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Conducting a Hospital and Pharmacy Physical Inventory April 22, 2014.

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Presentation on theme: "Conducting a Hospital and Pharmacy Physical Inventory April 22, 2014."— Presentation transcript:

1 Conducting a Hospital and Pharmacy Physical Inventory April 22, 2014

2 Introduction Kevin Ketels has served as the CEO of KMED LLC since its founding in He has more than 18 years of management experience in marketing and supply chain management, including roles with State Street Corporation, Dell Financial Services and KMED. Kevin is an Adjunct Professor of Global Supply Chain Management at Wayne State University, Michigans only urban public research university, located in downtown Detroit. 2 KMED CEO Kevin Ketels

3 Physical inventory overview Physical inventory counts within a health care facility – Medical Surgical Supplies – surgery, central supply, ER, labor & delivery, clinics, etc – Pharmacy medications and retail products – Capital assets – Dietary products – Office supplies – Gift shop – Linens Conducted by internal team or external vendor 80% of clients conduct physical inventories once per year, while 20% do two or more 3

4 Inventory benefits Comprehensive listing of all supplies in stock by location and value Validate the supply amounts match recommended inventory levels Confirm inventory value is in line with budget estimates Review manufacturer and/or supply vendor prices Confirm department inventory levels Theft detection Audit filing conducted by 3 rd party 4

5 Who does the counts? External vendor – Inventory software, technology, data aggregation and reporting capabilities – 3 rd party audit – Lower expense due to high OT labor costs – Check against perpetual inventory system – Reduce time to conduct counts due to efficiencies through outsourcing Internal staff – Internal control of physical inventory process – Perpetual inventory system in place – Regular internal cycle counts 5

6 Vendor selection questions How much experience does the vendor have in conducting hospital and pharmacy inventories? How will the inventory vendor determine the schedule of the on-site inventory? Will the vendor visit the facility prior to conducting the actual audit? What tools will the inventory vendor use? How will the inventory vendor manage the price file scrub and pricing? Will the vendor charge for editing and fixes? What is the inventory vendors schedule for delivering reports and their process for creating the reports? 6

7 Industry Pricing Variable pricing depending on final inventory value – range of $4 to $12 per thousand dollars in total inventory counted – Total inventory value – Time of year (high demand at end of month June and December) – Proximity to other clients or vendor facility/staff – Travel expenses – Pricing discounted for facility with many high value items Flat rate structure – Vendor will tend to err on the side of caution – More likely with small projects or inventories that have already been counted by vendor Variable pricing based on number of items to be counted (capital assets) Discounted Group Purchasing Organization, ie, Premier 7

8 Inventory prep Obtain price file from hospital vendor(s) with the following info: – Product description, Manufacturer, Product number, MMIS number if available, Price, Package size, Unit of Issue (box, each, CS) Conference call and/or walk through with vendor to review sections to be counted and process Mark items that should not be counted Review audit process for checks during count Prep hospital staff on upcoming inventory Notify vendor if there will be any manual list entry 8

9 Count technologies Digital Audio Recorders – Faster physical count within facility – Dictate count information – Easy for staff to maneuver – Upload to server – Transcribe into data aggregation software Laptop computers – Slower physical count – Upload files to editors – Faster report time – Field auditor must be more knowledgeable Client provided count sheets or laptop computers Scanners (pharmacy only) – Slower physical count – Faster report time 9

10 Day of the count Identify initial meeting location Identify room for vendor storage of personal and job materials Hospital/pharmacy staff member should be available to walk vendor through facility and answer questions Pull expired product? Confirm audit process with vendor field manager When counting narcotics, pharmacy staff member should be present with vendor during count Review sequence sheets after completion of inventory project to make sure everything was counted 10

11 On-site Audit process Hospital/pharmacy staff on site conduct spot checks of field auditor counts For digital audio recorders, go back to section ABC utilizing sequence sheet For laptop computers, go back to section in spreadsheet 11

12 Reporting Delivered in Microsoft Excel Paper reports available, but rarely requested by clients 1 – 4 weeks for prelim review – Transcription – Pricing – Editing 12

13 Sections Totals Report 13 Lists all the inventoried items in each section of a department or area counted during an inventory job

14 As Called Report 14 Shows all of the items as they were called.

15 Area x Mfg x Desc Report 15 Provides a comprehensive area- level perspective of the inventory data, but still includes pertinent details like item descriptions and manufacturers

16 Finalizing your reports What if items in stock dont have listing in client price file? – Obtain report showing AWP and blank lines – Option to insert average wholesale pricing with opportunity to update What are we charged for line pricing? Why is my valuation high? – Incomplete price file prep with high percentage of AWP – Run high/low report to check for outliers 16

17 What else can you do with data? Expiration analysis and product resell ABC analysis Par-level inventory management Management of consignment items Fraud detection Forensic auditing 17

18 Contact Information 18 Kevin R. Ketels CEO, KMED Inventory Adjunct Professor of Global Supply Chain Management, Wayne State University Phone: (586)

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