Statement of the Problem

     Since 1997, the Army Medical Department (AMEDD) has been focusing on automating the medical logistics system and attempting to capture specific supply and medication costs at the patient level as well as continue to reduce health care related costs.  The AMEDD identified POU technology as the means to capture and reduce costs at the point of use.  Landstuhl Regional Medical Center (LRMC) is faced with increasing pharmacy utilization as well as increased supply expenditures. These costs are illustrated in Figure 1.  From FY01 to FY03, the supply budget increased 17% annually and totaled over $11 million in FY03.  Similarly, the pharmacy budget increased 15% annually to a projected $12 million in FY03.  These two activities account for almost 40% of LRMC’s operating budget (LRMC Resource Management, 2002).

Figure 1. Landstuhl Medical Expenses

     The problem is determining the effect of point of use on supply and pharmacy expenditures.  The ideal system would maximize the hospital’s return on investment and offer the largest reduction in expenditures.  The system must operate within existing physical constraints, as well as interface with current logistics and information systems.  This enabling technology must add value to hospital operations and assist in managerial decisions, but must not disrupt patient care activities.   In addition, any POU system should successfully integrate supply and medication management functions of the eight primary care clinics that make up the Landstuhl medical system.

     The AMEDD business plan also identifies several user issues to consider when managing this organizational change.  These include clinical acceptance, inventory reduction and supply discipline, and concern by providers about practice visibility.

Literature Review   Back    Home