Montefiore Medical Center improves patient care with Answerthink's drug inventory system

Miami 07 October 2003Montefiore Medical Center, located in New York City, has become one of the first hospitals in the United States to implement Answerthink's completely automated drug replenishment system. The system utilizes the SAP R/3 Release 4.6C software solution and wireless handheld computers to dramatically improve the efficiency of the drug inventory process. Implemented earlier this year, the new system is already delivering results for Montefiore, ensuring that critical drugs are on hand while reducing drug inventory levels and aiding Montefiore's efforts to control rising costs.


Administrators at Montefiore Medical Center understand their first priority, providing high-quality health care and related services to the over 1,5 million residents of the Bronx and Southern Westchester County. But this is no small task, particularly since Montefiore is one of New York City's largest health care providers, with an operating budget of $1,6 billion. Montefiore's administrators face the challenge of having to balance the needs of thousands of patients, doctors, and others as they manage its vast integrated health care system including two hospital campuses (Moses and Weiler), research facilities, a network of neighbourhood medical groups, and offices throughout the Bronx and Southern Westchester.

Montefiore is also the academic medical centre of the prestigious Albert Einstein College of Medicine, a great teaching institution, providing valuable medical training for its resident physicians, making Montefiore one of the most influential medical complexes in the world. Yet in many ways, Montefiore's problems and issues are not all that different from those of any large services organisation. One issue Montefiore decided to tackle last year, with the help of Answerthink, was drug inventory management. Last year, Montefiore delivered more than $48 million in drugs to patients. Although they had already built a highly automated inventory process using SAP software several years ago, Montefiore wanted to accomplish even more.

Two drug-storerooms provide stock to both the Weiler and Moses hospital pharmacies. Drugs are then distributed from the pharmacies to hospital departments and to individual patients. For each drug, it is critical that the hospital keeps enough supplies on the pharmacy shelves so not to deplete stock and run out of needed drugs and medicines. At the same time, Montefiore doesn't want to overstock the pharmacies, as the result would be excess inventory and the associated cost of holding inventory.

With the inventory tracking system Montefiore had in place, pharmacy staff could get the drugs they needed from the shelves. But then they were required to utilize a PC workstation to manually identify and log out all medication, then identify which of more than 100 department cost centres to charge. Each night, the system could determine what was needed to restock each pharmacy and maintain appropriate inventory levels. Unfortunately the hectic pace of daily hospital operations made this system difficult for hospital staff to comply with.

"People here are constantly in priority mode, trying to respond to the needs of patients", explained Charles Agins, Montefiore's VP of Finance and Executive Director of Business Information Systems. "With the old system, we were only getting 80 percent compliance at best with our inventory procedures. This was creating significant problems. We never really knew exactly what we had in inventory. This made it impossible to keep inventory levels low, which is a key to controlling overall costs, without increasing the risk that we would run out of critical medications."

After carefully analysing Montefiore's needs, existing processes, and the medical centre's goals and objectives, Answerthink assisted the medical centre with upgrading its SAP software and installed a system of wireless handheld devices that dramatically simplify the process of tracking inventory and issuing drugs. The system enables pharmacists to carry the handheld devices, which are about the size and format of standard PDAs, as they pick drugs from the warehouse shelves.

Built-in scanners on the devices are used to read bar codes on the medication, then staff simply enters the account number to be charged. The system prints out a "pick slip", which can then accompany the drugs as they are delivered to the appropriate department. The new system also provides for on-line cycle counting and keeps the pharmacists aware of what the hospital has and what it needs to order.

The devices are also used to process returns of unused drugs from the various hospital departments. All these operations are done in applications that run in a Web browser, and information is immediately transmitted via a "Wi-Fi" 802.11b local wireless network back to Montefiore's SAP solution-based system, which charges the appropriate account number and removes the medication from inventory.

"By enabling our staff to scan as they go, we've brought our compliance rate up to at least 95 percent", stated Charles Agins. "This has significantly improved our ability to control inventory levels. Every evening the system automatically tells us what we have left in stock, and what we need more of. With this information at our fingertips we've been able to negotiate better prices and payment terms with our vendors. As a result, it looks like drug expenses may actually be under control this year for the first time. We're used to seeing them rise by at least 10 to 15 percent each year."

Now Montefiore is working with Answerthink to enhance the system further. The medical centre has expanded the wireless drug inventory system from supporting the outpatient pharmacies at both hospital campuses to include their in-patient Oncology departments. Future plans include rolling out the functionality to their AIDS centres as well as other off-site locations. In a separate project, Montefiore is implementing scanning of packing slips bar-coded by the vendors with the purchase order number to expedite receipts. This process is being implemented at their main warehouse.

The medical centre, as part of its future initiatives, is seeking ways to maximize revenue by developing a full charge capture system, in which requirements for each patient are scanned, materials are issued from inventory as they are used, and automatically billed to patients, and automatically re-ordered via MRP when supplies get low.

Finally, Montefiore is considering using the wireless network as the basis for a full asset lifecycle management system that would enable them to track expensive equipment as it is moved from facility to facility. This portion of the system would also be used to schedule preventive maintenance on the equipment, and log repairs that are made. These projects are under consideration for future development and implementation.

"Working with Montefiore, we realized the core problems they had were with people and processes", stated Answerthink President Allan Frank. "They had technology and systems in place, but people didn't find them easy enough to use. So we used our process knowledge and enabling wireless technology to design a solution that takes into account both the data Montefiore wanted to capture and the way their people worked. The new system truly streamlines how their pharmacy staff can operate, and gives Montefiore administrators the information they need to achieve the highest levels of patient care while controlling costs."

Answerthink Inc. is a business and technology consulting firm that enables companies to achieve world-class business performance. By leveraging the comprehensive database of The Hackett Group, a repository of enterprise best practice metrics and business process knowledge, Answerthink's business and technology solutions help clients significantly improve performance and maximize returns on technology investments. Answerthink's capabilities include benchmarking, business transformation, business applications, technology integration, and offshore application maintenance and support. Founded in 1997, Answerthink has offices in 9 cities throughout the United States and in Europe.

The Hackett Group, an Answerthink company, provides empirically based advice and best-practices research to executives seeking to drive world-class performance in areas such as finance, IT, human resources, and procurement. Hackett's benchmarks and its confidential, on-demand, membership-based research and advisory services are supported by a regularly updated database of best practices in processes, technology, and organisation in use at over 2000 clients around the globe.

Montefiore Medical Center, the University Hospital and Academic Medical Center for the Albert Einstein College of Medicine, is an internationally recognized expert in patient care, education, research and community services. Located in the Bronx, Montefiore provides treatment programmes for patients with all major illnesses and has distinguished centres of excellence in heart care, cancer care, children's health, women's health and surgery.

Leslie Versweyveld

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