09/05 2013

Reflecting on AHRMM 2013

If you attended the 51st Annual AHRMM Conference in San Diego recently, you might have noticed that vendors representing inventory management solutions were more numerous than in previous years. This was confirmation for me that hospitals as a whole are putting more emphasis than ever on inventory control. Also, it shows that the market is catching on and offering more options to hospitals. This is all good. The more competition there is, the better – it helps bring newer and more sophisticated solutions and technologies to the hospital environment to address the many complex issues associated with managing medical supplies and devices.

Despite an increase in the number of offerings at AHRMM, however, I didn’t see many vendors offering comprehensive solutions that address the variety of needs across the healthcare supply chain. And their lack of emphasis in most cases on the importance of complete and thorough inventory data capture surprised me, especially since hospitals are now demanding more data and analyses to help them gain better control over their inventory-related expenses.

Additionally, one thing that shocked me at the conference was the totally anachronistic approach of some consulting firms to inventory management problems. One firm was actually arguing that in a particular case study where a hospital was losing $4 million per year due to mismanaged inventory and shrinkage, it should add 30 staff people (yes, you read that right) at $50,000 per year per staff ($1.5 million total) in order to manage the inventory; their theory was that this would result in a net savings of $2.5 million per year.

The math sounds pretty attractive, but I seriously doubt that this equation could work in higher end job markets like San Francisco, NYC, Boston, and so on. Also, this solution is just out of touch with hospitals’ current reality. Who in the healthcare supply chain in recent years has been able to hire and sustain more staff? All we have been hearing lately is the mandate to do more with fewer people, not more. And can that consulting firm guarantee that spending $1.5 million on added staff really erases $4 million in shrinkage? Needless to say, this is not a sure thing.  To make matters even more ridiculous, this particular case study had to do with the waste of consigned items which weren’t even owned by the hospital (p.s. – shouldn’t the manufacturers of these products be taking some responsibility for their own inventory?).

Most importantly, we live in the 21st century, and we need to keep encouraging and supporting hospitals to modernize their processes. A much more logical and effective approach for hospitals is to invest in long-term technologies that ensure increased productivity and efficiency. By spending a little money up front on technological solutions that solve such entrenched problems as mismanaged inventory, hospitals see dramatic savings within a few short months.

05/28 2013

The Crisis of Medical Billing Practices Today

A couple of articles published in the past couple of months about hospital billing have illustrated a great crisis of our modern healthcare system in the U.S. There was the very informative but disturbing article in Time magazine in March, “Bitter Pill: Why Medical Bills Are Killing Us” by Steven Brill (, which made no apology about exposing both for-profit as well as non-profit hospitals’ mind-bending billing practices that prioritize boosting the bottom line rather than caring for patients.

The other article, published more recently earlier this month by the New York Times, “Hospital Billing Varies Wildly, Government Data Shows” (, drew attention to the disparity in cost charged to patients for identical care from one hospital to another, transcending regional variations as hospitals literally sitting across the street from each other charge vastly different amounts for the same procedure.

Both articles underscored the reality that the cost of providing care and the prices charged to patients are completely unrelated, and that hospitals follow obscure billing practices that rely on mysterious formulas. What is the true cost of care? I’m not arguing against hospitals’ charging a fair market value for their services and turning a profit. But fair market value is what’s key here – and the best interests of patients – not the financial gain of hospitals.

What I also find unnerving is that there is absolutely no transparency or guideline as to the method of pricing and charging for their services. Imagine going to a grocery store and depending on your method of payment or where that store is located, the total for your shopping cart may go from $100 to $800. In a transparent and real market economy, patients would be able to compare the price of healthcare services among providers in order to obtain the best services at the best cost. Where else do consumers engage a service without any knowledge of the price they’ll have to pay at the end? Nowhere but healthcare where patients only realize the financial trouble they’re in once they receive the bill, which can leave them anywhere from baffled to bankrupt.

Let’s give patients the power to decide where to spend their healthcare dollars. Usually when consumers are empowered, providers compete to provide the best service at the best price which should result in lower healthcare costs, more efficiency in delivering services, and increased quality and outcomes.

04/18 2013

VUEMED and Optimé Supply Chain team up

We’re very excited about our new collaboration with Optimé Supply Chain.  You may have seen on or on Yahoo! Finance that VUEMED and Optimé have joined forces to create OptiVue™, an exclusive Web-based software system that combines VueTrack™ and SmartANALYTICS™ (by Optimé).

OptiVue™ is a critically important development because it solves the data problem that exists in most hospitals. It does this by giving hospitals the tools they need to access, gather and analyze the data required to make informed decisions about their inventory composition, supply purchases, clinical utilization and comparative effectiveness.

OptiVue™ breaks down IT system silos in hospitals and creates a seamless, integrated data flow from otherwise fragmented applications, such as materials management, clinical information systems, billing and electronic medical records. OptiVue™ also connects patient, demographic and account information to the supplies used at the point of care, as well as to the performing physicians and procedure type.

For more information, check out our new OptiVue™ page on this site.

02/27 2013

Collaborating with hospital IT departments

We were recently asked to share any particularly difficult experiences we’ve had managing an organization’s inventory. For us, the biggest challenges have probably been with the IT departments of hospitals. Whenever a hospital brings in a new technology to improve its clinical inventory management, there are always a number of IT hurdles to overcome at the implementation phase – this is normal. But IT problems should never be the cause of implementation delays or failures. Once we had to wade through massive red tape in order to get the right IT forms completed and approved by the appropriate authority – it almost undid the whole process. Another time, our problems were due to an overburdened and poorly managed IT department that could not allocate resources to the effort.

In both of these cases, the clinical users and materials management had been the driving force behind the acquisition and adoption of the new technology, and their IT department was simply not prepared or willing to take on another project. In essence, there was no buy-in. One lesson we learned from these two experiences was that the IT department should always be an active participant in the technology purchasing decision, and should understand from the outset its responsibility to provide complete support to the implementation process.

Thankfully, we have also experienced the opposite – where IT has been an instrumental part of the process, very involved and a true supporter. In hospitals where this has been true, the IT staff had a much more collaborative and accommodating approach toward the clinical users. This is crucial because although there will always be limited resources, the priorities must be driven by the needs of the users on the front line of patient care. Complete buy-in from the IT staff who are also knowledgeable about the applications they support is critical because these staff serve as a central point of communication between the users and the vendors.

Over time, all IT departments will recognize that inventory management has become a core technological part of the hospital environment that will only continue to grow in importance and must be embraced as such, as vital as any other system supported by IT.

01/30 2013

Patient safety – lessons from other industries

When I was at the OR Manager Conference in Las Vegas this fall, I met one of the OR managers who recounted to me his ordeal getting there from the East Coast. As this was a long trip, he had upgraded himself to first class and was just getting settled into his seat when the Captain made an announcement that the plane had a mechanical failure and everyone needed to get off and be rerouted. Although his non-stop, first class trip quickly turned into a multi-leg, multi-hour affair, he was telling me this story because he saw a connection between the airline industry’s impressive safety orientation and his own reason for attending this conference, which was patient safety. It’s been said before that if the airline industry ran like the healthcare industry, we’d have every other plane falling from the sky. While meant as a joke, this statement has some truth to it; the healthcare supply chain industry could certainly learn a thing or two from the airline industry’s ability to respond immediately and effectively to safety issues – not only to identify them, but also to take action and fix them.

The healthcare supply chain could also take a lesson from the world of public health. Take the recent fungal meningitis outbreak caused by contaminated steroid injections distributed by the New England Compounding Center. As of January 14, 2013 there were 678 reported cases of infection in 19 states, with 44 deaths. As described in an article published in the New England Journal of Medicine on December 19, 2012 (, “one critical component of the public health response was the rapid, active outreach targeting both patients and clinicians.” In fact, as it goes on to highlight, “…all states achieved near-complete notification of exposed persons…”

In an article entitled “Supply Chain Lessons from an Epidemic,” the author, Ed Hisscock of Optimé Supply Chain (, explains how this meningitis outbreak has helped clarify for him what needs to change in the healthcare supply chain. As he so aptly asks, “What if the fungus that tainted the steroid was in/on a stent, catheter or some other supply item? We would not know who received the tainted product; we couldn’t avoid further exposure because we wouldn’t know where the tainted product is in the supply chain; and we likely would not have ready access to viable alternatives.”

Indeed, if the tainted steroids were instead a device used for a medical procedure, there would be no way to track it to the patient since the vast majority of healthcare providers do not record detailed product information such as lot/serial number and expiration date, or tie this information to the patient that the product was used for. This gap is alarming, particularly when we consider the statistics on product recalls: according to the FDA, there were 277 medical device recalls affecting 82 million units in the 1st quarter of 2012, of which four percent were Class I recalls (those which pose a serious risk of injury or death).

I’m hopeful (and I see the evidence of action underway at many organizations) that the increased focus on patient outcomes as a result of the Affordable Care Act, as well as the heightened scrutiny of the quality and integrity of electronic medical records, will lead to greater emphasis on the role of the supply chain in patient safety. Considering the prevalence and importance of medical devices in patient care delivery, this should be a no-brainer.

01/10 2013

GI departments take control of their clinical inventory

We’re happy to report that GI departments are now enthusiastically joining the ranks of other specialty procedure areas – such as Cath Labs and EP, IR, and OR departments – in recognizing the need for greater clinical inventory control and supply documentation. Despite their being typically smaller departments, they use sophisticated and costly medical devices and products and are procedure intensive, making them perfect candidates for solutions like VueTrack™. In recent months VUEMED has implemented VueTrack™ at the GI departments of Massachusetts General Hospital and Washington Hospital Center, both major cosmopolitan teaching hospitals. MGH and WHC are forward-looking institutions committed to managing their inventory, improving product traceability, doing effective recall and expiration management, and achieving best-in-class clinical documentation. They should serve as models for other GI departments looking to save money and improve patient care.

09/04 2012

How to ensure accurate charge capture in hospitals

There have been a number of posts on the AHRMM (Association for Healthcare Resource & Materials Management) listserve recently regarding the challenge of ensuring accurate charge capture. As former consultants and currently healthcare IT company executives, we see this problem at most hospitals. It stems from the fact that supply chain organizations depend on clinicians to properly document product usage, yet clinicians often lack the tools to do so effectively.

The reality is – as most supply chain folks would agree – that nursing and charge capture just don’t marry well. Nurses go into nursing to deliver care to patients, not to document clinical inventory usage. During a procedure, this responsibility feels like a burden and a distraction from their duties as clinicians. To make matters worse, the processes and technologies in place are usually inadequate at best, making the documentation task lengthy, error-prone, and frustrating.  It’s no surprise that the charge capture job isn’t performed well.

So if you’re a supply chain leader tasked with ensuring better charge capture, what are your options?

  1. You can train the nurses better. This tends not to work very well, though, because additional training doesn’t address the root causes of the problem. The problem is not that the nurses fail to realize how important documentation is and are just sloppy. Rather, it’s because they haven’t been given the adequate tools and because they have to deal with a chaotic clinical environment.
  2. You can reduce the variability in inventory and minimize the number of SKUs. This can reduce confusion and make documentation easier.
  3. You can ensure that all items used are available in the item master and the clinical documentation system. But there will still be issues documenting products brought in by vendors which are not carried in the regular inventory.
  4. You can communicate better the cost of items to the nurses so that they know how expensive certain products are and, therefore, how important it is to document them accurately.
  5. You can make sure that the supplies are better organized and that the case carts are stocked more accurately so that the nurses can find items more easily and spend less time hunting for the right product. This would buy them more time to spend on documentation and charge capture.
  6. You can also add staff – a circulating nurse or clinical assistant to do the documentation, or an auditor to hunt down the information for each procedure to get the billing and charge capture right. Clearly, though, this is not a cost-effective option.

In our experience, the single most critical roadblock to accurate charge capture is the lack of user-friendly, capable and reliable technology. Nurses will tell you that the system they use is too complex, that it has too many pull-down menus, that the field for defining and finding a product is restricted to so few characters that they cannot tell one SKU from another, and so on.  As a result, nurses often use a back-up method that is largely manual (multiple charge sheets, hand-written notes on stickers, etc.)

We designed VueTrack™ with all of this in mind. VueTrack™ is a software and web-based system that ensures swift and accurate supply charge capture in hospitals’ procedure-intense areas, while minimizing any distraction or workflow changes not aligned with clinical care processes.

Nurses have the desire and the will to do accurate clinical supplies documentation because they understand that what is used in a procedure makes it to the patient’s medical record.  What they need are the right tools that can save them time as well as ensure 100% accuracy in documentation, which would give them more time to do what they do best – nursing.

08/30 2012

Reflections on the 2012 AHRMM Conference

As I’ve written about before, we commissioned a survey of physicians last summer, in collaboration with The Optimé Group – one of our supply chain partners – in order to evaluate physicians’ perspectives on their relationships with materials management and supply chain organizations, including with regard to product selection and purchasing decisions. At the recent AHRMM (Association of Healthcare Resources & Materials Management) conference earlier this month in San Antonio, TX, Ed Hisscock of Optimé Supply Chain moderated a panel of physician leaders actively involved in supply chain-related functions in their respective organizations.  These physicians represented industry-leading facilities: Dr. David A. DiLoreto of Resurrection Health Care in Chicago, Dr. Tom C. Krejcie of Northwestern Memorial HealthCare in Chicago, and Dr. Sean Lyden of Cleveland Clinic in Cleveland.

In Hisscock’s reflections on the conference, he remarked that supply chain practitioners have a responsibility to inform their clinical stakeholders about patient-centric supply utilization and to advocate for patient safety and quality improvements.  He also noted that there can be profound improvements in patient care simply due to better clinical supplies documentation – knowing what products were used, when they were used, and how they affected the clinical outcome.  But how many supply chain practitioners can provide such utilization data to physicians?  As the industry increases its focus on outcome measurement, supply chain organizations will be called upon to provide peer utilization data.  In Hisscock’s words, “We will need to advocate for patient safety via GTIN adoption, assemble data for peer utilization and comparative effectiveness studies, participate in EMR and clinical information systems implementations and, in general, do whatever it takes to ensure that supply chain is being all it can be to support improvements in patient care…from both a cost and quality perspective.”

Contrary to common belief among materials managers, physicians respond very well to data about their own consumption of clinical supplies and don’t mind being compared to their colleagues in a transparent manner using their own names.  The data has to be reliable and accurate for them to trust it, though, and oftentimes the lack of such trustworthy data is where the opportunity to open a frank dialogue between materials management and clinicians fails before it has a chance to start.  My years of experience doing healthcare consulting have shown me that physicians are generally pretty competitive individuals who are constantly striving to improve their practice and – as the physician panelists agreed – when reliable patient outcome data shows them that leaner or less expensive product usage yields equivalent clinical results, for example, they are more than willing to change their purchasing habits.

05/31 2012

GS1 Standards Alone Inadequate for Managing Inventory

There are some in the healthcare field who believe that when hospitals adopt GS1 standards ( and integrate them into their MMIS (materials management information systems), this is enough to control their clinical inventory effectively.  I argue that this is not a satisfactory solution to the challenge of clinical inventory management and documentation.  The adoption of standards is important for any industry, certainly including the healthcare sector.  However, the issues that need to be addressed in healthcare go beyond just the adoption of standards.

For example, most clinical documentation systems currently are not able to parse GS1 barcodes, which makes it difficult to scan items with such barcodes because every time the lot/serial number and expiration date change, so does the barcode.  As a result, the pedigree information would still have to be entered manually (assuming receiving system accepts such information).  In addition, MMIS systems are generally not set up to receive/maintain products for each clinical department, but rather to receive against a PO and then to be expensed to an individual department.  Once expensed, this inventory is “off the books” and invisible until the next physical count.  Furthermore, MMIS systems have limits in the length of product descriptions, and those descriptions can be quite obscure and difficult to understand, not to mention categorize and report on.

On the other hand, there are a number of important advantages provided by a true clinical inventory management system such as VueTrack™.  With such a system departments can: (1) maintain an accurate count of on-hand inventory at any given point in time; (2) monitor consignment levels; (3) track expirations and recalls; (4) compare what’s utilized for patient care versus what stagnates; (5) and dynamically calculate appropriate par levels based on actual consumption history, thereby avoiding waste.  Additionally, clinical inventory management systems track inventory and facilitate the clinical documentation process across all clinical departments, regardless of the limitations of clinical systems or their barcode reading issues.  Furthermore, interfacing with a system such as VueTrack™ eliminates all issues related to barcode recognition and lot number/expiration date capture and documentation errors, and also simplifies and expedites the recording of product utilization.  Finally, true clinical inventory management systems can maintain a common database and nomenclature for both inventory tracking/replenishment and clinical documentation purposes.

04/20 2012

The problem of inaccurate clinical supply documentation

At a recent HIMSS conference last month, I co-presented at a Supply Chain Special Interest Group session regarding the problem of poor clinical supply documentation accuracy at the point of care and its implications for hospitals’ financial/risk management and quality of patient care. The goal of this meeting was to create awareness in the healthcare IT community around these issues and to ensure that as more organizations implement EMR systems, we don’t forget the basics – making sure that there’s integrity in the data that ends up in the EMR.

These problems are particularly common in specialty procedure areas (OR, EP, IR, cath labs), which are heavy users of implantable and consumable medical devices. Although many of these specialty procedures would clearly not be possible without such devices (which tend to be extremely costly), when it comes to their proper management, documentation, and tracking, the industry lacks any efficiency and automation, resulting in an estimated waste of at least 5 billion dollars in implantable devices alone (just in the U.S.), between providers and manufacturers.

In a three-month study of an endovascular OR that VUEMED conducted, we found that 100% of documented patient cases had at least one documentation error, most involving both under-billing and over-billing issues.  Errors included documenting wrong products, recording wrong quantities, failing to document products as used, documenting products as used when they weren’t, and applying wrong billing and reimbursement codes.  And that’s the kind of data that ends up in a patient’s EMR. In addition to errors, the recorded information was missing critical details such as the products’ lot and/or serial numbers and expiration dates, making it nearly impossible to track a recalled item or ensure that an expired product isn’t used on a patient.

Needless to say, the implications of these errors are significant not only for financial reasons (hospitals don’t have a full picture of their actual costs, potential unintentional fraud to payers, etc.), but also for patient clinical quality reasons (erroneous patient records, risk of using a recalled or expired item in a patient, difficulty in correlating the use of a particular device to patient outcomes, etc.). Although these kinds of errors are a daily reality for many institutions, I see things beginning to change for both hospitals and manufacturers, which are increasingly recognizing that accurate point of care data is a key element of clinical quality, financial health, and risk management.