Healthcare Purchasing News

To succeed, CS departments must keep an eye on finances

To succeed, CS departments must keep an eye on finances – Surgical Business

Karin Lillis

Keep costs down and quality up. Central sterile processing managers know that admonishment well. Every day, they are challenged and haunted by the relentless pressure of meeting flat or shrinking budgets while ensuring that their department performs at the highest levels.

If they aren’t frugal with their allocated dollars, the hospital could lose money. If CS staff fails to properly process an instrument and a patient gets sick, the hospital could lose money. Lives are on the line each day.

“One of the consequences of the downsizing and reorganization is that a number of the more qualified CS managers have opted to retire or get out of the field,” says consultant Charlie Hancock of Fairport, NY-based Charles O. Hancock Associates. “CS is a relatively low-paying field, and a lot of the best qualified people have elected to give up the fight and do something more rewarding. We are losing a lot of good people out of frustration with the cost situation.”

So how do the remaining CS managers find a balance? With a little creativity and a lot of foresight, it can be done, say two veterans in the field.

Meeting the demands

Lamont Holliday says budget and time constraints continually force CS departments to find ways to pare costs and increase output. As manager of central sterile services at University Hospital of Medicine and Dentistry of New Jersey in Newark, NJ, Holliday knows how frustrating that can be. Still, he says, there are ways CS departments can rise to the challenge. University Hospital’s CS department has shaved tens of thousands of dollars from its yearly budget.

First, Holiday and his staff converted the department inventory system from time-related — where all sterilized items stocked away carried an expiration date — to an event-related system. Under the new system, sterilized items and the various surgical packs remain sterile until they are used or if they become damaged.

Using a time-related shelf life system, in-house reusable items expire over time — 30 days, six months or one year, depending on how often a particular item is used. After the expiration date has passed, unused items are considered contaminated or unfit for use, Holliday says, and staff pulled the items from the shelf and return them to central sterile for reprocessing.

“Research has proven that sterilized items don’t expire or become contaminated over time,” Holliday says. “Every time an item is pulled off the shelf due to expiration, the materials used to process these items — like the reusable or disposable wrapper, the sterilization tape or external indicator, the internal indicator, and the labor and time it took to reprocess the item — are wasted.”

That waste amounted to $30,000 to $40,000 a year at Holliday’s facility.

“So we changed our habits,” he says. Under the event-related system, items expire when they are actually used, or if a package becomes contaminated (wet, opened or damaged, for example). Labels placed on the items help staff manage inventory and rotate stock — the first item placed on the shelf is the first item the patient care units use, Holliday explains.

“We check the integrity of the package, make sure it has not been opened or damaged in any way,” he says. “The item stays on the shelf until it’s actually used. Under the old system, a lot of stuff would expire, and we would have to reprocess it so it was fit for use.”

He cautions that a hospital’s infection control committee must first approve an event-related system.

A STERRAD sterilizer, equipment made by Advanced Sterilization Products, a J&J company based in Irvine, CA, has also helped University Hospital realize savings. The STERRAD uses less expensive plasma instead of more costly ethylene oxide to process heat-sensitive instruments like endoscopes and rigid scopes.

“We were spending about $1,000 a pop for each cylinder of ethylene oxide and using 15 a year,” Holliday says. “Since we’ve purchased the plasma sterilizer, we’re using half that amount.”

Holliday’s departmental budget allots $200,000 a year for purchasing instruments, about average for a 600-bed facility like University Hospital. He’s been able to keep costs under budget through a consignment program with a vendor where the hospital only pays for instruments when they’re actually used.

“Because we get replacement inventory for items that are used, lost or broken, we don’t pay the vendor until the instruments are actually removed from inventory and used to replenish another surgical tray,” Holliday says.

There’s always a challenge in tracking missing instruments — a “big problem in just about every hospital,” he says. For instance, central sterile employees know that when they send a tray to the operating room, it has all of the required instruments, Holliday says. When that same tray comes back with instruments missing — dropped on the floor, dumped in the linen hamper by mistake — it ultimately costs the hospital money.

“Over time, you keep losing instruments and before you know it, that tray is nonfunctional,” he says. “We’re trying to figure out how CS can work with the OR techs to make sure we get all of our instruments back. That’s a big challenge for sure, but working it out will help save money.”

Minding his own business

Mike Festa, director of sterile processing for Healtheast Care System, a healthcare network based in St. Paul, MN, views the CS department he oversees as his own business. If the network is going to keep sterile processing functions in-house, Festa must ensure that the financial end is running as smooth and strong as a line of freshly processed surgical instruments.

“We’re essentially a competing business in the community,” Festa says. “There is no company out there [currently] that says it can perform the same processes effectively, but competing with the outside is always a concern. It means always being aware and managing [the department] as cost effectively as possible. You’re not just given dollars and a budget. You have to ask yourself, ‘How would I spend those dollars if I was in my own business?”‘

“To the greatest extent possible, we are standardizing products, using value analysis, designing and printing own forms and developing best practices,” he continues. “Doing all of that helps ensure that our department is operating at a good rate of efficiency.”

Festa has some tenets he follows to keep things running smoothly at Healtheast:

* Upgrade equipment instead of buying new. Why spend money on a new sterilizer when it can be refurbished and upgraded for about a quarter of the cost, Festa asks. Replacing parts like electrical components extends the life of the equipment anywhere from three years to seven years. “This takes the limited dollars you have today and defers the expense,” he explains. “The organization can budget for the equipment later on and replace it when funds become available. You’re also better able to justify that new equipment purchase when the time comes.”

* Manage instruments on a facilitywide basis, rather than by department. “Available resources are maximized throughout the system,” Festa says. “There are pools of instruments available to all facilities.” For instance, suppose the OR department at one facility needs a certain item. Instead of buying the item outright for that department’s sole use, Festa checks whether another facility has the equipment available. “You’re drawing from within as opposed to drawing from without,” he says.

* Conduct value analysis. “Which products do you use? Are they the best quality available at the best price?” Festa asks. “Do a value analysis across your entire service line as applicable. It might be your detergents, or your preventative maintenance contract, or your peel pouches. If it were your business, would you pay so many more cents per pouch when you knew there was a cheaper product out there of equal quality?”

* Negotiate contracts and pricing. “Don’t settle on the first proposal. If it were your bottom line, you’d want the best pricing,” Festa says. “Don’t just go round one. Go a second or third if you have to. The benefit you gain might be well beyond the time and effort you spent to push the vendor.”

* Keep preventive maintenance costs down. Use in-house staff wherever possible, Festa says. Healtheast relies on its biomedical services staff to repair electronic components inside equipment like surgical tables, OR lights and warming cabinets.

Festa also suggests that some CS departments might find ways to generate revenue. “What can you do to bring revenue in?” he asks. “Your department might be able to provide services to smaller hospitals, surgicenters or other healthcare facilities. It can be just a physician clinic or a dental office. It’s usually just a few trays. In the big scheme of things, that’s not a lot, but it might bring in some extra dollars.”

COPYRIGHT 2002 Nelson Publishing

COPYRIGHT 2002 Gale Group