and
aids forecasting of periodic if stitutional
requirements. 1

9. Use of Pharmacist Handbook UPH apprises pharmacists of the available

(UPH) drug choice, composition, and strength. Gives
update of the overall drug selection with
uniform work procedure arhong all
pharmacists.

10. Adherence to First-In-First Works on set norms of stock intake and issues
(expiry)-Out (FIFO) policy in and aids in the control of loss of drugs due to

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 EXPLANATION OF THE CRITICAL
No. CRITICAL DIMENSIONS
DIMENSIONS
stock management exp1ry.

11. Quality Assurance System of Maintains quality and efficacy of drugs

DIS (QAS) through stringent process; helps to identify
good suppliers and blacklist spunous
suppliers.

12. Monitoring and Evaluation of Methodical evaluation through efficient

Drug Availability usmg the management information systems aids all
DDIS (MEDA) levels of decision makers.

Table 3.2 Significance of all dimensions in the context of Health

Administrators, Doctors and Pharmacists

Sl. FUNCTION/DI HEALTH

DOCTORS PHARMACISTS
No. MENSION ADMINISTRATORS

1. System of Aids a very systematic Achieves close Works with

having the evaluation of the . levels of limited number
essential drugs DDIS as well as standard of drugs with
list, (LOED) standardization of treatment ease of access.
working. guidelines
2. Forecasting of Well-defined Issue necessary W arehouse/facili
Drug statement to plan for a indents to ty requirements
Requirements need based recoup the stock can be computed
using DIS procurement based on daily basis.
(FDR) requirements
3. Procurement As the drugs are in Prescription of Manage the
and distribution place, effective drugs (with warehouse from
of drugs among clinical management stock positions stocks-out,
Government in terms of known) to save maintaining
hospitals (PD) consumption is patients from efficient
feasible. non-issue of inventory levels
drugs.

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Sl. FUNCTIONIDI HEALTH
DOCTORS PHARMACISTS
No. MENSION ADMINISTRATORS

4. System of An effective Supply- Transparent Detai~s as

procurement Chain system throws pr9curement, acces~ible at all
and logistics of hght on all with supplier times through
1

the new DDIS management issues responsible for efficient systems

(SPL) across locations logistics. Quality. helps decision
time utilized makirlg simpler.
better.
I

5. Specification I Eliminates the Aids easy access Locating the

codification in complex evaluation of to drugs at the drug by its shape
the packing of bids and manage the stores as well as and size with
drugs (CPD) storing and access medicine easy access
issues at all levels. counter at the codes.
facilities
6. Transparent Elimination of Speedy Adherence to
tendering disputes among the replenishment of order value and
system in the bidders and that of stocks, thereby supplied value to
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DDIS (TTS) false claims. Reduced reducing stock- smoofhen
processing time with out situation wareliouse-
regard to tenders. operations.

7. System of From all warehouses, Link between Help$ in

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centralized transaction data are warehouse and identifying the
storage in pooled to give a State- hospital ensures hospital
district wide reporting and periodical flow requirements and
warehouses for hospitals are of stocks and managing the
the issues to connected efficiently elimination of stoc~ position as
respective to the respective stock-out and well fs aiding the
hospitals warehouses for a emergency forecrsting
periodically seamless management requirements function
(SCS)
8. Electronic Helps in connecting Aids prior Helps assessing
passbook the hospitals information on and reconciling
System issued periodically and requirements requirements
to medical having an update of above budget to against budget
institutions for drug issues and obtain necessary provision and
distributing receipts sanctions stocks'
drugs (EPS) availability.

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Sl. FUNCTION/DI HEALTH
DOCTORS PHARMACISTS
No. MENSION ADMINISTRATORS

9. Use of A uniform standard Enforce standard It helps to

Pharmacist was enforced among in issues and delegate duties
Handbook the pharmacist to receipts at the efficiently
(UPH) build a standard of stores.
work

10. Adherence to Eliminates Expired drugs Store and issue

First-In-First obsolescence of drugs are prevented drugs in a
( expiry)-Out by identifying the fast from being systematic
(FIFO) policy expiry drug. issued to manner
in stock patients
management
11. Quality Based on enhanced Ensures that Contribute to the
Assurance QA, vendor quality drugs segregation of
System of DIS performance, and are issued in the drug by
(QAS) safety and efficacy of Government batches and
the drugs are ensured hospitals at all concealing their
times identity and sent
to QA for check
and scrutiny
12. Monitoring and Control of day-to-day Quality data Information on
Evaluation of issues and timely available for drug availability
Drug interventions to make overall clinical aids to recoup the
A vail ability the system efficient management stock levels.
using the DDIS
(MEDA)

In order to empirically validate the 12 DDIS constructs; a survey instrument

consisting of 90 items has been developed. This instrument has been developed

on the basis of an exhaustive review of the literature (prescriptive, conceptual,

empirical and practitioner) and also based on a pilot survey among practitioners

(Health Administrator, Doctors and pharmacists) involved in the system. The

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 instrument has been refmed several times based on the pilot study fmdings and

on the comments and suggestions of the experts. The instrument has been so

'1f- developed in order to maximally capture all the aspects of the system, with

respect to various dimensions of DDIS. The instrument has been developed to

specifically address the issues of the supply Chain in Health Domain. However,

the dimensions and the items (vis-a-vis the parlance) are highly flexible; in the

sense, the items (phraseology) can be modified to suit any health systems in the
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world. The instrument has been developed during 2000-2002 and the data

collection has been carried out during 2002.

3.3 KEY OPERATING ELEMENTS OF DDIS 12 CRITICAL

FACTORS

The DDS has been driven by various reports, which are the outcomes of key

subsystems that encompass the overall Supply Chain Management activities.

The various subsystems involved in the process are presented in the ensuing

passages.

Dimension 1: System of having the essential drugs list based on WHO

recommendation

Items of the dimension would include: Rationalization of drug procurement,

Streamlining of the quantification of drug procurement, Procurement of

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specialty drug as a special case, Enablement of efficient treatment of primary

and referral cases, Elimination of wastage of drugs

Removal of obsolete/expired drugs from the stores, Enablement of possession

of and operation with a compact drug list to have adequate control over drug

procurement and distribution.

Dimension 2: Forecasting of Drug Requirements ~ing DIS

Items of the second dimension would include: For~asting process suited for

Public Drug Distribution, Monitoring and evaluation of stock-out/over-stocking

of drugs and Meeting the requirements of Government drug distribution.

Dimension 3: Drug Procurement and Distribution for Government

Hospitals:

Items of the dimension include: Improvement in the quality of drugs

procured, Rationalization of procurement time, Creation of public confidence

on drugs' procurement practices, quality and availability and Achievement of

procurement price with competitive advantages.

Dimension 4: System of Procurement and logistics of the DDIS :

Items: Efficiency in the supply of drugs to various distribution points, Increase

in savings ·in transportation of drugs to hospitals, Centralization of control of

drug distribution and Improvement in accountability at the district and hospital

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levels. This dimension also include: Electronic transfer of information on drugs

from institution to warehouses and Centralization of payment to manufacturer

and prompt distribution.

Dimension 5: Specification I Codification are to address the following

concerns:

Items: Simplification and speeding up of tender evaluation, Rationalization

and reduced complication in drug handling during distribution and Elimination

of complication in tender evaluation.

Dimension 6: Transparent tendering system:

Items: Establishment of healthy competition m bidding and pncmg,

Facilitation of bidding by genuine firms alone with respect to supply of drugs,

Procurement of quality drugs from multi national firms at competitive prices,

Establishment of a transparent drug distribution system, Procurement and

delivery of drugs and Betterment of decision-making in procurement and

distribution system.

Dimension 7: System of Centralized storage in district warehouses for

distribution to hospitals periodically:

Items included: Utilization of drug storage as per drug movement,

Identification and consolidation of drug requirements at centralized warehouses

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of hospitals, Adequacy of space for issue and receipt of drugs, Prevention of

overlapping of storage of drugs simultaneously at hospitals and warehouses,

Use of FEFO policy to supply drugs before their expiry, Clarity in allocation

of storage facilities for various types of items and Installation of warehouse

information system for tracking of drug movement.

Dimension 8: Electronic passbook System:

Items: Monitoring of issue of drugs from centralized warehouses to hospitals,

Avoidance of over-drawing and wastage of drugs, Minimization of stock-out of

drugs, Betterment of control over drugs in the state and Generation of timely

MIS reports on the availability of drugs.

Dimension 9: Pharmacists' handbook:

Items: Optimization of pharmacists' freedom in decision-making, Facilitation

of a rational prescription pattern for doctors, especially in choosing an essential

drug and Reduction in difficulty in procurement of drugs not included in the

handbook-list.

Dimension 10: Adherence to FEFO:

Items: Automation and systematization of procurement, dispatch and

issue of drugs, Location of drugs batch-wise as per expiry, Effective

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arrangement of receipt of drugs in the order of expiry and Prevention of

complication at all stages of drug logistics.

Dimension 11: Quality Assurance System:

Items: Enhancement of quality of drugs, Favorable cost-benefit ratio out of QC

test, Building-up of public confidence towards Government-supplied drugs,

Improvement in vendor quality, and Prevention of issue of spurious drugs

Dimension 12: Periodic Monitoring and Evaluation of Drug Availability:

Items: Reduction in instances of stock-out I excess stock at all storage points,

Possibility of timely and effective intervention by the Government, and

Concentration of doctors' focus on treatment, rather than wasteful

administrative functions related to drug logistics.

3.4 DEPENDANT VARIABLES

Dimension 1: Operational cost saviug (in terms of procurement of drugs)

Items: Realization of cost savings in procurement, Realization of cost savings

in high-value drugs, Realization of cost savings in low-value drugs and

multifarious advantages of managing information

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Dimension 2: Bulk Procurement System:

Items: Attainment of cost advantage in terms of reduction in drug-procurement

prices; Reduction in budget expenditure through attainment of large~ quantity

of a variety of drugs within a sanctioned budgetary limit and Timely fulfillment

of hospital requirements

Dimension 3: Overall DDS effectiveness:

Items: Cost reduction and improvement in service, Enhaneed profection of

costs with regard to procurement of drugs against market fluctu~tion, and

Establishment of transparency, rationalization, and systematization of drug

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procurement and distribution.

Dimension 4: Drug Distribution and its impact on medical services:

Items: Quality of Health care, System-enabled dispensing of D~gs, and

Reduction of administrative paper work

Establishing and using a list of carefully selected essential drugs is pbrhaps the

single most cost-effective action that any health care system can take to

promote a regular supply of drugs. Essential drugs are those best suited to treat

the most prevalent illnesses afflicting a population. Logically, if ttiose drugs

were made available, then doctors would have the required drugs to treat

patients' common ailments. In addition, selecting the most useful drugs helps

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avoid wasting scarce resources on unnecessary, unsafe, or ineffective drugs. To

select the most appropriate drugs, selection teams depend on current

information on common illnesses, budget limits, and pharmaceutical advances,

as well as on input from doctors and pharmacists. In this way, codtributions

I

from the procurement, distribution, and components of the cycle infl~ence the

selection process and keep the drug management cycle in motion. The rationale
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for selecting a limited number of essential drugs is that it may lead to better

supply and more rational use and lower costs. Essential drugs are tho~e that are
I
deemed to meet the health care needs of the majority of the population and

therefore they should be available in the appropriate dosage fprms and

strengths at all times. Since drugs have such considerable impact on tpe quality

of care and the cost of treatment, the selection of drugs is one of the most cost-

effective areas for intervention in the healthcare system.

A list of essential drugs may be selected for use in one or more health facilities

of for the public sector as a whole. In the latter case, the list usuall~ indicates

the level of the health care system where each drug may be used. It can also be

considered a supply list. A formulary manual contains summary information

on a selected number of drugs, usually based on an essential bgs list.

Treatment guidelines are systematically developed statements that assist

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medical officers in deciding on appropriate treatments for specific clinical

problems. Whereas a formulary is drug centered, treatment guidelines are

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disease centered, presenting treatment alternatives, and reco11111lending a

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treatment of first choice. Essential drugs are selected based on relevance to the

pattern of prevalent diseases, proven efficacy and safety, adequate · scientific

data and evidence of performance in a variety of settings. Cons~derations

include adequate quality, favorable cost-benefit ratio, Desirable

pharmacokinetic properties, and possibilities for local m$ufacture,

'
Availability as single compound and, identified by the generic.name. j

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3.5 FORECASTING OF DRUG REQUIREMENTS (FDR) USJNG DIS

Forecasting of the drug requirement is done by consumption method, wherein a

list of all drugs eligible for procurement is prepared, and the most accurate

inventory records of past consumption are used to calculate the quantities of

each drug by days/weeks/months. Consumption during a recent period of six to

twelve months is adjusted for stock outs to obtain the average monthly

consumption. Then the average monthly consumption is multipli~d by the

number of months to be covered by procurement and safety stock .levels (in

months) are also multiplied by the average monthly consumption. these two

figures are added to get the gross needs during the period, with the stock on

hand and any stock on order subtracted from the gross estimate, to derive the

quantity to purchase.

The anticipated unit cost for each drug (not the last unit cost) is multiplied by

the number of units to be purchased to obtain the expected purchase value for

the entire quantity. All purchase values for individual drugs are added to

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obtain the total expected procurement cost. If this cost is greater than the

budgeted cost, adjustments are made. The method employed in forecasting of

drug requirements is based on consumption method, which has stabilized over

the years. It aims at maintaining minimum stock level of all' EDL drugs. The

minimum stock level can be maintained by periodical reordering based on (a)

Previous month I quarter consumption, (b) stock on hand (c) Lead. time for

supply and (d) Nature of the drug. This will help hospitals in lifting drugs

based on demand, thereby avoiding over stocking and wastage of funds.

An ideal formula for having five-month stock level will be as follows:

[Average requirement per year = (Stock on Hand + Quantity in pending

order)*O.S.] By this formula, three months' base stock and two-month stock on

pipeline can be maintained. While fixing the average requirement, any quantity

ordered for special schemes I specific requirements must be taken care, as

otherwise, the anticipated requirement will be high, further based on

anticipated requirement received from institution. With the actual consumption

quantity for the preceding three years, the actual requirement has to be arrived

at for each drug specifically.

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3.6 PROCUREMENT AND DISTRIBUTION OF DRUGS (PD)

AMONG GOVERNMENT HOSPITALS IN THE STATE

Accurate and timely information is critical at each stage of the process of

effective procurement of drugs. The effective fuoctional advantage of the

procurement systems that are in place in the TNMSC system included:

information for quantification and tender documents, Collate offers for

adjudication, Issue notifications of award and purchase orders, Track order

status, and compliance with contract terms, Manage communications with

contract suppliers and Track suppliers' performance for future tenders.

Effective drug distribution relies on good system design and good

management. The system is a well-designed and well-J.?anaged distribution

system that includes: maintenance of constant supply of drugs, keeping drugs

in good condition throughout the distribution process, minimization of drug

losses due to spoilage and expiry, maintenance of accurate inventory records,

rationalization of drug storage points, use of available transportation resources

as efficiently as possible, reduction of theft and fraud, and provision of

information for forecasting drug needs.

3.7 SYSTEM OF PROCUREMENT AND LOGISTICS OF THE NEW

DDIS (SPL)

For procurement, the first step is to invite bids. Invitation of bids undergo

number of procedures that include the publication in National dailies having all

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India circulation, which may be in local language and one in English, and

publication of invitation for bids in the web site. This will help in the

participation of importers and foreign manufacturers resulting in considerable

improvement in quality and reduction in the procurement rates. Copies of the

international competitive bidding (ICB) are being sent to the manufacturers and
.
to all leading Pharmaceutical Associations and Journals.

3.8 SCRUTINIZING PROCEDURE

Scrutinizing teams may be formed. The persons for the scrutinizing team may

de drawn from the Directorate of Drug Control along with the personnel of the

Corporation. As soon as the cover "A" is opened in the presence of the tender

committee members and bidders, it can be sent to the scrutinizing team with a

computer check slip. The scrutinizing team can scrutinize the document with

the check slip and record their remarks.

3.9 SPECIFICATION I CODIFICATION IN THE PACKING OF

DRUGS (CPD)

Quality is defined as conformance to specifications. The manufacturer supplies

the tendered products following specifications that ~e stated correctly without

any ambiguity in the system. The choice of a product is a pre-procurement

function but appending the correct specifications is an exercise towards

quality assurance and need based. In the procurement of drugs the

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 specifications should include the correct technical name suffixed with the

pharmacopoeia references. The specifications should also include: the strength

and composition of the preparations, the total volume per container, of the

preparations, as in the case of the liquid oral or injections in ampoules or vials,

the route by which the product is to be administered or used, Special

requirement like coating of the tablets or score-lines on the tablets, The packing

size- that is the number of units per pack, The required primary and secondary

packing together with the specifications for the packaging material and the

accessories to accompany the product - like cutters for ampoules, applicators

for peccaries, measuring devices for liquid oral preparations, and not stating the

..- · specification or providing incomplete or wrong specification can lead to the

procurement of any other product that does meet buyer's requirement

3.10 TRANSPARENT TENDERING SYSTEM IN THE DDIS (TTS)

The primary function of a procurement process is to obtain the required items

at the right time, in the correct quantities and at the most favorable prices. The

procurement process involves; identification of potential suppliers, selection of

the most cost-effective supplier for each product, receipt of firm supply

contracts, and making sure that the suppliers and the health system comply

with contract terms. Competitive tenders are recommended for most drug

procurement in public sector pharmaceutical systems. In order to maximize the

benefit of pharmaceutical purchases, corruption and favoritism in procurement

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must be minimized. It is equally important to avoid the appearance of

favoritism, and hence process should be as transparent as possible. A formal

tender process includes drug selection and quantification, preparation of tender

documents and contracts, notification and invitation to bid, formal bid opening,

collation offers, adjudication and supplier selection, award of contracts,

performance monitoring of suppliers and clients and enforcement of contract

terms when necessary. Reliable suppliers are the cornerstone of effective

procurement; tender adjudication and selection of suppliers is the critical step

that determines the costs of drugs and defmes the integrity of the procurement

process. Adjudication should be based on formal written criteria and must be

free from influence by special interests.

Centralized storage in district warehouses for the issues to respective hospitals

periodically Centralized storage at all district warehouses aids the systems at

headquarters. The overall system is entirely dependent ' on the transaction

details sent from the respective warehouses. The details of the tendered

quantity and order quantity with reference to delivery to respective warehouses

are billed at the time of tender processing at the headquarters. The information

received from the warehouse is used for tallying the tender details to fix the

supply information as per the terms and conditions set out. In the process of

tallying the vital details, important management controls are established that

include those against: discrepancy in the ordered and delivered quantity of 1·

supply, damaged supply, inferior quality of drugs supplied to the warehouse,

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delivery beyond the time stipulated in the tender, consumption details which

are projected at the time of placement of orders and actual consumption

details received from time to time will enable a perfect inter-warehouse drug-

transfer at the headquarters, and Material receipt certificates produced at all

the district warehouse soon after the receipt of acceptable quantity (less

the damaged supply).

At the time of implementation of system, the One Time Entry of stock drug-

wise was being made and further the stock management has been controlled

through automated system. The major element of daily routine from the

warehouse management include - Receiving daily Inward and Outward entries

from all the Warehouses through Internet connected to Head Office Computer.

Data is getting consolidated and processed to fmd out the up-to-date stock

position at the various Warehouses and, District-wise stock-availability for

months is calculated along with consolidated availability for each drug. The

Stock transfer from the Warehouse, which has excess stock to the one that is

running short of stock, is routed from the centralized monitoring and evaluation

system.

3.11 ELECTRONIC PASSBOOK SYSTEM ISSUED TO MEDICAL

INSTITUTIONS FOR DISTRIBUTING DRUGS (EPS)

The drugs that pass in Quality Control are issued to the institutions by through

Passbooks. For the receipt of medicines, each institution is issued with the

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Passbook with the budget allotted by the respective Directors. One copy of

passbook (institution copy) is issued to the institution and the other copy

(Warehouse copy) is retained in the Warehouse. Institution can draw medicines

from the Warehouse to which is attached and necessary entries will be made in

the passbook while drug issue. They can draw the drugs up to the budget value.

If they need additional quantity of medicines they have to approach the

respective administrative heads for additional fund allotment The Passbook

performance is the indicator for monitoring the utilization of the institutions

and the stock of drugs at any point of time. We are sending the utilization

statement to the Directors in every quarter so that they can give instructions to

the institutions who have under utilized the funds to utilized it properly in time

without any lapse.

3.12 USE OF PHARMACEUTICAL HANDBOOK (UPH)

Pharmaceutical Hand Book is a manual form of electronic communication from

warehouses, needed as introduction of computers in peripheral centers, primary

health centers, sub hospitals will be an unviable burden on the Government's

exchequer. Besides, maintenance of databases in more computers would

require not only large number of machines but also require trained personnel.

The number of transactions at these places too few that it does not justify a

personal computer or a 2417 data monitoring system. Therefore, such practices

would be expensive and impractical. Such passbooks enable a complete

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accountability in terms of total number of drugs issued, consumed and

available, remaining to be replaced or reorder..ed.

3.13 ADHERENCE TO FIRST-IN-FIRST (EXPIRY)-OUT (FIFO)

POLICY IN THE DRUGS STOCK MANAGEMENT

An important aspect of stacking is the need for stacking the items in a batch-

wise manner, in other words First Expiry First Out. This is one of the greatest

challenges in warehouse as far as drugs are concerned, because as fresh stocks

arrive they tend to get accumulated in the front and the older stock gets out of

sight. To prevent this, the warehouse manager should be continuously shifting

the old stock to the front to accommodate the fresh stock behind it. This is very

tedious and is not practicable. An alternative method is to asses the space

occupied by a 3 months requirement (presuming that the policy is to stock three

months requirements) and the space allotted in the bay for this particular drug

would be for holding 6-month stock. In the procedure the drugs are arranged in

one-half of the bin, that is one side of the bin. The other side is kept empty to

accommodate the fresh stock. This method simplifies the task of managing the

goods in a batch-wise manner, which is crucial to the successful management

of the warehouse. A bin card is a separate record for each item and maintained

at the bind itself. It indicates the name of the drug, strength, the quantity

received, the quantity issued and the balance now available with the batch

numbers. The bin card helps in the easy retrieval of the drugs.

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A totally computerized system for management of the stocks on the racks

includes plotting of the total storage area. Each bay and bin within the bay is

assigned a code. For instance the bays may be designated as A, B, C, and D etc.

The bins may be labeled using numerals i.e., 1, 2, 3 etc. Two different drugs

are not to be held in the same bin. If this practice is adhered to it is then

possible to locate the bin where each drug has been stocked. This is particularly

useful when a new manager or a temporary manager takes over in the absence

of the regular person. The system can be so programmed to indicate in a flash

all goods that are to expire within some specific time limit. The bins carrying

such stock would be highlighted on the screen. It is not necessary for the

manager to physically check and every bin. Integrating the stock position

system with the storage system would result in a comprehensive Rack

Information Management System (RIMS).

3.14 QUALITY ASSURANCE SYSTEM OF DIS (QAS)

In a procurement-distribution system of pharmaceuticals, a test report of every

batch of supply can be demanded from the manufacturer and the product

released on the basis of this report. Test reports could be sought from one or

more independent testing agencies apart from the manufacturer. For the

purpose of Quality Assurance (QA), samples are drawn by the warehouse

pharmacist as soon as goods are received and thereafter any time during the

shelf life period of the drug the samples are sent to the centralized Quality

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assurance system. Samples thus can be drawn from any other institution, which

draws its indents from this system. The samples analyzed after they are

dispatched, that is on arrival at the warehouse, through independent testing

laboratories. The samples may be coded for this purpose.

For purpose of testing well-equipped laboratories are empanelled and they are

stipulated with time period for the results. The QC wing receives the reports
I
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and action is taken as per the report suggesting the use or rejection of I

r·

medicines. On receipt of the QC instructions at the warehouse the batches are

released that is issued for frozen and returned to the manufacturer. Apart from

the routine the QC wing may ask for specific samples when complaints are

received regarding a batch or to assess the keeping quality of a product,

especially those that are generally unstable. If a batch, earlier released, was

found to have deteriorated, the QC wing issues a 'stop-issue' notice and a recall

notice. The same holds good for samples drawn by the local Drugs Inspector

for samples drawn during their inspections. In such instances, the warehouse

manager conveys to all the recipients of the particular batch that should be

returned, who should send a conformation to the QC wing, a compliance

statement regarding the recall.

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3.15 MONITORING AND EVALUATION OF DRUG AVAILABILITY

(MEDA) USING THE DDIS

The DDIS reports many of the decision-making that gives control to the

management of day-to-day operation as well as effective planning and

management of drug distribution to the medical institution. Overall monitoring

is dependent on the transactions details received from the respective

warehouses. Information received from the warehouse will be used for tallying

the tender details to fix the supply information as per the terms and conditions

set out. The details of the tendered quantity and order quantity with delivery to

respective warehouses are summarized at the time of fresh tender processing

based on the outcomes of Monitoring and evaluation on an overall perspective.

Periodical monitoring and evaluation of drug includes very vital stock and

fmancial statement, namely: The overall stock Statement in months

availability, re-order stock value and quantity, Drug order statement, Inter

warehouse transfer statement, Slow/Fast Moving, Discrepancy in the ordered

and delivered quantity of supply, Damaged supply, Quality of drugs supplied

to the warehouse, Time of delivery, The consumption detail, Time Expiry

details, Pass-book Statement, Un-executed Orders Supplier-wise, Quality

control failure/pass, abstract Order & Supply Value and, pending order

statement.

181
There are vital fmancial accounting statements, which aids the funds

management for the overall efficiency of the system and that are regularly

monitored and evaluated for the overall organizational efficiency. Financial

Accounting statement includes: Accounting at overall system and warehouses,

Receipts & Payments, Break Even Analysis, Account Receivable and payable

with ageing, Profit Planner (Warehouses-wise as well as regional office-wise

Profit & Loss, Trial Balance, Balance Sheet) The items with respect to the

various dimensions have been grouped and presented, so that the responder

may clearly understand the context in which the items represent. The list of

dimensions and the corresponding items have been listed in table 3.4. Data

have been collected from various respondents (Health Administrators, Doctors

and Pharmacists) demographically distributed in Warehouses and health

institutes. The respondents have been asked to indicate their perception of the

level of agreement with respect to each item on a 5-point Likert scale (from 1

indicating Strongly Disagree to 5 indicating Strongly Agree). A total of 362

respondents from 22 different warehouses and Health institutes have been

approached from whom 254 correctly completed questionnaires have been got,

yielding a response rate of around 70%. The high response rate is due to the

personal-contact approach used followed by periodic follow-ups over telephone

and personal visits.

182
Table 3.3 Distribution of respondents

Type of Respondents Number of Respondents

Doctors 192

Pharmacists 43

Health-Care Administrators 19

Total 254

3.16 SCALE REFINEMENT AND VALIDATION

A crucial aspect in the evolution of a fundamental body of knowledge in any

management theory is the development of genuine measures to obtain valid and

reliable estimates of the organization-level constructs and their relationships to

another. Hence, research should initially identify the intrinsic dimensions of

quality management, check that they are measured reliably, and validly and

subsequently ascertain their influence on organizational performance (Flynn et

al., 1994). Without establishing the reliability and validity, it is hard to

standardize the measurement scales, without which it is difficult to know

whether the scale actually measure what they are suppose to measure.

Therefore, the frrst step in scale development and refmement is to expound the

theory and concepts that underlie a particular management concept. This can be

achieved through an extensive review of the literature and the subsequent

\
183
 identification of the critical dimensions of the construct (in the present study, it

is DDIS) that is intended to measure. The Second step is the design of a survey

instrument by careful selection of the representative items to measure each

factor. Step 3 involves pre-testing of the instrument either objectively or

subjectively by experts in the field (content validity checking). This next step is

the modification, refinement, and fmalization of the measurement instrument.

Data are usually collected through field survey and then the collected data is

factor analyzed (usually exploratory) in order to unearth the latent factors based

on item-factor loadings. Then the instrument is subjected to reliability and

validity, thereby operationalization and standardization are ensured. All the

above-mentioned steps have been carried out in the present study with only one

exception. The technique used here for factor analysis is Confirmatory Factor

Analysis (CFA) approach, as opposed to the conventional Exploratory Factor

Analysis (EFA) approach.

Traditionally, the EF A approach has been used in organizational behavior and

marketing research. EFA is designed for the situation where the relationships

between the observed and latent (factors) variables are unascertained or

uncertain. The approach proceeds in an exploratory mode to discover the

+ underlying factors, thereby illustrating the relationships between the factors and

the observed variables. The purpose is identifying the minimum number, of

factors that account for the co-variation among the observed variables.

However, this approach has certain limitations. The foremost limitation of this

184
 approach lies in the fact that in EFA, it is assumed that the correlations between

the variables are due to one or several underlying latent factors that generate

the raw data. Nevertheless, the researcher may have only a vague but not a

precise idea about these correlations or factors. Moreover, even if he/she is sure

about the existence of a particular factor, he/she may not know which variables

are best indicators of the factor (Byrne, 1994). Therefore, the researcher may

not even have tentative prior information about the processes that cause co-

variation among the variables and hence may not get any sound evidence on

which to make his/her interpretations. To elaborate further, items are assigned

to those factors on which on which they load most substantially. Therefore, it is

possible for an item to load to a significant extent on more than one factor and

hence the distinctiveness/identity of the factors is affected. Furthermore, in

pure EFA items are loaded on to a factor only statistically and not on any

theoretical basis, thereby affecting the valid identity of the factors. Finally the

concept of uni-dimensionality (i.e., extent to which items on a factor constitute

or govern one single construct) has not been taken care of in EFA approach

(Ahire et al., 1996). In essence, EFA is particularly useful, only in the absence,

of a sufficiently detailed theory about the relationships between the observed

+ variables and the latent constructs.

In contrast, the CFA approach overcomes the above mentioned limitations and

addresses the situation wherein the researcher specifies a model a priori, and

tests the hypothesis that a relationship between the observed and the latent

185
variables does in fact exist. In other words, the hypothesis that form, the

constraints are an integral part of the CF A technique. This is because the

researcher is aware of the number of factors that are required to explain the

inter correlations among the measured variables. Furthermore, he/she knows

which observed variables are presumably reliable indicators of each of the

factors, and which variables are not related to a factor. The postulated model

draws i~s logic from research outputs and other theoretical perspectives, and if

the researcher has a reasonably good idea about the likely number of factors to

be found and the variables that are expected to be highly influenced by a

particular factor, it is more appropriate to use CFA rather than EFA (Bentler,

1995). As research on DDIS is quite well founded and in view of the increasing

acceptance of the CFA approaches in organizational behavior literatures, the

present work has chosen to adopt the factor analysis in a confirmatory fashion.

Once a scale has been developed, its construct validity must be ensured so that

one can have confidence that explanations based on the proposed model reflect

reality. Construct validity is broadly defmed as the extent to which an

operationalisation measures the concept it is presumed to measure. It is

generally used to refer to the vertical correspondence between a construct,

which is at an indiscernible, latent, and abstract level, and a purported measure

of it, which is at an observable, operational level (Peter, 1981). In order to

check for the goodness of the overall model fit, the following hypothesis has

been formulated.

186
Hl: DDIS is a structure consisting of the 12 dimensions such as System of

having the essential drugs list, based on WHO recommendation (LOED),

Forecasting of Drug Requirements using DIS (FDR), Functional Effectiveness

in procurement and distribution of drugs among the Government Hospitals in

the State (FEPD), The system of procurement and logistics of the new DDIS

(SPL), The introduction of specification I codification in the packing of drugs

(CPD), Effectiveness of the transparent tendering system in the DDIS (ETTS),

Effectiveness of the system of centralized storage in district warehouses for the

issues to respective hospitals periodically (ECS), Effectiveness of Electronic

Passbook System issued to medical institutions for distributing drugs (EEPS),

Use and effectiveness of Pharmacist Handbook (EPH), Adherence to First-

Expiry-First-Out (FEFO) policy in the drugs stock management (FEFO),

Quality Assurance System of DIS (QAS), Periodical Monitoring and

Evaluation of Drug Availability using the DDIS (MEDA). A basic prerequisite

for construct validity checking is the urn-dimensionality of the measure. Urn-

dimensionality refers to the existence of a single construct/trait underlying a set

of measures. The most important and fundamental assumption in measurement

theory is that a set of items forming an instrument measures just one thing in

common. Urn-dimensionality alone, though a necessary condition is not

sufficient by itself to establish the usefulness of a scale. Once urn-

dimensionality of a scale is substantiated, its statistical reliability should be

assessed before it is subjected to any further validation analysis. Reliability of a

measure determines its ability to yield consistent results (Nunnaly, 1988). Even

a supremely uni-dimensional (and otherwise construct valid) scale would

render futile if the resultant aggregate score . is ascertained basically by

187
 measurement error, with the values of the scores broadly fluctuating over

repeated measures (Gerbing and Anderson, 1988). Hence, for each of the

1· scales, urn-dimensionality and reliability analysis have also been performed in

addition to ensuring construct validity. The various steps involved in the

development and validation of the measurement scale are shown by means of

flow chart in Figure 3.1 .

3.17 UNI-DIMENSIONALITY ANALYSIS

Items within a measure are useful only to extent they share a common nucleus

- the characteristics to be measured (Nunnally, 1988). It is highly difficult to

represent the value of a scale by a solitary number without the concept of uni-

dimensionality (Venkatraman, 1989). The problems associated with uni-

dimensionality can be further fme-tuned by removing those items from the

scales that reduce the extent of uni-dimensionality. CFA affords a stricter

interpretation of uni-dimensionality than other traditional methods like EF A,

item-total correlations, etc. For urn-dimensionality checking, a measurement

model is specified for each construct and CFA is run for all the constructs.

Individual items in the model are investigated to see how closely they represent

the same construct (Ahire et al., 1996). A Comparative Fit Index (CFI) of 0.90

or above for the model imply that there is no proof lack of urn-dimensionality

+ (Byrne, 1994). The CFI indices for all the 12 constructs present in the

developed instrument are shown in Table 3.4. All the CFI indices are above

0.90, denoting strong urn-dimensionality for the scales.

188
 Figure 3.1 Development and validation of the measurement Scale

Expound the theory and concepts that underlie a particular

management philosophy.
• Review of literature
• Identification of the critical dimensions of the construct

Design of survey instrumen y careful selection of the

representative items

Pre-testing of the instrument - objectively or subjectively by

experts in the field (content validity)

Modification, refinement and finalization of the instrument

Data collection (through field survey)

Factor analysis of data (Confirmatory Factor Analysis)

Remo'¥19 those items

that affect uni-
dimensionality

Remove items that will

improve internal

+ Proposed Measurement Instrument

189
Table 3.4 Uni-dimensionality, Reliability and Convergent Validity

Indices for the 12 DDIS constructs

Bentler
Comparative Cronbach
Sl. Bonett
Dimension Fit Index Alpha
No. Coefficient
(CFI) * (a)#
(.A.)v'

List of Essential Drugs,

based on WHO 0.952 0.841 0.946
recommendation (LOED)

Forecasting of Drug
Requirements using DIS 0.932 0.916 0.907
(FDR)

Procurement and
distribution of drugs among 0.981 0.743 0.931
Government hospitals (PD)

System of procurement and

logistics of the new DDIS 0.927 0.940 0.951
(SPL)

Specification I codification
in the packing of drugs 0.973 0.814 0.934
(CPD)

Transparent tendering
0.915 0.942 0.934
system in the DDIS (TTS)

System of centralized
storage in district
warehouses for the issues to 0.961 0.890 0.914
respective hospitals
periodically (SCS)

190
 Bentler
Comparative Cronbach
Sl. Bonett
Dimension Fit Index Alpha
No. Coefficient
(CFI) * (a)#
(~)"'

Electronic passbook
System issued to medical
0.907 0.939 0.899
institutions for distributing
drugs (EPS)

Use and Pharmacist

0.981 0.964 0.914
Handbook (EPH)

Adherence to First-In-First
(expiry)-Out (FIFO) policy
0.867 0.847 0.901
in the drugs stock
management

Quality Assurance System

0.957 0.867 0.931
ofDIS (QAS)

Monitoring and Evaluation

of Drug Availability using 0.991 0.804 0.981
the DDIS (MEDA)

Overall Model 0.907 - 0.957

191
Table 3.5 Uni-dimensionality, Reliability and Convergent Validity

Indices for the 4 DDIS outcomes

Bentler
Comparative Cronbach
Sl. Bonett
Dimension Fit Index Alpha
No.
(CFI) * (a)#
( .
Coefficient
)"'

Operational Cost Effectiveness

0.907 0.961 0.917
(OCE)

Cost and operational

effectiveness of Bulk 0.947 0.924 0.931
Procurement System (BPS)

Overall Effectiveness of Drug

0.927 0.931 0.918
Distribution System (0 E)

Drug Distribution System and

its impact on Medical Services 0.965 0.785 0.930
(IMS)

* CFI value of 0.90 and above testifies strong scale Urn-dimensionality.

#a value of0.70 and above testifies strong scale reliability .

../ _. Value of0.90 and above testifies strong scale convergent validity.

3.18 RELIABILITY ANALYSIS

Several measures of reliability can be evaluated in order to establish the

reliability of a measuring instrument. These include test-retest method,

equivalent forms, split-halves method and internal consistency method. Of all

192
the above methods, the internal consistency method reqmres only one

administration and consequently is supposed to be the most effective,

especially in field studies. Moreover, this method is considered to be the most

general form of reliability estimation. In this method reliability is

operationalised as internal consistency, which is the degree of inter-correlations

among the items that constitute a scale. Internal consistency of a set of items

refers to the homogeneity of the items in a particular scale. Internal consistency

is estimated using a reliability coefficient called Cronbach's alpha (Cronbach,

1951). An alpha value of 0.70 or above is considered to be the criterion for

demonstrating internal consistency of established scales (Nunnally, 1988). If a

scale is found to violate the above stipulations, its items are examined and

those with the least item-total correlations are taken away so that the reliability

is enhanced beyond the minimum requirements. In doing so, it is mandatory to

call for the researcher's judgment as otherwise a reliable scale lacking content

validity will result (Ahire et al., 1996). The Cronbach's alpha values for all the

twelve scales are shown in Table 5.4. All the values exceed well over the

obligatory requirements, thereby testifying that all the twelve scales are

internally consistent and has acceptable reliability values in their original form.

3.19 VALIDITY ANALYSIS

Consensus seems to be lacking in the methodological literature with respect to

the extensive variety of labels/tags and the way they are organized to describe

193
the validity of scales and measures. Different validity terms are used to reflect

numerous aspects of construct validity. A comprehensive, list of validity types

that are typically mentioned in texts and research works include: face, content,

convergent, discriminant and criterion related validity.

3.20 FACE VALIDITY

Face validity is the mere appearance that a measure is valid. Often a measure is

considered to have face validity if the items are reasonably related to the

perceived purpose of the measure (Kaplan and Sacuzzo, 1993). In face validity

one looks at the measure and see whether "on its face" it seems a good

translation of the construct. Though it can be argued that is probably the

weakest way of demonstrating the construct validity, it does not in any way

mean it is wrong, as the researcher on most occasions, has to rely on subjective

judgment throughout the research process. As the items representing the 12

DDIS constructs have been identified from the literature, their selection is

justified, thereby ensuring the face validity of the instrument. The face validity

has also been established through a thorough review by experts (both academia

and practitioners) in the field.

3.21 CONTENT VALIDITY

Content validity of an instrument refers to the degree to which it provides an

adequate depiction of the conceptual domain that it is designed to cover. Apart

194
from face validity, content validity is the only type of validity for which the

evidence is subjective and logical rather than statistical. Establishment of

content validity warrants sound logic, good intuitive skills and high I
I

perseverance on the part of the instrument designer (Kaplan . R., M. Sacuzzo.

D., P, 1993). If the items representing the various constructs of an instrument

are substantiated by a comprehensive review of the relevant literature, content

validity can be ensured (Bohrnstedt, 1983). As explained in the preceding

sections, the present instrument has been developed based on a detailed

analysis of the prescriptive, conceptual, practitioner and empirical literature.

Moreover, the content validity of the instrument, has also been ensured through

a thorough review by experts (both academia and practitioners) in the field.

3.22 CONVERGENT VALIDITY

Convergent validity is the degree to which, the various approaches to construct

measurement is similar to (converges on) other approaches that it theoretically

should be similar to. When a measure correlates well with other measures that

are believed to measure the same construct, convergent evidence for validity is

obtained (Kaplan and Sacuzzo, 1993). Convergent validity is based on the

correlation between responses obtained by maximally different methods of

measuring the same construct (Peter, 1981 ). The various approaches may

include completely different methods of administering the scale (e.g. postal

survey, telephone surveys, interviews, etc.). It can also be such that each item

195
in a scale is treated as a different approach to measure the construct (Ahire et

a/., 1996). By this method the convergent validity can be checked using a

coefficient called Bentler-Bonett coefficient <•). A scale with ._ values of

0.90 or above is an indication of strong convergent validity (Bentler and

Bonett, 1980). The values of._ for all the scales are summarized in Table 3.4.

It can be seen from the table that all the scales have a ._ value of more than

0.90, thereby demonstrating strong convergent validity.

3.23 DISCRIMINANT VAIIDITY

Discriminant validity of a measure is the degree to which the measure is not

similar to (diverges from) other measures that it theoretically should not be

similar to. Discriminant validity is ensured, by demonstrating a measure does

not correlate very highly with other measures from which it is, supposed to

differ. A scale possesses discriminant validity if its component items estimate

only one construct (Bagozzi et al., 1991). It is noted that discriminant validity

is an illustration of the uniqueness of the scale. Scales are tested for

discriminant validity using a chi-square difference test CFA is run for the

selected pairs of scales, keeping the correlation between the two factors as free

parameters. Let the chi-square value of this model be chil. In the next step

CF A is re-run for the same scales by fixing the correlation between the two as

1. Let the chi-square value of the second model be chi2. The chi-square

difference test checks for the statistical significance of the statistic (chil - chi2)

196
 at a significance of 0.01. The two constructs of interest are distinct and hence

unique if (chi l-chi2) is statistically significant. The above procedure should be

·;t repeated for all the possible pairs of scales in the instrument (Ahire et a!.,

1996). In the present study as there are 12 DDIS dimensions a total 66

discriminant validity checks (12C2 ) have been carried out. All the 66 tests

have been found to be statistically significant at a level of 0.01, thus indicating

that all the twelve factors are distinct constructs - a strong demonstration of

discriminant validity.

197
 -+ ·~ ~

Table 3.6 Bi-variate Correlations among the DDIS constructs **

LOEO OCE FOR PO SPL CPO TTS cs EPS EPH FEFO BPS QAS MEOA OE IMS
1. LOEO 1.00
2. OCE 0.81 1.00
3. FOR 0.64 0.74 1.00
4. PO 0.91 0.89 0.85 1.00
5. SPL 0.79 0.81 0.94 0.70 1.00
6. CPO 0.93 0.84 0.76 0.82 0.91 1.00

-
-.....)
\.0
7. TTS 0.94 0.67 0.73 0.69 0.80 0.95 1.00
8. cs 0.68 0.84 0.67 0.71 0.89 0.97 0.84 1.00
9. EPS 0.86 0.88 0.94 0.67 0.74 0.89 0.96 0.73 1.00
10. EPH 0.95 0.66 0.81 0.90 0.78 0.62 0.93 0.76 0.77 1.00
11 . FEFO 0.97 0.78 0.69 0.84 0.83 0.94 0.88 0.74 0.65 0.75 1.00
12. BPS 0.90 0.85 0.70 0.66 0.92 0.83 0.79 0.94 0.75 0.91 0.80 1.00
13. QAS 0.69 0.71 0.95 0.79 0.68 0.97 0.85 0.90 0.76 0.92 0.73 0.94 1.00
14. MEOA 0.95 0.87 0.91 0.67 0.61 0.97 0.75 0.82 0.91 0.67 0.82 0.95 0.72 1.00
15. OE 0.76 0.81 0.75 0.84 0.81 0.76 0.94 0.82 0.84 0.76 0.91 0.72 0.86 0.95 1.00
16. IMS 0.73 0.94 0.97 0.67 0.80 0.85 0.94 0.76 0.83 0.91 0.80 0.76 0.91 0.82 0.92 1.00

All correlations are statistically significant at p <= 0.01

3.24 CRITERION - RELATED VALIDITY

Relationships among the dimensions might be discussed as follows. The bi-

variate correlations among the constructs are summarized in Table 5.6. All the

correlations have been found to be statistically significant at the level of 0.01.

It is to be noted that all the correlations are positive. This fmding emphasizes

the belief that DDIS is a holistic philosophy and set of practices that has to be

executed as a whole rather than by piece by piece on a piecemeal approach.

There is a very high degree of interdependence among the constructs as can be

seen from the high correlations among all the factors. Correlations shown in

Table 3.6, indicate that all the scales have significant, positive correlations with

one another and thus criterion-related validity is established for all the scales.

The basic idea of criterion-related validity is to check the performance of the

measure against some criterion. Flynn et al. (1994) explained that criterion-

related validity is a measure of how well the scales symbolizing the various

practices are correlated to measures of perceived outcomes (i.e., the criterion).

Traditionally, criterion-related validity is evaluated by examining the

correlations of the different constructs with one or more measures of system

performance (Saraph et a!., 1989). In the present context criterion-related

validity is established by correlating the scales scores with overall effectiveness

considered to be the outcome of DDIS. To sum up, all the dimensions have

exhibited strong uni-dimensionality, reliability, convergent, discriminant, and

199
 -
criterion-related validities. Moreover, the Comparative Fit Index (CFI) and the

Bentler-Bonett coefficient ( •) for the overall model have also found to exceed

the minimum requirements. Therefore, hypothesis Hl is accepted implying that

DDIS can be conceptualized as a -dimension structure composed of the above

identified dimensions. The instrument thus standardized can be used to

measure the levels of DDIS practice in Health organizations.

200