BYMEGHA & VINCENT

SCM OF MAHARAJA AGRASEN HOSPITAL

Global Healthcare Facts

One of the world's fastest growing industries, absorbing over 10% of gross domestic product of most developed nations.

Total industry size is about $ 5.5 trillion. USA , Sweden and Germany are the three biggest global players.

Indian healthcare sector

• One of India’s largest sectors, both in terms of revenue and Employment• Total value - $34 billion in 2009 and is projected to reach $60 billion by

2013.• India’s booming population, currently 1.1 billion and increasing at a 2%

annual rate. By 2030, India is expected to surpass China as the world’s most populous nation

• Indian economy - Goldman Sachs predicts that the Indian economy will expand by at least 5% annually for the next 45 years.

• Expanding middle class – Indian middle class has grown from 45% in 1998-99 to 63% in 2009-2010.

• Rise of diseases – Dengue fever, malaria and other communicable diseases have returned in force. Lifestyle diseases such as hypertension diabetes are reaching epidemic proportions. Emergence of diseases like AIDS.

Challenges in Indian health care sector

Deteriorating Infrastructure - With a few exceptions, such as the All India Institute of Medical Studies (AIIMS), public health facilities are inefficient, inadequately managed and staffed, and have poorly maintained medical equipment.

The Healthcare Divide – Today only 25% of the Indian population has access to Western (allopathic) medicine, which is practiced mainly in urban areas, where two-thirds of India’s hospitals and health centers are located.

Lack of Insurance - Only 11% of the population has any form of health insurance coverage.

Opportunities in Indian health care sector

Medical TourismEmerging health insurance marketGrowth of tele-medicineHealthcare Infrastructure expansionMedical Equipment Market Pharma Industry Opportunities

Maharaja Agrasen Hospital

• Maharaja Agrasen Hospital was established on 15.08.1991 under the auspices of Maharaja Agrasen Hospital Charitable Trust, Punjabi Bagh New Delhi.

• This Trust was founded in 1980 by some prominent handful of donors of the Society

• The main objective of its foundation was to give free medical aid to every deserving human being irrespective of caste, creed and religion. 

Objective

“Pratham Sukh Nirogi Kaya”

FIRST PROJECT

• This Hospital has been so named because Maharaja Agrasen was a noble King of Agroha (Haryana) in whose heart the welfare of his subjects was the supermost.

• In his kingdom Education and Medical facilities were free to everybody irrespective of caste, religion, race etc.

• The Hospital was started with a humble beginning of 65 beds and within a short span of 20 years this hospital has reached to the stage of 380 bedded multi-super specialty catering to the population of not only Delhi but also from the adjoining states such as Haryana, Punjab, Rajasthan, U.P. and also remote areas like Assam, Orissa etc.

Recent events in Agrasen Hospital

Supply Chain Management

Supply Chain Management (SCM) is the process of planning, implementing and controlling the operations of the supply chain with the purpose of satisfying the customer requirements as efficiently as possible with a continuous eye on operating cost reduction. SCM encompasses the planning and management of all activities involved in sourcing and procurement, conversion and all logistics management activities.

SUPPLY CHAIN IN AGRASEN HOSPITAL

A hospital, or any business for that matter, cannot operate in isolation. Right from the procurement of raw material to providing the service and finally to the concluding transaction where service/ goods delivery is completed and exchange of money takes place, it is a chain of interconnected businesses and business processes. Every time a requirement is communicated, order is placed and inventory is stocked, there is a potential opportunity of value addition, waste reduction and process standardization.

Major Objectives

The main objectives of Hospital Supply Chain

•Clinical Performance and Patient Safety#1•Overall reduction in operating costs possible#2

Implementing SCM in Agrasen Hospital

Automating the activitie

s like medical, surgical

and pharmaceutical supplies

In time inventor

y replenishment

and lesser stock out

Centralized

database and

proper inventor

y classific

ation

Advantages

Reduction in inventory levels and product waste, expiry and obsolescence

More efficient means of order entry and processing, with integrated electronic settlement

Supply chain transparency, shipment tracking and improved demand forecasting

Volume pricing and discountsAccurate and timely management reporting,

especially related to patient/procedure costing

Major Challenges

Individual departments in a hospital act as individual buying centers

Large number of intermediariesConsolidation of demands from all the

departments of the hospitalProper flow of information between the

departments and suppliersRisk of expiration

SCM in Agrasen Hopital

Supply Chain Management (SCM) is the process of planning, implementing and controlling the operations of the supply chain with the purpose of satisfying the customer requirements as efficiently as possible with a continuous eye on operating cost reduction

The “keeper” of the supply chain has two main objectives. The first is making sure the product is always available when it is needed. The second is to ensure the first objective is fulfilled in the most cost effective way

SCM in Agrasen Hospital

The ultimate aim is to transform a sick patient to a healthy person at a reasonable cost, in the shortest possible time and with superior patient satisfaction

Consolidation of demands from all the departments and proper flow of information between the departments and suppliers can remove a lot of bottlenecks and result in reduced cost of all the parties involved

High volume drugs like antibiotics and anti-ulcer drugs constitute more than 70% of the total drug consumption in a typical hospital. Expensive, restricted drugs account for a mere 5% of general usage. This suggests that a proper inventory control mechanism and order placing procedure can be brought in place for these high volume drugs

SCM in Agrasen Hospital

It is estimated that inventory management accounts for anywhere between 17% and 35% of the hospital’s total revenue

Therefore, a small reduction in inventory management expenses can have an enormous impact on the hospital’s bottom-line

For example, a hospital running at 5% profitability, with 30% inventory management costs could improve profitability by 60% with a 10% reduction in its inventory costs

SCM in Agrasen Hospital

Usage of barcodes makes record keeping easier, removes data entry errors and ensures exact knowledge of stock at any time.

It facilitates exact maintenance of place holders for individual drugs.

It can be used to track the exact position of precision medical instrument while in transit.

It restricts the movement of specific medical instruments to individual departments.

SCM in Agrasen Hospital

Electronic medication administering and recording provides tools and guidance that assist in ensuring the “Five Rights” of prescribing and administering a medicine: Right Drug Right Dose Right Patient Right Route Right Time

Automated Point of Use (APU) systems: These devices are placed in the various wards throughout the hospital and only allow authorized users to pull inventory.

Tagging each patient with a specific identity barcode and maintaining a clinical history log file for individual patients.

SCM in Agrasen Hospital

Allows for automatic orders being placed to the suppliers whenever the inventory level for a particular stock falls below a specified limit

The daily drug usage data captured by these automated systems and stored in the central database develops accurate forecasting model which could incorporate the number of patients and ailments to come out with the expected drug usage rate

Inventory Classification

“Class –A” : Status to the critical/life saving drugs“Class-B” Status to the important drugs that are used

by different departments“Class-C” Status to routine drugs and medical

supplies

Perpetual inventory management system can be adopted for class A items

Economic order quantity can be used to determine the replenishment policy for class C

Hospital can enter into forward contracts depending upon the usage volume and demand pattern

Obstacles

A variety of obstacles to effective supply chain management exist, including:

• Constantly evolving technology resulting in short product life cycles and high cost for physician preference items.

• Difficulty in predicting frequency, duration and primary diagnoses for patient visits and the associated product requirements

• Lack of standardized nomenclature/coding for healthcare products and commodities.

• Lack of capital to build a sophisticated information technology infrastructure to support supply chain management efforts.

• Inadequate business education and SCM capabilities among hospital-based buyers

Recommendations

Look at group purchase to cut costs. If more than one hospital site / branch exists, look at a group purchase from a single vendor for that product.

Zero sub-store helps tremendously in preventing pilferage, theft and unaccounted items, which may have to be scrapped in inventory accounts later. All the items can be billed through the system directly to the patient, and the items can be procured directly from the central store.

Acquire logistics expertise from consumer product, manufacturing and other sectors outside the healthcare industry as a benchmark.

Recommendations

Right labeling of inventory will save considerable time during rush hour inventory requests.

Appropriate storage and access to the inventory, organized arrangement, ‘First In First Out’ (FIFO) method will help in quicker retrieval of the required items.

Appropriate identification of Sound Alike and Look Alike (SALA) inventory should be appropriately segregated and labeled to avoid wrong retrieval, delays thereof and any medication mishaps.

Waiting time (delays/dispatch/inventory procurement time during patient discharge, return of medicines) can be considerably reduced if the bottlenecks are identified through regular time motion studies.

Recommendations

Appropriate calculation of re-order levels and lead times will help the stores stock just 'enough' material to not overload their stores and also not have a stock out. Appropriate re-order levels can help the stores trigger the purchase requests to the vendor (and also within the hospital from various users to the central stores) to procure the items just in time to avoid an over stock / stock out.

Medicines have a shelf life and many drugs are expensive. The SCM in the hospital should have an efficient mechanism of provisioning, storing and issue of such 'shelf-life' drugs in a manner that they are stored and carried in a temperature and humidity-controlled atmosphere and issued on a ‘First In First Out’ basis (FIFO).

Outsource to third party logistics providers (3PLs) functions such as warehousing, transportation, inventory management, custom packaging, and returns management.

Conclusions

Supply Chain Management has finally started getting acceptance in Healthcare sector.

50% inventory reduction, 40% increase in on-time delivery, doubling of inventory returns coupled with nine-fold reduction in out of stock rates.

To improve the service delivery and reduce cases of mistreatment, every touch point with the patients has to be closely monitored.

Vendor Managed Inventory and Group Purchasing Organization take away the burden of frequent ordering and bargaining off the hospitals

Computerized inventory control system enables automatic order placing