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Abstract

Profit will always be a challenge in the healthcare continuum. Healthcare facilities operating expenses are always increasing, meaning cost control projects become more and more important.The control of healthcare expenses falls on each person within the enterprise to not only manage the facilities expenses at an individualized level, but to also strive toward better overall controls for the organization. In this paper, research was performed analyzing supply waste with a simplified solution to reclaim some of these unnecessary expenses.

 

 

 

Turn A $1 Basket Into $100,000,000

            In 2011 the Commonwealth Fund reported that approximately one quarter of hospital expenses $215 billion were steered toward administrative costs. US hospital administrative costs are appreciably higher than other nations including; Canada, Germany, Scotland and the Netherlands. Were the US to reduce their spending to that of Canada or the  Netherlands, the savings would be greater than $150 billion dollars (“Comparison of Hospital Administrative Costs in Eight Nations: U.S. Costs Exceed All Others by Far – The Commonwealth Fund,” n.d.)

Unnecessary waste within the healthcare industry is frequently studied at the macro level i.e. drug cost increases, marketing expenditures, administrative overhead and hospital employee wages. There are many micro expenses that are overlooked which when scrutinized closely, can add up to significant revenue loss worthy of attention.

In general terms, salaries are the largest expense within most enterprises. Often, when institutions are looking to increase profit, naturally the first category examined is payroll. Economic studies can be done finding short term gains that will calm apprehensive stake and shareholders. Elimination of jobs, benefits or services provided may deliver some short term gains.  Although, once implemented, it may be found these draconian methods can result in long term detriments to the service piece of an organization. In the case of a hospital, this would refer to patient care. .

Nurses require several items throughout the day to provide appropriate patient care. A number of these supplies being items that are billable to the patient. A few tools of the trade would include; syringes, alcohol swabs, IV lines, IV caps, tape, wound care items, band aids, IV flushes, just to name a few common items. As with any supply, there is a cost associated for all items involved in patient care.

After completing the first clinical day, when arriving home, one located four alcohol swabs within my scrub pocket. Observing staff nurses the following clinical shifts,, several nurses had collected numerous items on their persons,  which one would assume the unused items may have left with them as well. Having a quality improvement assignment due by the end of the semester, observing and attempting to quantify these losses may uncover a significant expense to the institution.

Collecting data the next few clinical days from 3 different nurses per shift, the following results was compiled:

Overall Cost Analysis (retail) of basic supplies removed from unit  

 

Retail Price/ea

 

Average Removed/ Shift

 

 

Total $ Per Shift

 

  Total $

Per Week

 (4 days)

 

 

Total $ Per Year

(49 Weeks)

IV Cap (1) $0.50 5 $2.50 $10.00 $490.00
Alcohol Swabs (2) $0.02 3 $0.06 $0.24 $11.76
BandAid (3) $0.06 3 $0.18 $0.72 $35.28
Ink Pen (4) $0.12 1 $0.12 $0.48 $23.52
IV Flush (5) $0.46 4 $0.84 $7.36 $360.64
Annual Results of one nurse working 4 days/wk for 49 weeks  

$4.70

 

$18.80

 

$921.20

 

According to the American Association of Colleges of Nursing (AACN), there are over 3.1 million registered nurses nationwide. It is estimated that approximately 60% of these nurses are employed within a hospital setting, equal to 1,860,000  (“American Association of Colleges of Nursing | Nursing Fact Sheet,” n.d). If we were to assume half of that number, 930,000 were involved with Medical Surgical floors and following the researched data identified, $921.20/yr of lost supplies; that would result in an overall impact of $856,716,000.00! Seems a bit unrealistic, so let’s break it down further. Let’s cut that number of nurses in half, 465,000 and presume the hospital gets a much better deal than the retail price listed, for convenience we will reduce it 50%. With those reductions, the net loss is still $214,179,000!

When asked why the nurses end up taking supplies home, the common theme was, because these items are kept in a location other than the patient’s room. In an effort to improve productivity,  did not want to make extra trips back and forth to the patient’s room. Sensible, but costly.

A simple solution to this would be to raise awareness to the staff members of just how costly this problem is across the healthcare continuum. Some suggestions which may mitigate this would be to place a basket near the time clock with a sign reminding employees to “Save Money – Empty your pockets”. These supplies could then be collected and catalogued back where they belong for appropriate use. Another suggestion, a bit more organized, was to place clear plastic bags on a turn style like device where each item could be dropped into the appropriate bag, thus making restocking much more efficient.

A more practical solution, and one being utilized by some hospitals, are the deployment of inner space carts located in each patient’s room. These locking cabinets start at around $600.00 and depending on features increase accordingly. A local hospital utilizes one found online which retails for just under $1000.00. Based on the staggering statistics, $856,716,000.00, that is equal to nearly 860,000 of these carts. These carts would improve other efficiencies within the facility as well; centralize daily supplies required by nurses and other staff members dedicated to patient care, assist with medication distribution as they are locked and aid in infection control, especially in the case of patients under precautions.

When executive decisions are made to cut expenses at the macro level within an organization, short term success may be achieved, but sustainability can be challenging. A simpler solution may be to involve all stakeholders, educating and informing at all levels about simple economics; each time a $0.02 alcohol swab is opened and applied to a patient’s skin, there has to be more than $0.02 in return to counter this expense to the institution.

Some elementary solutions were suggested with very little research to support what may be a significant cost issue within the healthcare field. Were one to delve deeper into some of the most basic processes and procedures currently occurring within the healthcare industry – in many cases one may find that a simple $1 basket can lead to the $100,000,000.

 

 

 

 

 

 

 

References

American Association of Colleges of Nursing | Nursing Fact Sheet. (2011, April 12). Retrieved from http://www.aacn.nche.edu/media-relations/fact-sheets/nursing-fact-sheet

A Comparison of Hospital Administrative Costs in Eight Nations: U.S. Costs Exceed All Others by Far – The Commonwealth Fund. (n.d.). Retrieved from http://www.commonwealthfund.org/publications/in-the-literature/2014/sep/hospital-administrative-costs

Special Thanks to Brigitte Keyandry for her help with this project and preparation of a fantastic brochure we used to present the above materials

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