From autonomous hospital procurement to purchasing association:Impacts on stock - keeping, ordering system and procurement
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《中华医药杂志》英文版
From autonomous hospital procurement to purchasing association:Impacts on stock - keeping, ordering system and procurement(pdf)
1 Department of Radiology, Klinikum Grosshadern University of Munich, Munich, Germany
2 Department of Surgery, Klinikum Grosshadern University of Munich, Munich, Germany
3 Fachhochschule für Wirtschaft, Berlin, Deutschland
Correspondence to Dr. med. Dirk-André Clevert, Department of Radiology, Klinikum Grosshadern University of Munich, Marchioninistr. 15, Munich 81377, Germany
Tel: +49- 89 / 7095 - 3620,Fax:+49- 89 / 7095 - 8895,E-mail:Dirk.Clevert@med.uni-muenchen.de
[Abstract] Objective The objective of this study was to show if and to what extent joining in a purchasing association and the therewith expected bundling of resources can make a contribution to improve the economic situation in German hospitals. Possible effects concerning the structure of stock - keeping, the ordering system and the procurement are analysed and demonstrated. Methods The altered purchasing structure of a hospital in east Germany was analysed with a focus on the purchase of pharmaceutical products. The wards 1, 2 and 3 of the hospital's department of internal medicine were regarded as an entity concerning its consumption of therapeutic agents. They were evaluated by ABC - analysis for the year 1998 and 2001 to provide an insight whether and to what extend the associate - solution of the pharmaceutical purchase had entailed actual cost savings. Results By direct comparison of costs in 1998 and 2001, we were able to show that 23 of the 45 articles associated with the highest costs in 2001 were still identical with those in 1998. For six of the high cost articles of 1998 an alternative article was provided in 2001. Three therapeutic agents were newly included to the article range. The remaining therapeutic agents were those that did not belong to the A - articles stock in 1998, but evolved into high turn over articles in the year 2001. Conclusions The altered pharmaceutical purchasing structure is cost - effective for the reference hospital and represents a step towards a more economic procurement.
[Key words] cost-effectiveness; ABC-analysis; cost analysis
INTRODUCTION
For several years now the German public health care system has been the focus of controversial discussions in science and politics, primarily due to the ever-increasing annual costs[1]. There is a general agreement that the public health care system urgently needs reforms in many areas. Regarding the necessary changes, economical aspects are gaining importance due to the increasing financial distress of the public health care system[2]. The main aim in this setting is to maintain a high standard of patient care within the financial limits of the society[3~5]. The so called “explosion of costs” in the public health care system has aroused politicians and triggered various actions, mainly attempting to limit cost expansion by governmental regulation[6].
A way to get insight into the true costs and to solve the accounting problems is activity-based costing (ABC). In various manufacturing and service organizations ABC has been applied successfully. There is an increasing interest to implement the method in health care[7~15]. ABC provides more precise product cost information than a conventional costing system[13]. The accuracy of budgets can be increased. Due to more detailed product costing, the evaluation of the effectiveness of the examinations and treatments is more precise.
The purpose of this study was to create and test a new costing system based on ABC analysis in hospital procurement to minimize the net working capital and product storage and to lower the risks of overrunning product expiry dates[16]. Maximum availability, minimum cost and minimum working capital were the goals that were set for the project[17].
MATERIALS AND METHODS
We analyzed the altered purchasing policy of a hospital in East Germany, taking only the purchase of pharmaceutical products into account.
The objective of the study is to evaluate in what matter joining in a purchasing association and the therewith expected bundling of resources can make a contribution to improve the economic situation of German hospitals. Possible effects concerning the structure of stock-keeping, the ordering system and the procurement are to be analysed and demonstrated. The data is also analyzed with regard to operating efficiency.
The investigated reference hospital of the study was a hospital of standard care in East Germany with 160 beds. The drugs are provided by a hospital pharmacy which is affiliated with an academic teaching hospital of a university. The academic teaching hospital provides 580 beds (Main Hospital Center). The pharmacy guarantees the supply of pharmaceutical products at the academic hospital, the reference hospital and two other hospitals of the same standard. In total, the pharmacy supplies 1 750 hospital beds with drugs and other pharmaceutical products.
First, the situation in 1998 was registered. Until December 1998, the demand for pharmaceutical products was supplied by a pharmacy located a 30 to 40 min drive away from the hospital.
The storage was inspected by periodical internal stock-taking. Therefore, an annual complete stock-taking of the hospital's department of internal medicine (ward 1~3) was implemented. The stock-takings were carried out by physicians and nursing staff in cooperation with the administration. Short-term, spot-check controls were performed by physicians on selected products.
The temporary storage for medical drugs was located on each ward and largely consisted of the same compounds. The wards 1 and 2 supplied 30 beds and two intensive-care beds each with their storage. Ward 3 supplied 18 beds. If a shortage of some products occurred, they could be borrowed from the respectively other ward. In case of need there was the possibility to obtain the needed drugs from the intensive care unit or from surgical wards.
In 1998, orders of pharmaceutical products were written by hand and given to the driver of the delivery car or transmitted by phone if necessary. Short-term problems were solved by phone and suitable alternate products were delivered. The ordering rhythm was usually twice a week and the orders were placed by the nursing staff after consultation with the physician of the ward.
An in-house delivery service obtained the pharmaceutical products twice a week from the 35 km distant hospital pharmacy. The needed pharmaceutics were provided according to the consumption of each ward. They were assorted manually at the central pharmacy. In urgent cases, the in-house driver was sent to the hospital pharmacy.
If the ordered pharmaceutics were not available, suitable alternate products were sent, in some cases without prior consultation with the wards.
In December 1998 the hospital changed the supplying pharmacy. After the voluntary fusion with an academic teaching hospital in a nearby large town the drug procurement was to be managed by the hospital pharmacy of this hospital. The purpose of the fusion was the chance of more economic prices for pharmaceutical products due to the larger size of orders in a newly-formed purchasing association.
In 2001 stock-taking of the hospital was conducted to compare it with the situation in 1998, determining effects on the structure of stock-keeping, the ordering system and the procurement. The managing director of the supplying pharmacy implemented a periodical stock-taking. Excesses were detected and eliminated. The management stock-keeping was tighter and the stock of products was reduced. Due to a modern computer system the supplying pharmacy was enabled to provide individual statistics and consumption lists for each ward. The temporary storage for each pharmaceutical product was still located on each ward and largely consisted of the same compounds and the arrangement of drugs was about equal. The orders for pharmaceutics were compiled three times a week by the manager of the ward after consulting the physician. On the evening before delivery or in the case of emergency until 7.30 am at the day of delivery the order was sent to the supplying pharmacy by fax. Occurring problems, e.g. if the fax was not legible, were solved by reassurance over the phone. In case of emergency an extraordinary delivery causing additional costs was possible.
The received orders were manually transferred from fax to a computer or a commissioning machine. The commissioning machine assorted the ordered drugs in a short time and packed them into a transport container. For quality control spot-checks of the packed supply were done by the pharmacy's staff.
The ordered drugs were delivered three times a week, on Monday, Wednesday and Friday at relatively fixed times by the pharmacy's transport service. Transport containers were labelled with the name of each ward. A list containing the delivered pharmaceutics was added. The empty containers were returned at the next tour.
The consumption volume of all pharmaceutical products was to be analyzed to get an overview about “drug”-focal points to figure out saving possibilities. The wards 1, 2 and 3 of the hospital's department of internal medicine were considered a unit concerning its consumption of therapeutic agents and were evaluated by ABC-analysis for the year 1998 to 2001. The pharmaceutics were grouped according to their frequency of consumption and their value[33]. A - articles have a high consumption value, B - articles have a middle consumption value and C - articles have a low consumption value. For the ABC-analysis of therapeutic agents the volume of consumption was evaluated. The consumption value is then calculated by multiplication with the acquisition price.
RESULTS
In total, 720 different consumption values were listed for the department of internal medicine (ward 1~3) during the observed period of 11 months (January 1st until November 30th,1998). 104 articles or 14.4% of the stock accounted for 75% of the total costs.
If a constant patient occupancy is taken as a basis for the calculation, the consumption value of 94 131.63 would have increased to approximately 102 689.00 by the end of the year. The results of the ABC-analysis for the consumption of pharmaceutical therapeutics in the year of 1998 are shown in (Figure 1).
Figure 1 Results of the ABC-analysis regarding consumption of therapeutic agents in 1998 (ward 1~3)
In 1998, the total consumption value for 720 pharmaceutical products at the department of internal medicine amounted to 133 266.50.
In 2001, the consumption of therapeutic agents at the department of internal medicine was again evaluated by ABC-analysis.
The overall assessment of drug consumption in 2001 showed a stock of 485 articles. However, 45 articles (9%) generated 76.5% of the total costs.
The period from January 1st 2001 until December 31st 2001 was evaluated. The overall consumption value of pharmaceutical products at the department for internal medicine in 2001 amounted to 132 682.80.
The result of the ABC-analysis for the consumption of therapeutic agents in 2001 is shown in (Figure 2).
Figure 2 Results of the ABC-analysis regarding consumption of therapeutic agents in 2001 (ward 1~3)
By direct comparison of costs in 1998 and 2001, 23 of the 45 therapeutic agents with the highest turn-over were the same. Six high turn-over articles of 1998 were replaced with an alternative article with the same effect and a similar active substance in 2001. Three therapeutic agents were newly included to the article master. The remaining pharmaceutical products did not belong to the A-articles in 1998, but evolved into articles of high turn-over in 2001.
Table 1 shows the direct cost comparison of a stock of 23 identical A-articles in 1998 and in 2001.
The table obviously shows that within the group of identical pharmaceutical products the gross purchase price was up to 75% lower than in 1998 which in conclusion means a substantial benefit in costs. To elucidate the advantageous relation, the consumption of therapeutic agents in 2001 is calculated with the cost-prices of 1998. This calculation yields a sum of 52 040.82 for the 23 identical A-articles in 1998 compared with 31 818.71 in 2001. Hence, the difference for the gross purchase price is 20 222.11, representing a cost saving of 38.8% regarding identical A-articles.
Table 1 Direct Cost Comparison of A Stock of 23 Identical A-articles in 1998 and in 2001
In 2001, about 485 pharmaceutical products were registered at the stock with a consumption volume of nearly 132 683.
Comparing 1998 with 2001 the stock of articles was reduced to 32.6% without changing the mandate of patient supply. 1998 in total 2 222 admissions were registered compared with 2 445 in 2001, representing an increase of 19.1%.
The average duration of stay in 1998 was registered with 11.3 days. In 2001 the average duration of stay was 10.2 days, corresponding to a reduction of 9.8%.
The overall costs of pharmaceutical products per patient in 1998 amounted to 59.71 compared with 54.26 in 2001, which corresponds to a 9.1% reduction of case-related costs of therapeutic agents.
DISCUSSION
The provisons of state law in health care in Germany as well as the reform of the system in 2000 sustainably changed the general conditions in the public health care system. The reorganisation of the reimbursement system for hospitals resulted in an increased cost pressure for the individual hospital and an increased competition between the hospitals. In future, the economic operation of hospitals should be rewarded, because competitive performance structures are a promise for extending the mandate of health supply by the health insurance companies. Therefore, hospitals are waging a price war[18].
Due to this stress of competition, logistical concepts for hospitals are gaining importance[19~21]. In the field of stock keeping, significant effects can be achieved with the reduction of stock, especially regarding slow-moving items[22].
Since the enactment of cost reduction in the health insurance the federal government tries to attempt a revenue-oriented expenditure policy. This means that expenses of public health insurances may not rise more than income[23].
The hospital sector is considered to be an important economic factor with a great potential for growth and employment. Hospitals present the largest fraction of the service sector with a trade volume of more than 55 billion Euro[24]. In Germany, almost 600 000 beds at almost 2 300 facilities are available for clinical treatment. The hospital industry employs almost one million people including 140 000 physicians. Therefore, the hospital sector is one of the most capital intensive part of the public health system[25].
The German public health system has to manage a fast alternation of the general conditions; one reform of the public health system follows after another. Due to governmental interventions resulting in financial shortages that threaten the existence of the hospitals, the gap between income and expenses increases[26].
The German hospitals have to deal with this limited amount of financial resources in an increasing degree. Therefore, the decision-makers are forced to come to rapid decisions in which economic aspects play a major role. Appropriate cost analyses can identify savings potentials and expenditures can be shortened[27, 28]. In future, hospitals as well as other branches, will be exposed to total market-risk, which implies that continuous losses cause a cessation of business. Facing this difficult starting position the question arises how German hospitals can obtain or even enhance their economical ability to compete[29].
Hospitals will have to even more force rationalization and optimization in all fields to realize logistical savings potentials like in purchase or disposition. In addition, close cooperation with other partners can be profitable. Networks with resulting synergistic effects and economisation efforts can increase the chance of survival in economic competition[23]. This means a constant alteration for the hospital which every field in the hospital has to realize and support[30, 31]. The management as well as the remaining fields have to develop in this direction as it is common in the service sector[32].
A significant reduction of cost prices concerning therapeutic agents was realized by changing of thesupplying pharmacy together with other hospitals of the same ownership. Reduced administrative expenses and a reduced stock are consequences of a higher frequency of delivery and quality controls by the pharmacy.
The pharmacy of the academic teaching hospital as supplier sees into the amount of orders as well as the actual consumption of therapeutic agents of the supplied hospital. Also, it takes care of quality control and checks expiry dates. These periodical controls guarantee an exact survey of the consumption of pharmaceutical products and stock-keeping.
Stock-keeping of pharmaceutical products at wards of the department of internal medicine was significantly reduced which results in a reduction of the rate of interest for the stock capital bindings and the expiry of therapeutical agents due to long-term storage is minimized. The temporary storage remains at the ward.
The manager of the pharmacy also holds the position of the managing director of the participating hospitals.
The supplying pharmacy compiles consumption histories at a fixed price, which is helpful to realize reliefs in some domains or to improve quality and profitability.
The ordering process of commissioning drugs changed. The supplying pharmacy uses a high-tech commissioning machine. A result are savings with respect to time and staff. Further on, ordering lists of pharmaceutical products were written by hand and sent by fax to the pharmacy after consultation with the physician of the ward.
Regarding the supply, the method and frequency of delivery changed in comparison to the previous procedure. Delivery was newly implemented instead of pick-up. The products are supplied three times a week instead of picking-up twice per week. The transport costs have to be paid as a processing fee to the supplying pharmacy.
The statistical analysis focuses on the pharmaceutical products only. First of all, the situation in 1998 was assessed. Only the high cost type A-articles were included in the ABC-analysis. ABC - analysis revealed that 14.4% of the therapeutic agents account for 75% of the costs. In 1998, the stock of articles of the department of internal medicine included 720 pharmaceutical products with a calculated purchasing volume of 135276.
The ABC - analysis for 2001 showed that 9% of the therapeutic agents caused 76.5% of the total costs.
In 2001, 485 pharmaceutical products were listed in the stock of articles at the department of internal medicine and the volume of purchase amounted to 132683. Comparing the total expenses for pharmaceutical agents in 1998 and 2001, a cost reduction of nearly 3 595 could be achieved. This may seem a relatively small amount, but it has to be considered that a significantly higher number patients were treated in the shorter period.
The direct comparison regarding the potential of cost savings in 1998 and 2001 is only efficient if case-related costs for pharmaceutical products are evaluated. As mentioned above, they amounted to 9.1% and are about equal to the overall savings achieved by joining the purchasing association for pharmaceutical products.
Figure 3 illustrates these potentials illustrates these potentials
Figure 3 Efficiency and capacity growth at the reference hospital in 1998 and 2001
CONCLUSION
Regarding the results of this research the altered pharmaceutical purchasing structure is cost effective for the reference hospital. Although it concerns only the procurement area of the pharmaceutical articles, this represents a step towards improved economics. Intensive development of its economic potential concerning purchase and logistics is required by the reference hospital. Purchase is an operational economy related tool. Strategic decisions should always focus on purchase structures, while there should also be a focus on the optimization of the palette of products[34]. Generally a higher purchase volume, achieved by associating several clients, makes more attractive purchase prices possible. Even the supplying pharmacy is able to achieve better purchase prices for therapeutic agents at wholesale traders or producers by bunching the requests of pharmaceutical products from several hospitals.
Differentiated procuring or stock-keeping politics determined by ABC-analysis can result in significant cost savings[35].
The results of the ABC - analysis make clear that type A-articles have to be handled accurately and audits have to focus on them; A - articles should be planned, scheduled and supervised with the best possible methods. Cost structure analysis and transport analysis should be implemented[36].
Improvements are essential not only for purchase controlling but also in other fields in hospital administration to promote an integrative process management[37~39].
Without any doubt, cooperations of any kind in various matters will be an important part of hospitals' strategies in future[40~44].
However, it also has to be kept in mind that the supply of medical care and nursing are the main aims of a hospital rather than its financial profitability.
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(Editor Emilia)(Clevert D. - A.1, Stickel)
1 Department of Radiology, Klinikum Grosshadern University of Munich, Munich, Germany
2 Department of Surgery, Klinikum Grosshadern University of Munich, Munich, Germany
3 Fachhochschule für Wirtschaft, Berlin, Deutschland
Correspondence to Dr. med. Dirk-André Clevert, Department of Radiology, Klinikum Grosshadern University of Munich, Marchioninistr. 15, Munich 81377, Germany
Tel: +49- 89 / 7095 - 3620,Fax:+49- 89 / 7095 - 8895,E-mail:Dirk.Clevert@med.uni-muenchen.de
[Abstract] Objective The objective of this study was to show if and to what extent joining in a purchasing association and the therewith expected bundling of resources can make a contribution to improve the economic situation in German hospitals. Possible effects concerning the structure of stock - keeping, the ordering system and the procurement are analysed and demonstrated. Methods The altered purchasing structure of a hospital in east Germany was analysed with a focus on the purchase of pharmaceutical products. The wards 1, 2 and 3 of the hospital's department of internal medicine were regarded as an entity concerning its consumption of therapeutic agents. They were evaluated by ABC - analysis for the year 1998 and 2001 to provide an insight whether and to what extend the associate - solution of the pharmaceutical purchase had entailed actual cost savings. Results By direct comparison of costs in 1998 and 2001, we were able to show that 23 of the 45 articles associated with the highest costs in 2001 were still identical with those in 1998. For six of the high cost articles of 1998 an alternative article was provided in 2001. Three therapeutic agents were newly included to the article range. The remaining therapeutic agents were those that did not belong to the A - articles stock in 1998, but evolved into high turn over articles in the year 2001. Conclusions The altered pharmaceutical purchasing structure is cost - effective for the reference hospital and represents a step towards a more economic procurement.
[Key words] cost-effectiveness; ABC-analysis; cost analysis
INTRODUCTION
For several years now the German public health care system has been the focus of controversial discussions in science and politics, primarily due to the ever-increasing annual costs[1]. There is a general agreement that the public health care system urgently needs reforms in many areas. Regarding the necessary changes, economical aspects are gaining importance due to the increasing financial distress of the public health care system[2]. The main aim in this setting is to maintain a high standard of patient care within the financial limits of the society[3~5]. The so called “explosion of costs” in the public health care system has aroused politicians and triggered various actions, mainly attempting to limit cost expansion by governmental regulation[6].
A way to get insight into the true costs and to solve the accounting problems is activity-based costing (ABC). In various manufacturing and service organizations ABC has been applied successfully. There is an increasing interest to implement the method in health care[7~15]. ABC provides more precise product cost information than a conventional costing system[13]. The accuracy of budgets can be increased. Due to more detailed product costing, the evaluation of the effectiveness of the examinations and treatments is more precise.
The purpose of this study was to create and test a new costing system based on ABC analysis in hospital procurement to minimize the net working capital and product storage and to lower the risks of overrunning product expiry dates[16]. Maximum availability, minimum cost and minimum working capital were the goals that were set for the project[17].
MATERIALS AND METHODS
We analyzed the altered purchasing policy of a hospital in East Germany, taking only the purchase of pharmaceutical products into account.
The objective of the study is to evaluate in what matter joining in a purchasing association and the therewith expected bundling of resources can make a contribution to improve the economic situation of German hospitals. Possible effects concerning the structure of stock-keeping, the ordering system and the procurement are to be analysed and demonstrated. The data is also analyzed with regard to operating efficiency.
The investigated reference hospital of the study was a hospital of standard care in East Germany with 160 beds. The drugs are provided by a hospital pharmacy which is affiliated with an academic teaching hospital of a university. The academic teaching hospital provides 580 beds (Main Hospital Center). The pharmacy guarantees the supply of pharmaceutical products at the academic hospital, the reference hospital and two other hospitals of the same standard. In total, the pharmacy supplies 1 750 hospital beds with drugs and other pharmaceutical products.
First, the situation in 1998 was registered. Until December 1998, the demand for pharmaceutical products was supplied by a pharmacy located a 30 to 40 min drive away from the hospital.
The storage was inspected by periodical internal stock-taking. Therefore, an annual complete stock-taking of the hospital's department of internal medicine (ward 1~3) was implemented. The stock-takings were carried out by physicians and nursing staff in cooperation with the administration. Short-term, spot-check controls were performed by physicians on selected products.
The temporary storage for medical drugs was located on each ward and largely consisted of the same compounds. The wards 1 and 2 supplied 30 beds and two intensive-care beds each with their storage. Ward 3 supplied 18 beds. If a shortage of some products occurred, they could be borrowed from the respectively other ward. In case of need there was the possibility to obtain the needed drugs from the intensive care unit or from surgical wards.
In 1998, orders of pharmaceutical products were written by hand and given to the driver of the delivery car or transmitted by phone if necessary. Short-term problems were solved by phone and suitable alternate products were delivered. The ordering rhythm was usually twice a week and the orders were placed by the nursing staff after consultation with the physician of the ward.
An in-house delivery service obtained the pharmaceutical products twice a week from the 35 km distant hospital pharmacy. The needed pharmaceutics were provided according to the consumption of each ward. They were assorted manually at the central pharmacy. In urgent cases, the in-house driver was sent to the hospital pharmacy.
If the ordered pharmaceutics were not available, suitable alternate products were sent, in some cases without prior consultation with the wards.
In December 1998 the hospital changed the supplying pharmacy. After the voluntary fusion with an academic teaching hospital in a nearby large town the drug procurement was to be managed by the hospital pharmacy of this hospital. The purpose of the fusion was the chance of more economic prices for pharmaceutical products due to the larger size of orders in a newly-formed purchasing association.
In 2001 stock-taking of the hospital was conducted to compare it with the situation in 1998, determining effects on the structure of stock-keeping, the ordering system and the procurement. The managing director of the supplying pharmacy implemented a periodical stock-taking. Excesses were detected and eliminated. The management stock-keeping was tighter and the stock of products was reduced. Due to a modern computer system the supplying pharmacy was enabled to provide individual statistics and consumption lists for each ward. The temporary storage for each pharmaceutical product was still located on each ward and largely consisted of the same compounds and the arrangement of drugs was about equal. The orders for pharmaceutics were compiled three times a week by the manager of the ward after consulting the physician. On the evening before delivery or in the case of emergency until 7.30 am at the day of delivery the order was sent to the supplying pharmacy by fax. Occurring problems, e.g. if the fax was not legible, were solved by reassurance over the phone. In case of emergency an extraordinary delivery causing additional costs was possible.
The received orders were manually transferred from fax to a computer or a commissioning machine. The commissioning machine assorted the ordered drugs in a short time and packed them into a transport container. For quality control spot-checks of the packed supply were done by the pharmacy's staff.
The ordered drugs were delivered three times a week, on Monday, Wednesday and Friday at relatively fixed times by the pharmacy's transport service. Transport containers were labelled with the name of each ward. A list containing the delivered pharmaceutics was added. The empty containers were returned at the next tour.
The consumption volume of all pharmaceutical products was to be analyzed to get an overview about “drug”-focal points to figure out saving possibilities. The wards 1, 2 and 3 of the hospital's department of internal medicine were considered a unit concerning its consumption of therapeutic agents and were evaluated by ABC-analysis for the year 1998 to 2001. The pharmaceutics were grouped according to their frequency of consumption and their value[33]. A - articles have a high consumption value, B - articles have a middle consumption value and C - articles have a low consumption value. For the ABC-analysis of therapeutic agents the volume of consumption was evaluated. The consumption value is then calculated by multiplication with the acquisition price.
RESULTS
In total, 720 different consumption values were listed for the department of internal medicine (ward 1~3) during the observed period of 11 months (January 1st until November 30th,1998). 104 articles or 14.4% of the stock accounted for 75% of the total costs.
If a constant patient occupancy is taken as a basis for the calculation, the consumption value of 94 131.63 would have increased to approximately 102 689.00 by the end of the year. The results of the ABC-analysis for the consumption of pharmaceutical therapeutics in the year of 1998 are shown in (Figure 1).
Figure 1 Results of the ABC-analysis regarding consumption of therapeutic agents in 1998 (ward 1~3)
In 1998, the total consumption value for 720 pharmaceutical products at the department of internal medicine amounted to 133 266.50.
In 2001, the consumption of therapeutic agents at the department of internal medicine was again evaluated by ABC-analysis.
The overall assessment of drug consumption in 2001 showed a stock of 485 articles. However, 45 articles (9%) generated 76.5% of the total costs.
The period from January 1st 2001 until December 31st 2001 was evaluated. The overall consumption value of pharmaceutical products at the department for internal medicine in 2001 amounted to 132 682.80.
The result of the ABC-analysis for the consumption of therapeutic agents in 2001 is shown in (Figure 2).
Figure 2 Results of the ABC-analysis regarding consumption of therapeutic agents in 2001 (ward 1~3)
By direct comparison of costs in 1998 and 2001, 23 of the 45 therapeutic agents with the highest turn-over were the same. Six high turn-over articles of 1998 were replaced with an alternative article with the same effect and a similar active substance in 2001. Three therapeutic agents were newly included to the article master. The remaining pharmaceutical products did not belong to the A-articles in 1998, but evolved into articles of high turn-over in 2001.
Table 1 shows the direct cost comparison of a stock of 23 identical A-articles in 1998 and in 2001.
The table obviously shows that within the group of identical pharmaceutical products the gross purchase price was up to 75% lower than in 1998 which in conclusion means a substantial benefit in costs. To elucidate the advantageous relation, the consumption of therapeutic agents in 2001 is calculated with the cost-prices of 1998. This calculation yields a sum of 52 040.82 for the 23 identical A-articles in 1998 compared with 31 818.71 in 2001. Hence, the difference for the gross purchase price is 20 222.11, representing a cost saving of 38.8% regarding identical A-articles.
Table 1 Direct Cost Comparison of A Stock of 23 Identical A-articles in 1998 and in 2001
In 2001, about 485 pharmaceutical products were registered at the stock with a consumption volume of nearly 132 683.
Comparing 1998 with 2001 the stock of articles was reduced to 32.6% without changing the mandate of patient supply. 1998 in total 2 222 admissions were registered compared with 2 445 in 2001, representing an increase of 19.1%.
The average duration of stay in 1998 was registered with 11.3 days. In 2001 the average duration of stay was 10.2 days, corresponding to a reduction of 9.8%.
The overall costs of pharmaceutical products per patient in 1998 amounted to 59.71 compared with 54.26 in 2001, which corresponds to a 9.1% reduction of case-related costs of therapeutic agents.
DISCUSSION
The provisons of state law in health care in Germany as well as the reform of the system in 2000 sustainably changed the general conditions in the public health care system. The reorganisation of the reimbursement system for hospitals resulted in an increased cost pressure for the individual hospital and an increased competition between the hospitals. In future, the economic operation of hospitals should be rewarded, because competitive performance structures are a promise for extending the mandate of health supply by the health insurance companies. Therefore, hospitals are waging a price war[18].
Due to this stress of competition, logistical concepts for hospitals are gaining importance[19~21]. In the field of stock keeping, significant effects can be achieved with the reduction of stock, especially regarding slow-moving items[22].
Since the enactment of cost reduction in the health insurance the federal government tries to attempt a revenue-oriented expenditure policy. This means that expenses of public health insurances may not rise more than income[23].
The hospital sector is considered to be an important economic factor with a great potential for growth and employment. Hospitals present the largest fraction of the service sector with a trade volume of more than 55 billion Euro[24]. In Germany, almost 600 000 beds at almost 2 300 facilities are available for clinical treatment. The hospital industry employs almost one million people including 140 000 physicians. Therefore, the hospital sector is one of the most capital intensive part of the public health system[25].
The German public health system has to manage a fast alternation of the general conditions; one reform of the public health system follows after another. Due to governmental interventions resulting in financial shortages that threaten the existence of the hospitals, the gap between income and expenses increases[26].
The German hospitals have to deal with this limited amount of financial resources in an increasing degree. Therefore, the decision-makers are forced to come to rapid decisions in which economic aspects play a major role. Appropriate cost analyses can identify savings potentials and expenditures can be shortened[27, 28]. In future, hospitals as well as other branches, will be exposed to total market-risk, which implies that continuous losses cause a cessation of business. Facing this difficult starting position the question arises how German hospitals can obtain or even enhance their economical ability to compete[29].
Hospitals will have to even more force rationalization and optimization in all fields to realize logistical savings potentials like in purchase or disposition. In addition, close cooperation with other partners can be profitable. Networks with resulting synergistic effects and economisation efforts can increase the chance of survival in economic competition[23]. This means a constant alteration for the hospital which every field in the hospital has to realize and support[30, 31]. The management as well as the remaining fields have to develop in this direction as it is common in the service sector[32].
A significant reduction of cost prices concerning therapeutic agents was realized by changing of thesupplying pharmacy together with other hospitals of the same ownership. Reduced administrative expenses and a reduced stock are consequences of a higher frequency of delivery and quality controls by the pharmacy.
The pharmacy of the academic teaching hospital as supplier sees into the amount of orders as well as the actual consumption of therapeutic agents of the supplied hospital. Also, it takes care of quality control and checks expiry dates. These periodical controls guarantee an exact survey of the consumption of pharmaceutical products and stock-keeping.
Stock-keeping of pharmaceutical products at wards of the department of internal medicine was significantly reduced which results in a reduction of the rate of interest for the stock capital bindings and the expiry of therapeutical agents due to long-term storage is minimized. The temporary storage remains at the ward.
The manager of the pharmacy also holds the position of the managing director of the participating hospitals.
The supplying pharmacy compiles consumption histories at a fixed price, which is helpful to realize reliefs in some domains or to improve quality and profitability.
The ordering process of commissioning drugs changed. The supplying pharmacy uses a high-tech commissioning machine. A result are savings with respect to time and staff. Further on, ordering lists of pharmaceutical products were written by hand and sent by fax to the pharmacy after consultation with the physician of the ward.
Regarding the supply, the method and frequency of delivery changed in comparison to the previous procedure. Delivery was newly implemented instead of pick-up. The products are supplied three times a week instead of picking-up twice per week. The transport costs have to be paid as a processing fee to the supplying pharmacy.
The statistical analysis focuses on the pharmaceutical products only. First of all, the situation in 1998 was assessed. Only the high cost type A-articles were included in the ABC-analysis. ABC - analysis revealed that 14.4% of the therapeutic agents account for 75% of the costs. In 1998, the stock of articles of the department of internal medicine included 720 pharmaceutical products with a calculated purchasing volume of 135276.
The ABC - analysis for 2001 showed that 9% of the therapeutic agents caused 76.5% of the total costs.
In 2001, 485 pharmaceutical products were listed in the stock of articles at the department of internal medicine and the volume of purchase amounted to 132683. Comparing the total expenses for pharmaceutical agents in 1998 and 2001, a cost reduction of nearly 3 595 could be achieved. This may seem a relatively small amount, but it has to be considered that a significantly higher number patients were treated in the shorter period.
The direct comparison regarding the potential of cost savings in 1998 and 2001 is only efficient if case-related costs for pharmaceutical products are evaluated. As mentioned above, they amounted to 9.1% and are about equal to the overall savings achieved by joining the purchasing association for pharmaceutical products.
Figure 3 illustrates these potentials illustrates these potentials
Figure 3 Efficiency and capacity growth at the reference hospital in 1998 and 2001
CONCLUSION
Regarding the results of this research the altered pharmaceutical purchasing structure is cost effective for the reference hospital. Although it concerns only the procurement area of the pharmaceutical articles, this represents a step towards improved economics. Intensive development of its economic potential concerning purchase and logistics is required by the reference hospital. Purchase is an operational economy related tool. Strategic decisions should always focus on purchase structures, while there should also be a focus on the optimization of the palette of products[34]. Generally a higher purchase volume, achieved by associating several clients, makes more attractive purchase prices possible. Even the supplying pharmacy is able to achieve better purchase prices for therapeutic agents at wholesale traders or producers by bunching the requests of pharmaceutical products from several hospitals.
Differentiated procuring or stock-keeping politics determined by ABC-analysis can result in significant cost savings[35].
The results of the ABC - analysis make clear that type A-articles have to be handled accurately and audits have to focus on them; A - articles should be planned, scheduled and supervised with the best possible methods. Cost structure analysis and transport analysis should be implemented[36].
Improvements are essential not only for purchase controlling but also in other fields in hospital administration to promote an integrative process management[37~39].
Without any doubt, cooperations of any kind in various matters will be an important part of hospitals' strategies in future[40~44].
However, it also has to be kept in mind that the supply of medical care and nursing are the main aims of a hospital rather than its financial profitability.
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(Editor Emilia)(Clevert D. - A.1, Stickel)