It's because the healthcare industry is now capitating costs, charging a specific overall price for each procedure or treatment program rather than breaking down costs into various departmental "silos." The new practice helps providers estimate more narrowly the costs of their services so they can contract more efficiently with third-party payers, and it also serves as a goal to assure the most cost-effective use of healthcare resources.

Part of this effort can be seen in "per diem" billing, where hospital patients are charged an overall daily rate rather than for every piece of equipment used, says Scott Heath, the internal control manager at the Virginia facilities of Columbia/HCA, the giant hospital chain. Columbia, he says, is doing its part by using bar codes to move toward a "stickerless" inventory system that will greatly streamline inventory maintenance and improve current patient billing practices.

Today's methods evolve into per-diem payments

The Stickerless Material Management System, from Compsee, is the heart of Columbia's purchasing system, according to Randall Skinner, manager of distributed EDI and interfaces for the Columbia/HCA hospital chain. The new stickerless system is "integral to the purchasing system," called SMART (for Supply Management and Resource Tracking) which is now used in more than 300 Columbia hospitals.

'Up to par' wasn't

Some six and a half years ago, "we decided to automate," says Skinner. "We had an opportunity to cut out a lot of paperwork and keyboard entering. There were several thousand entries, including item number and quantity, that could be automated." Planning and design of the program took nine months.

Point-of-capture changes

Once a day, a material manager, now foregoing his clip board, picks up a hand-held terminal and puts it into a cradle, downloading to a PC in the purchasing department. All the hand-held terminals are optically downloaded via a daisy chain, allowing multiple locations to be serviced from a single port via cable.

Columbia/HCA's SMART system can access this data from the PC and use it to do physical inventory as well as allow items to be billed to the specific patient. In the SMART operation, there was no need to redo the original logic to accommodate the bar code system - "We just took what worked already and substituted the bar coding for the keyboarding," says Skinner.

Versatility

Such flexibility, in recognition of Columbia's behemoth status as a hospital chain, is vital.

In this regard, "the devil is in the details," says Skinner. For instance, the inventory interface to the SMART purchasing system was written generically, so the inventory system could interface with the variety of other vendors' purchasing systems used in other Columbia hospitals.

Because some hospitals also had automated point-of-issue (POI) supply systems, there are three different POI systems that can be interfaced to the SMART purchasing system. But even with all these interface possibilities for SMART, says Skinner, "[the] stickerless material management system is our biggest interface."

SMART now can have functions such as patient charges, purchase orders and replenishment requests, as well as an annual inventory, recorded with little or no key entry. "Our need to do away with one paper par form has given us a lot of value: automatic savings in accuracy and labor," says Skinner.

Columbia's need for flexibility is exemplified by this fact: one of its hospitals has 10,000 transactions a week and uses up to 40 hand helds. Other, smaller facilities can make do with only two hand helds by having them operated by purchasing staff while taking inventory rather than by nurses when dispensing.

It's still ticking

The second requirement: a forgiving nature that would allow the unit to be downloaded without "following the Ten Commandments," says Skinner. "Ours is not a friendly environment, and the nurses are there for patient care, not inventory, so they want it to be fast and easy." The hand-held terminals are downloaded into a Mars 1260 cradle using only an infrared beam, eliminating the metallic used by many others

Basic advantages

Technical problems with the pilot were minor: cable systems done by local contractors didn't work. People problems included a need for continuing training because operations less frequently performed are forgotten and staff may not even realize they are possible. Plus, user resentment may keep it out of some hospitals.

Five years ago, only four Columbia hospitals used this hand-held terminal inventory system, and today there are 33, with a dozen more now implementing it. Since Columbia now has 342 hospitals, there is a 10% penetration of the automatic inventory system. It is an individual decision by the hospital, says Skinner, and the nursing director and hospital administrator have to support that decision. Indeed, one of the biggest installations is in the Richmond, VA, market, in a hospital run by a nurse. "When the boss is a nurse, the system works," says Skinner.

David Catino, Columbia/HCA's Manager of supply chain development says that the hospital giant is investigating ways to use bar codes more extensively "all the way down to the 'eaches'. It's similar to retail," he says, "where bar codes are used in conjunction with point of sale to drive replenishment." Obviously, using ADC at the point of issue will soon impact all the hospitals, and with them, patient point of care.

---

Written by:

Synth Greenwald, Contributing Editor

Healthcare Automation Magazine
Advanstar Publishing
May/June 1998

Quote

Vital Statistics