Like it or not, hospitals are in the steel business. Buying steel. Cleaning steel. Packaging steel. Storing steel. Moving steel. One health system in one year moved 28 million surgical instruments—some 14 million pounds of steel equivalent to 4,300 automobiles—purchased from over 200 vendors and valued at $40 million.
No wonder the OR accounts for up to 35% of total hospital costs. No one has really mastered this steel business. And no doubt you know about the constant potential for waste in managing these complex assets across your institutions.
Luckily, with extraordinarily smart data tools, a little extra teamwork, and some expert guidance, the most egregious waste is getting easier to locate and eliminate.
What’s in a name? Well you might be surprised how much time you’re wasting in and around the OR simply because different vendors, departments, and systems use different names and codes for the same items. You can’t know where your stuff is if you don’t even know what your stuff is called. And if you don’t know where your stuff is, you can’t deliver the right stuff to the right place, right on time.
Let’s say the very same surgical instrument tray is called a “General Minor Set” on the surgeon’s preference card in the EMR system and a “Minor Set” in the hospital’s inventory tracking system. This is one example of a rather common occurrence. Someone has to settle the discrepancy, find the right tray, and get it to the right room.
If someone cannot settle this discrepancy in time, the set doesn’t show up at the scheduled OR start time. Now that surgical instrument tray suddenly grows a whole lot more expensive. With an 8-minute delay at $62 a minute, your completely unnecessary and totally avoidable naming mix-up just cost your health system 500 bucks; not to mention, a patient unnecessarily waiting under anesthesia on the table.
The last-minute rush to compensate for such dirty data also wastes labor. When your people are moving steel without purpose, they are working inefficiently. That inefficiency costs you now and later. It costs you immediately in the poor utilization of your current staff. And it costs you over the longer term in hiring and training new staff you don’t really need.
For total knee replacements, one OR ordered 8 surgical sets with an average of 60 instruments per set, or 480 instruments, daily. But they only used 25%, or 120 instruments.
Add it up. That’s 360 unused instruments cycling through the OR, decontamination, washing/disinfection, assembly/maintenance, sterilization, and storage. That’s 360 instruments that could’ve been repurposed for other surgeons performing other procedures in other ORs. That’s 360 unused pieces of inventory you could altogether eliminate from your next purchase orders.
Everything starts with the cleanest possible data that gives you the clearest possible view of supply and demand. First, you need to know the difference between what you use every day, what you’re saving for a rainy day, and what you’re not using at all. Only then may Supply Chain, Operating Room, and Sterile Processing, in close collaboration, begin elevating the conversation and start moving along the path to peak performance.
In our experience, supply chain executives who enjoy this broader view of surgical instrument inventory and utilization, soon change their purchasing behaviors and priorities. Enhanced contracting often rises to the top of the list.
In a typical primary vendor agreement, a health system may agree to purchase 80% of the surgical supplies it needs through that particular vendor. But few such contracts can truly be honored. Most health systems are buying most of their supplies from 50 or more vendors without specialized contracts. Here’s the origin of our nomenclature problem. A fragmentation of suppliers and disharmony in the surgical inventory causes troublesome variations in names and codes and wasted time and motion in the OR.
Some supply chain executives at leading health systems are looking instead at contracting vendors by specialty. They’re creating incentive pricing for increased compliance, growing current accounts with current vendors rather than taking on expensive new starts.
It’s an exciting time to be working at this intersection of Big Data and Big Steel. Naming conventions are only one part of how we clean data to clear the view. Every day we are helping our clients find new ways to turn information into insights and insights into action. And some days, we learn things we never knew our tools could do and create things we never dreamed of creating. Because there are plenty more efficiencies and plenty more savings to be found along the road from chaos and complexity to clean and simple.
Brian Reed is Co-Founder and CEO of Ascendco in Chicago. He has over 15 years of experience with leading surgical device manufacturers in Europe and has been a trusted advisor to the most progressive health care systems in the U.S. and to hospitals around the world. Outfitting surgery departments with superior data, analytics, and software, Ascendco is helping providers better manage their most complex assets and helping people work together to reach new heights. Comments or questions for Brian can be sent to