Physician involvement in supply and materials management - Hospitals

Physician Executive, Jan-Feb, 2004 by Alan H. Rosenstein

The combination of declining health care revenues and increasing business costs has placed increasing pressure on hospitals to try and maintain a positive bottom line.

With minimal opportunity to increase reimbursement payments, hospitals have turned to expense reduction as the main vehicle for financial viability.

Cost reduction efforts can be lumped into three major categories

1. Labor

2. Supplies

3. Clinical efficiency

Efficiencies in labor are affected by staffing ratios, staff mix and productivity. Efficiencies in supply management come from better pricing, inventory and formulary control and standardization. Efficiencies in clinical management come from implementation of care management programs that support best practice guidelines that enhance the delivery of appropriate, timely and cost-effective care.

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While each of these categories has been able to demonstrate significant success, there is still a large opportunity to gain additional cost savings from a more integrated approach to supply management activities. (1-3)

Supply expenses account for 25 to 35 percent of hospital spending. Recent research suggested that hospitals have an opportunity to save an additional 8 percent to 14 percent in supply savings through more effective supply standardization and utilization programs. (4)

Two key factors to the success of these programs are the structure, function and actions of the supply management committee and the degree of physician involvement in supply management activities.

In an effort to address the relationship of these factors on the perception of supply management success, VHA West Coast developed a survey tool to assess member experiences in these areas. Here's a look at the survey and the results.

Materials and methods

VHA West Coast is one of 18 VHA regional divisions of VHA Inc., a network of community owned health care systems and their physicians with over 2,200 member organizations nationwide.

A 16-question survey on physician involvement in materials management was developed by VHA West Coast and completed in September 2002. A total of 67 individual responses were received from VHA West Coast hospital members.

Survey questions were scored by multiple choice, yes/no responses or on a 1-10 Lickert scale, with a score of 10 indicating the strongest response to the question. Several questions had open-ended responses.

The survey addressed issues about physician knowledge and awareness of the supply management program, physician involvement in the supply management process, supply management committee structure and clinical representation, physician resistance and non-compliance and measurements of success.

Physician Knowledge and Awareness of the Importance of Supply Management on Hospital Finances (Fig. I)

The average score for this question was 6.5 indicating a relatively low overall perception of physician awareness. Note the marked variation in responses between Materials Managers and Physicians on their perceptions of physician awareness.

Physician Involvement in the Supply Management Process (Fig. II)

The average score for this question was 4.5 signifying a very low perception of physician involvement. As with the previous question, there was a wide variation in perceptions between materials managers and physicians at the same organization.

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Types of Committees Involved With Supply Management Activities/Degree of Physician Participation

Table I lists the different committees ranked by order of frequency. The most commonly cited committees were surgery/OR, product steering, product review, value added teams (VATs), technology assessment and cath lab.

Several hospitals reported using special task force committees that focused on one specific project at a time. There is no uniform committee platform used by VHA West Coast hospitals to focus on supply management issues and physician participation in these various committees varied significantly between the different hospitals.

Many of the materials managers expressed an interest in getting more physician representation and involvement as they felt that this was a key factor in promoting success of their programs.

Clinical Representation in Supply Management Programs

Sixty-eight percent of the respondents reported that either a nurse (60%) or physician (23%) were part of the materials/supply management team.

In regard to physicians, several organizations had physicians at least partially responsible for supply management activities either through a service line or care line delivery structure or as an assumed responsibility in their role as VPMA. Physician responsibility and accountability was reported as a key factor in program success.

Physician Resistance

The average score for this question was 6.5 signifying a moderate degree of physician resistance. The four main specialties where problems were most likely to occur were in orthopedics, cardiology, anesthesia and radiology.

Barriers to Compliance:

* The most frequent barriers to compliance cited were physician preference, vendor relationships, physician time, interest and willingness to attend meetings, gaps in communication, information, knowledge and understanding and motivating incentives.