Small-Scale Materials Management Success


By Daren Smith

What is the biggest expense when you look at your monthly financials?  For most centers it is staffing, but what is number two?  Once again, for most it is supplies and medications. Do you spend as much time on materials management as you do tweaking and monitoring staffing?  If it is the second highest expense, shouldn’t you?

A successful materials management program has three key components. Those key components are the people managing the program, the management of the cost of the supplies, and the maintenance of the program. Supervision of these components in smaller surgical facilities can be challenging. Let’s look at these components and how they can be addressed in the smaller facility.

Quality analysis and administration of a materials management program takes time and effort. How much time is required tends to be a common question. You should budget .1 to .2 FTEs per 1,000 cases performed. We put it in a range because different surgery centers have different requirements for materials management. Where you fall in that range depends on a few factors:

• What is your specialty mix?  Traditionally, a single specialty center would require less time dedicated to materials management than a multispecialty center. Centers that have orthopedics tend to require more materials management time to manage implants.

• How many supplies are listed in your catalog?  It stands to reason that the fewer the item count, the less management is required.

• Does the materials manager have software to support data management or are they working out of a spiral notebook?  Keeping records of orders and usage by hand is an arduous and time-consuming task.

For example, consider a single-specialty GI surgery center performing approximately 4,000 cases a year. It has 250 items in its item master, and has an active inventory module in its management software. I would budget 0.4 FTE’s for materials management. It is a single specialty with a low item count; therefore, it's at the smaller end of the scale.

There are many different ways to manage the people side of materials management in a smaller venue. Some centers utilize clinical staff to act as materials manager, others split the duties of materials manager between several staff members or management, and some have dedicated materials management personnel. The important part is to make sure all the duties are assigned. The duties of a materials manager may include:

• Group purchasing organization (GPO) optimization and contract management

• Managing and organizing storage spaces

• Setting up processes to initiate supply reorder

• Producing purchase orders and ordering product

• Receiving and shelving orders

• Physical count administration

• Maintenance of inventory software solutions

• Management of vendors

• Many other duties, including recall management, price audits, implant management and management of repairs

No matter how you delegate these duties, it is essential that the staff assigned is trained to be successful. There are a multitude of resources available from management companies, software providers, vendors and distributors that can help your staff understand how to be effective in their materials management role. One of the keys to a successful materials management program is using data to your advantage. If your staff is not using the software correctly or not using it to its highest potential, you may be at a disadvantage when it comes to the next key component: price.

The advent of GPOs has made purchasing at a discount much easier. For those who are unfamiliar with the term, a GPO is an entity that is created to leverage the purchasing power of a group of businesses to obtain discounts from vendors based on the collective buying power of the GPO members. The GPO contracts with the manufacturers and you get the discount. Joining a GPO is easy – and in most cases, free. If you dive into the contracts from a GPO, you may find that many of the contracts have different tiers of discounts based on volume or standardization. You may have the ability to access those tiers that require higher volumes through an affiliate group. Affiliate groups follow in the same vane as a GPO. They are a group of members that join together to leverage their purchasing power, but this group does it within the GPO contracts. There are many different models of affiliate groups, and each does things a little bit differently. They are definitely worth investigating; start by getting a list of affiliate groups from your GPO. The combination of the GPO paired with an affiliate group can allow you to access more competitive

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