St. Francis Breaks Out of the Red in Five Weeks

By Deven Kichline

Kathy Smith, RT, has done the impossible: She saved her facility $46,706 – in just one day.

As many technologists in interventional radiology departments across the country will testify, one of the most time consuming tasks is keeping a daily record of product inventory. And as many directors may or may not be aware, the costs associated with overstock and expired products may be the final nail in the budgetary coffin.

“We consistently recognized year after year that our costs were always over budget. We continued to have a high number of expired products just going bad on the shelf, and we couldn’t get our arms around it,” says Smith, assistant director of radiology at St. Francis Hospital & Medical Center, Hartford, Conn.

One reason the department, which sees about 190,000 annual procedures, found itself over budget was the ordering process. According to Smith, a few times a week, the supervisor would walk around the labs and place an order based on what she remembered they used or by eyeballing the inventory on the shelf. She would then fill out a travel card – a giant index card – that was then sent to purchasing, who would place the order and send the card back.

“What would happen was on Monday, someone would fill out the travel card and send it down. But somewhere along the way, a second card was created because the one from Monday had not yet come back,” she says. “Since we had several cards, we duplicated the order over and over, creating a lot of extra inventory. And it happened over and over and over again.”

But as fate – or fax – would have it, the solution to streamlining the process and curbing costs was right around the corner.

The Dawn of a New Era

Smith recalls, “I received one of those generic faxes for a product called SpaceTRAX and I was intrigued by their advertising and went on their Web site. They have an interesting down-and-dirty profitand- loss-type worksheet (see samples on page 15) and it was very convincing – convincing enough to make me call them. I recognized this was something we wanted to do, sold it to the administrators here at the hospital and five weeks later, we were on our way.”

SpaceTRAX  from InnerSpace, Grand Rapids, Mich., is designed to help clinical departments keep track of non-stock inventory in the most simple way: by scanning the barcodes already printed on the packages from the manufacturer. “With a perpetual inventory, you need to keep track of two things: what’s coming in and what’s going out,” says InnerSpace Datel’s product manager Mike Carpenter. “We build, update and manage a product database with more than 100,000 interventional and diagnostic devices that are linked to the barcodes pre-printed on each item. The result is a process for our customers that is as simple as checking out at the grocery store.

With SpaceTRAX, the hard copy travel card is a thing of the past, as is multiple orderings and excessive spending.

After a two-day on-site physical inventory at the beginning of the implementation, St. Francis created par levels for each item on day three. “For instance, for a particular wire, you might need a minimum of three on the shelf and a maximum of five,” Smith explains. “If you go below three, the system will automatically create a purchase order and put everything on a list. Then once a day, the system e-mails the list to purchasing and they place the order. So you’re only ordering in what you need to keep a minimal level on your shelf – and nobody needs to count it.”

Smith also sees another benefit from a risk management standpoint. “We’ll do a case – an entire procedure – and as the technologists create the tray or open items during the procedure, they save the wrapper. At the end of the procedure, you document which items were used on which patient on which procedure,” she says. “So if, for instance, six weeks later we receive notification from the manufacturer that there was a problem with the product for whatever reason, we’re able to see who that particular product was used on.”

“In clinical departments, such as interventional radiology and the cath lab, clinically trained techs and nurses are regularly asked to expend great amounts of effort to track and manage their inventory. For them, SpaceTRAX means they get visibility and control,” Carpenter says. They can eliminate the effort associated with answering simple questions like: What do I have? What does it cost? What do I need to order? What’s going to expire and when? What got used? What do I need to bill?

But the benefits are noticeable in other departments, too. “Managers in administration, materials and purchasing get the ability to control and manage costs, benchmark performance, establish performance targets, monitor progress and gain instant access to key data,” says Carpenter.

Cold Hard Facts

Smith says as a manager, she can breathe a little easier knowing the reports can be simply pulled out and downloaded into an Excel spreadsheet, allowing her to manipulate the data. “We just went through trials of three different products and it was a snap to compile information,” she says. “Because the system downloads everything – historical use, how much money you’ve spent, etc. – it was very easy to just plug in the new product and the new pricing and create a formula to recognize additional savings. To an administrator with fiscal responsibilities, that is huge.”

Since implementation of the system on Oct. 6, 2003, Smith has a year-to-date savings of $124,474 and is under budget. “Initially, we identified $36,000 of excess usable inventory. We no longer carry that expense,” she says. “We also found $3,500 worth of products that had expired and $20,000 worth of products our radiologists no longer used or those that had been replaced by other products. We were then able to work with the vendors to replace those items at equal or comparable cost to us.”

St. Francis liked those numbers, but as with any new technology, there was a hefty total cost of ownership, right? Wrong. Because SpaceTRAX is a hosted Internet-based service, there’s no software to buy, there’s no software to install, there’s no IT project to schedule and there’s no database to build, manage, update or backup. “As a result,” Carpenter says, “the department and the hospital can start gaining the benefits associated with the solution immediately.”

“One of the significant challenges many hospitals face with any new technology is the backlog of existing IS/IT projects,” he continues. “We’ve talked to hospitals where it will take nine to 12 months before an IS/IT project can get off the ground. If SpaceTRAX wasn’t a hosted solution, that’s the minimum timeline a department would have to deal with to get a solution deployed.”

In addition, Smith says the monthly pricing structure was a big help when she pitched the idea to St. Francis administrators. “One of the reasons I was able to sell it quickly here at the hospital was it [did not cost much] to get started, and if it didn’t work, we were in no worse shape than an already terrible budget,” she says.

The pricing structure is based solely on the number of procedure rooms in a department. There is a monthly access charge for the service, but there are no restrictions as to the usage, number of users or amount of stored data. A one-time implementation fee covers the cost of performing the physical inventory, importing internal data into the database, initializing the application and training the staff to use the software. And Smith says that, too, was easy.

“We trained all of our staff on the forth day of implementation while InnerSpace was still here,” she says. “Everyone picked it up quickly. They were probably 85 percent to 90 percent completely trained by the time they walked out the door that day.” “

We have a very thorough and complete process by which we bring every department up on SpaceTRAX,” Carpenter says. “We are dedicated to ensuring the success of our customers long-term – and we have to. This is a hosted service with a monthly fee. If we drop the ball, if we do a bad job with service, customers will stop using our service. We have to do a good job every day to earn that customer’s business, and we have to earn their business every month.”

Carpenter says cardiac catheterization labs and interventional radiology departments represent the bulk of InnerSpace’s deployments, but he also notes that the system is making inroads in surgery and GI. “The inventory challenges in the operating room are more complicated, but those customers are seeing the same results. Our objective is not to provide a solution that is geared to one department. We’re not out to solve the interventional radiology problem across the globe. We’re out to provide a clinical inventory management solution across the enterprise.”

“We focus on inventory and, as a result, we do it well,” Carpenter says. “For departments and hospitals that are seeking a solution for tracking and managing inventory, for controlling costs and improving productivity and benchmarking their performance, this is the solution.”