Improving materials management through re-engineering.
Activities related to the purchase, distribution, and management of supplies account for about one-third of the operating costs of healthcare facilities. Under a free-for-service reimbursement system, the use of supplies generates revenue; there is little motivation to control supply costs, and the goal in most facilities is to ensure abundant availability of supplies to both patient care staff and patients. As the reimbursement picture changes, however, and supplies become expenses instead of revenue generators, facilities are being forced to scrutinize all activities, including materials management, that influence operating costs and to identify and seize cost-reduction opportunities. One approach to improving materials management to reduce the cost of supplies is re-engineering. A successful re-engineering effort involves six basic steps: 1) recognizing the need for change, 2) establishing guidelines, 3) forming a team, 4) analyzing current processes and costs, 5) redesigning processes, and 6) implementing and managing the changes. In this article, a case study illustrates the possible benefits of re-engineering materials management processes.