Discussion

Supply Management

     The management of supply items is a complex issue and presents many challenges for POU technology.  For many supply items, the order quantity is not the same as the issue quantity.  For example, a patient procedure may require the use of four or five 4 x 4 bandages, which could potentially be billed to the patient.  This requires a system that accurately costs and charges each individual item rather than the package cost.  If the system does not charge by individual item, over-billing of pay patients will result.  Therefore, the POU system must be able to discern between unit of issue for billing purposes and unit of order for resupply purposes.  Similarly, it is impractical to charge patients for certain items such as rolls of tape or immunization vials, which can be used on many patients.  Additionally, blood collection vials or 4 x 4s, which have an extremely small unit price, are hardly worth the increased effort to account for these supplies and charge them to the patient, especially in an environment where only 10% of the patients are chargeable.  The examples raised here represent only a small portion of the operational challenges that would have to be resolved in managing supplies through a point of use cabinet.  The majority of these issues have been resolved in AMEDD facilities using POU technology, but issues at LRMC will have to be resolved as they arise.

     The management of non-standard medical supplies represents a tremendous challenge for the Logistics Division.  Present hospital procedures allow each section to establish their own reorder point, order supplies as needed, and manage its local purchase supplies directly.  If these items were managed in a POU cabinet, a requisition would be generated in the Logistics Division Medical Material Branch when the on hand quantity reaches the reorder point.  Since these items are not available through DMLSS, an exception report would be generated, and the item would have to be ordered manually by logistics personnel.  Due to the tremendous variation in hospital supplies, source, and nomenclature, this process represents a challenge to the management of these non-standard items, and places the burden on logistics to order, receive, and deliver the correct item to each ward or clinic.  The Logistics Division is currently not staffed adequately to handle this additional workload.

Personnel

     This cost effectiveness analysis does not monetize the effects of changes in work practices or other related activities.  POU implementation often reduces the amount of time hospital personnel must spend on inventorying, restocking, ordering, and other related activities, but these costs are dispersed throughout every section in the facility and not easily quantifiable.  Although ward and clinic personnel will no longer be required to conduct inventory functions, the workload requirement on the Division of Logistics (DOL) will increase.  DOL personnel will spend a greater amount of time filling supply cabinets in each section of the hospital, a function that is currently performed by ward or clinic personnel.  The conclusion that POU will not reduce personnel requirements is substantiated by experience in other facilities that have implemented a POU system. 

     The AMEDD Business Plan (AMEDD Logistics) discusses the necessity of having an on-site administrator in order to provide user training and provide updates to both the system and the equipment.  These duties necessitate the hiring of one full-time employee to perform this function.  LRMC’s current budgetary constraints and human resources environment pre-empt the addition of staff without a well-justified benefit to the organization.  A POU system cannot be maintained without adding additional staff. Maintaining a POU system is only one of the issues that must be addressed in order to move forward with the planning and implementation of this project.  Although system administration is clearly an Information Management Responsibility (IMD) responsibility, the IM requirements for this system are minimal and the system administrator would be either a pharmacy or a logistics employee.

     I conducted a site visit of Walter Reed Army Medical Center to observe their POU system and learn from firsthand experience the results of their system.  During the site visit, I interviewed pharmacy, medical supply, and professional staff in order to qualitatively describe the effects of a POU system in this Army facility.  The implementation of POU at this facility had major organizational impacts.  The most obvious impact was the dedication of three personnel— two in logistics and one in pharmacy— to maintain and support the system.  Landstuhl will have similar support requirements.

     The second highly visible impact on the organization was the tremendous reduction in storage space requirements achieved through the deployment of POU cabinets. I visited the Anesthesia Service to view the impact of POU on space requirements for storing supplies.  The service reduced the space required for storage from an entire room measuring 40 ft by 40 ft to a much smaller area occupied by five POU cabinets approximately 10 ft by 30 ft, a 50% reduction in space required.  This space efficiency, realized on a smaller scale throughout an organization, represents a significant improvement in function as well as aesthetic appearance. 

     Finally, I discussed provider satisfaction with the system.  An on site interview was conducted with the emergency room staff.  The staff reported high satisfaction with the system and confirmed the ability of the system to accomplish the reordering function as well as its convenience and ease of accessing supplies.  Although a few items were not managed through the POU cabinet, the department was continuously working to improve supply management by expanding the number of items in the POU cabinet and establishing accurate inventory levels as well as refining the resupply interval.

Pharmacy Management

     Landstuhl tracks medical supply costs by an APC that identifies the user, but pharmacy costs are rolled up under the pharmacy’s APC.  With this constraint, determining which services are responsible for pharmaceutical costs is difficult, and quantifying the subsequent impact of a POU system is impossible.  The organization will not experience a significant and recurring cost reduction due to the immutable requirement to provide drugs to treat diagnosed conditions.

     Point of use would have its greatest impacts due to increased managerial controls and greater visibility on pharmaceutical expenses.  With this information, better decisions can be made regarding future business decisions and expansion or reduction of services.  POU technology represents a quantum leap forward for pharmacy management of costs over the current system.

     Proponents of POU technology claim that these systems have the ability to dispense pre-filled prescriptions in a 24-hour emergency room or outpatient setting, thereby eliminating the security concerns of controlled substances.  However, the system cannot perform the labeling function nor is it capable of printing the patient education sheets provided to the patient.  At Walter Reed, a Pickpoint FlexRx unit completes this function.  Currently, the only other Army facility using this method to deliver medications is Evans Army Community Hospital, which utilizes units in the emergency department and the primary acute care clinic.  This mode of dispensing medications offers many benefits and should be pursued in conjunction with POU medication delivery.

Health Care Providers

     As with any new technology or change to an established process, employees resist this change.  Many providers expressed concern over how a POU system would affect their patient care time.  Although they would have medications available at the clinic, the provider would be responsible for providing patient education and ensuring no contra-indications for existing medications.  Several Landstuhl physicians were concerned that this would require them to perform pharmacy duties as well as clinician duties.  Therefore, a key factor for physician acceptance is that the POU system must not reduce their time providing direct patient care.  Although physician acceptance is critical to any hospital system, the majority of users will consist of nursing and other support staff.  They will rely on this system on a daily basis and must clearly see the benefits of a POU system.

Coding and Itemized Billing

     Coding and Outpatient Itemized Billing (OIB) are integral parts of business activities at Landstuhl Regional Medical Center.  Until recently, most health care providers at Landstuhl were asked to complete the coding requirements for their patients.  Although the hospital is making advancements in coding of patient records, Landstuhl is still years away from a comprehensive coding program comparable to a civilian hospital.

     Landstuhl’s current coding staff includes 1.5 full time equivalents (FTEs) for the Emergency Room, 2 FTEs for Family Practice, 1.5 FTEs for Pediatrics, 1.5 for OB/GYN, 1 FTE for Ophthalmology/ Optometry, 1 FTE for Orthopedics/Podiatry, and 1.5 FTEs for Physical Therapy/Occupational Therapy/Urology.  The army health clinics are in the process of hiring coders dedicated to each clinic.  No coders support the Division of Medicine, which includes Allergy, Endocrinology, Hematology/Oncology, Internal Medicine, Neurology, and Rheumatology.  The lack of coder support places a substantial requirement on providers who, in many cases, do not have sufficient time to perform the intensive data entry that is required by the current record keeping system.  Coding by physicians often results in incomplete or erroneous coding of patient visits and may result in overcharging patients for services provided.  Incorrect or inaccurate coding is estimated to cost a family practice physician in the civilian sector 10% to 20% annually in lost or uncollected charges (Henley, 2003).  Until OIB, no emphasis was placed on accurate coding since 90% of patients treated at LRMC are not required to pay.  Itemized billing has forced this onto providers in order to produce an accurate bill.  Hospital leadership must resolve the issue of coder staffing before attempting to integrate supply costs into the coding process.

     The effect itemized billing will have on the generation of revenues for the hospital is unclear.  Multiple factors and changes to policy will impact this in the upcoming years.  Changes in the time in accounts receivable standard have slowed the transfer of a bill for collection until after 90 days from the time the bill is generated.  Due to the system cycle time from the patient visit, a bill cannot be generated until 17 days after the patient receives care.  This 17-day time frame is broken down as follows—3 days for services to be performed in connection with the visit, 7 days for the results and approval by consulting specialist, and 7 days for transcription of the results into the medical record.  The facility must then allow 30 days for first bill to be due and another 30 days after a follow up letter is sent before the Defense Finance and Accounting Service (DFAS) can transfer the bill out for collection.   The net result of these changes represents a greatly increased time in accounts receivable, and an expected decrease in the amount collected by the medical treatment facility to support operations.

     Even though OIB represents an improvement in the medical treatment facilities’ ability to charge for individualized medical care provided, it does not include any provisions for reimbursements for medical supplies consumed during the episode of care.  With POU technology, all supplies used during this patient visit can be charged to the patient, which will enable the hospital to potentially recoup these costs.  This represents a sizable increase in funding if utilized for all pay patients.

     The alternative to POU technology capturing durable medical supplies used during a patient visit is the creation of tables within the Composite Health Cares System (CHCS) with a listing of supplies and equipment used during each procedure. The cost of supplies and equipment utilized in the performance of each procedure is incorporated into the CPT code.  The Uniform Billing Office will also generate pick lists to capture any other supplies and equipment associated with the visit not captured with the procedures.  This method requires the physician to code the planned procedure as well as select all the supplies and equipment associated with performing that procedure.  Data entry is time intensive for the provider who must remember all supplies used as well as take the additional time to select these items from the list.  In addition, not all procedures are the same and a great deal of practice variation exists among providers.

     Point of Use is less disruptive to the business practice as supply usage is captured when the item is removed from the cabinet.  Supplies are removed by a technician, nurse, or other clinic personnel.  Ultimately, the method chosen is less important than when it is implemented because the organization loses substantial revenue with each pay patient.

Organizational Assessment

     Financial cost/benefit is not the only consideration for analysis of a POU purchase, but it is the only aspect easily quantifiable.  Many aspects can be qualitatively measured and these will ultimately influence the decision to purchase a POU system.  The AMEDD Business Plan recommends the use of a questionnaire survey before and after implementation to measure the qualitative aspects of this project.  A survey would assess organizational climate and staff satisfaction with the current medical/surgical supply and pharmacy systems and provide a roadmap for future improvements.

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