Publication/Presentation Date

7-25-2014

Abstract

Abstract

This study aims to decrease unnecessary practice variation regarding consumable surgical dry goods while limiting disruption to surgeon technique and maintaining patient outcomes and safety standards. Materials and equipment required for surgical procedures are listed on a Doctor’s Preference Card (DPC) and ensure the presence of required items. Each surgeon creates his own DPC creating variation in supplies used for the same procedure. This variation, along with outdated cards, poses an opportunity for cost savings in the operating room suite. A quantitative case study with qualitative analysis was performed on two high-volume procedures at LVHN (laparoscopic appendectomy and laparoscopic cholecystectomy) with significant variation in average cost per case. Due to the extensive catalog of DPCs on file, focus was placed on the usage data of high-volume surgeons in calendar year 2013 for both cases. Frequency of use and input from surgical personnel was used to determine materials essential for representative procedures. Cost analysis was performed using two methods of standardization. The “Find and Replace” Method can be implemented immediately and focuses on consolidation of consumable materials to more cost-effective equivalents. The “Core DPC” Method creates a new standard pick list of essential materials for all cases, allowing for preference within certain categories of consolidated items that. For both cases combined, the “Find and Replace” Method yields a 2.33% reduction in total annual procedural costs for a total savings of $28,433.96. The “Core DPC” Method is more extensive, leading to a cost reduction of 11.18% with savings of $136,425.82. Maintenance of these standardization efforts requires continued review to ensure accuracy and to reflect changes in personnel and technology.

Keywords

standardization, Doctor’s Preference Card (pick list), cost reduction, “Find and Replace” Method, “Core DPC,” laparoscopic procedures, LEAN

Introduction

Lehigh Valley Health Network (LVHN) is concerned with the Triple Aim: better health, better care, and better cost. In order to provide the best healthcare for the community, hospital networks must be aware of cost-saving opportunities. The operating room (OR) is one of the highest revenue generators, but there is a high cost associated with its daily functioning (“Where to look,” 2009). Therefore, cost reduction efforts within Perioperative Services have potential for success. LEAN methodology provides the standard for waste reduction and increased efficiency (“5S,” 2007; “A Lean process,” 2010; DiConsiglio, 2009).

Surgical procedures require extensive equipment and supplies. Each procedure is classified under a Diagnosis-Related Group (DRG), which is associated with a code used for OR tracking and billing. For each procedure code and site, all surgeons at LVHN have a Doctor’s Preference Card (DPC), or pick list, that indicates the equipment and materials required to complete the case. Tolerating physician preference leads to variation in supplies requested for the same case and therefore in cost.

This study reviews two high-volume DRGs at LVHN that exhibit a wide range of case costs. Laparoscopic Cholecystectomy, referred to by the procedure code (CHOLEL), was analyzed because it is the highest volume case in the network. Laparoscopic Appendectomy (APPEL) was analyzed due to their similarity to CHOLEL instrumentation and relatively high volume. While these are straightforward procedures, there is a wide range of average cost per case, indicating a need for consistency across surgeons and locations (Figure 1). At LVHN and other health networks, past efforts to decrease variability have been undertaken on a limited scale and have included standardization of instrumentation, waste reduction, and consolidation of materials to more cost-effective alternatives (“Practical Approach,” 2013; Barlow, 2014; Castro & Castilho, 2013; Park & Dickerson, 2009; Nilsen, 2005; Patterson, 2010; Saver, 2013; “Start with,” 2005; “Taking small,” 2013).

In this study, focus was placed on items for which the hospital is charged. This set of materials is referred to as dry goods or consumables and excludes equipment and reusable instrument trays. This study addresses APPEL and CHOLEL dry goods in an overarching standardization effort that surpasses the item-by-item approach commonly taken (“Start with,” 2005). Increasing standardization and consolidating dry goods within these DRGs will lead to process improvement. Furthermore, ensuring the accuracy of DPCs by analyzing usage data will improve inventory (DiConsiglio, 2005). Together, these steps will increase efficiency and decrease variation, leading to lower costs.

Methods

A descriptive case study with both qualitative and quantitative analysis was undertaken by the Perioperative Services Department of the LVHN. It focused on two common procedures with variable costs: APPEL and CHOLEL. Data collection was inclusive for both procedures in calendar year 2013 (CY13).

Data was collected from the APPEL and CHOLEL DPCs on file at the Cedar Crest (CC), Muhlenberg (MH), and 17th Street (AM) hospitals. For each DRG, data reports included total consumable item usage for CY13.

Statistical outliers in regards to case cost were eliminated. Analysis focused on high-volume surgeons, as case load was inversely correlated with average cost per case (r=-0.401, r2=0.161). For APPEL, surgeons with yearly case volumes above the 50th percentile were considered high-volume, and for CHOLEL, high-volume surgeons averaged at least one case per week in CY13. Items associated with anesthesia and non-standardizable consumables (i.e. gloves) were eliminated. Data analysis was based on actual usage and was performed separately for APPEL and CHOLEL.

Unweighted and weighted usage frequencies were calculated for each item using the equations shown in Figure 2. These calculations reflected those done in a similar study by Castro and Castilho (2013).

Items used in less than 10% of cases (as determined by unweighted frequency) or by fewer than 10% of surgeons (as determined by weighted frequency) were eliminated. Consultation with a General Surgery Specialty Team Coordinator (STC) assisted in verifying function and necessity of remaining items. Based on these discussions, “pull” and “have available” lists were edited to form a new “Core DPC.” The “pull” list was composed of items used in at least 30% of cases, while “have available” included items with usage between 10% and 30%. The variety of supplies was reduced based on STC recommendations and cost considerations. Other deciding factors were surgeon’s case volume, average cost per case, and surgeon retention. A separate pediatric DPC was developed for APPEL due to the unique needs of the pediatric patient.

Cost analysis was conducted using two different methods. Savings from the “Find and Replace” Method were calculated by replacing certain items with more cost-effective equivalents. Savings were equal to the difference between CY13 total cost of items considered equivalent and the cost of the same number of items at the lower price. Waste reduction was included in the savings determined from the “Find and Replace” Method. “Core DPC” savings were calculated by determining the difference between the total cost of all CY13 procedures and the estimated cost based on the new DPC, including CY13 average cost of anesthesia per case, for the same number of procedures. Because this estimates savings through the use of a totally new DPC system, waste reduction from CY13 was not included in the savings estimations. The savings per case were calculated by dividing annual savings by number of cases in CY13. The reduction in cost per case and annual cost were calculated as a percentage of the costs for CY13.

Results

The sample analyzed consisted of data coded under APPEL and CHOLEL. For APPEL, 503 cases were performed in CY13 with an average cost per case of $959.43. 50 DPCs exist on file; however, only 27 DPCs were in use in CY13. For CHOLEL, 1096 cases were completed in CY13 with an average cost per case of $753.78. Only 32 of the 51 DPCs on file were active in CY13.

The “Find and Replace” Method resulted in savings itemized by category, which when summed reflected the potential annual savings per DRG (Table 1). The “Core DPC” was created to reflect the essential consumable materials required to complete a case. Every “Core DPC” created as a result of this analysis is structured similarly to the CHOLEL “Core DPC,” shown in Figure 3. Supplies were categorized according to the existing system. The “Core DPC” Method resulted in an entirely new DPC and case cost for all surgeons, and associated cost savings are shown in Table 2.

The relationship between site location and average cost per case was analyzed using a one-way Analysis of Variation, (ANOVA). For CHOLEL, a marginally significant relationship, F(2,29) = 2.39, p=.11, was found when comparing CC and MH sites using a Tukey’s Honest Significant Difference post-hoc test. No significant relationship was found for APPEL.

Discussion

The number of active DPCs is much fewer than the number of DPCs in the system. Surgeons may operate at more than one hospital location, but DPCs are not shared across sites. Therefore, if a surgeon has privileges at more than one site, different DPCs exist for each site. However, surgeons do not always operate at all sites where they have privileges; thus, DPCs remain inactive within the system.

The two different methods of cost analysis, “Find and Replace” and “Core DPC,” produced a range of savings possibilities. The ease of implementing these methods is inversely related to the savings opportunities. “Find and Replace” savings are easy to implement because higher-priced items simply will be replaced with more cost-effective equivalents. APPEL has higher savings opportunities than CHOLEL because the procedure requires the use of expensive staplers, listed under implants (IMP) and special supplies (SSUP) (Table 1). The “Core DPC” method is more difficult to implement because it requires the use of a single DPC by all active surgeons. This method involves more widespread standardization, so the savings opportunities are much greater. Due in part to a high case volume, CHOLEL savings are higher than those for APPEL.

Results of the ANOVA showed a marginally significant difference between CC and MH for CHOLEL cost, providing an added incentive to focus on standardization across the network. While surgeon preference causes slight variation within each site, procedures at different sites within a network should be performed similarly and lie within the same cost range. This finding may indicate that there are administrative and procedural discrepancies between sites, contributing to usage and cost variability.

The majority of research regarding operating room standardization and cost reduction has focused primarily on instrumentation (Nilsen, 2005). The few efforts regarding consumables have been centered on waste reduction or on simultaneously reducing inventory variety for a limited number of materials (Castro & Castilho, 2013; Park & Dickerson, 2009; “Start with,” 2005). This case study is one of the first to suggest mass standardization of dry goods on commonly used DPCs. The introduction of a “Core DPC” is a drastic departure from the physician-centered preference card of the past. A “Core DPC” contains all necessary dry goods and allows for physician preference only within select categories of materials, which have already been reduced in variation and cost. The “Core DPC” creates a standard pick list for typical APPEL and CHOLEL cases, effectively reducing the number of DPCs on file to one per DRG. Another unique feature of a “Core DPC” is the inclusion of “situational kits,” shown in Figure 3. Some existing DPCs request items that are used only under special circumstances. Therefore, “situational kits” allow necessary groups items to be pulled according to patient needs. Because the items are grouped according to role within the specific DRG, it is clear which items are necessary for individualized patient care.

While it is possible to eliminate unnecessary practice variation, implementation must be carefully structured in order to maintain standardization. Recommendations for standardization and cost reduction were submitted to the Perioperative Services Department at LVHN-CC for review. Following administrative and clinical review, immediate initiation of the “Find and Replace” Method was suggested due to the relative ease of implementation. The current software used to manage LVHN’s DPCs allows for a global find and replace function, hence the name of the method. Success of this method would yield savings with minimal effort and build support for more extensive standardization efforts. While the creation of a “Core DPC” for each DRG will save significantly more money, implementation is much more involved. Limiting existing physician preference will ensure increased cost savings and efficiency but may not be well-received. The switch to this method across DRGs will also require more effort due to the time needed to develop each new “Core DPC.”

A conscious effort must be made to ensure that DPCs are continually revised to reflect current usage data, changes in personnel and new technology. At the departmental level, it is possible for DPCs to be monitored and updated by surgeons or scrub persons (“Physician-led,” 2007; Saver, 2010). However, because LVHN is such an extensive network, DPC maintenance infrastructure must be network-wide. DPC “clean-up” has been attempted here before and changes have not been lasting. In order to perpetuate standardization, physicians must be involved throughout the entire process. While the necessary administrative physician leadership in standardization efforts is currently present in standardization efforts, the motivation to limit variation and cost variability must come from practicing surgeons (DiConsiglio, 2009; “Fast tracking,” 1996; “Physician-led,” 2007; “Start with,” 2005; “Taking small,” 2013). In a vast network such as LVHN, high-volume-low-cost surgeons from multiple sites should be consulted before any changes occur. Increased physician involvement in the process of standardization may enhance network-wide receptiveness to elimination of unnecessary practice variation.

The authors acted as consultants without formal medical training or familiarity with operating room management and standard consumable items. Gaining a comprehensive understanding of surgical equipment, materials, and procedures is not feasible within an eight-week time frame. Therefore, the expertise of perioperative personnel was instrumental in understanding both the use of materials and surgical set-up. Our study was further limited by inaccurate usage data. For example, two pairs of gloves are required for every case and the recorded usage was less than one per case. These blatant gaps raise suspicions as to the entry accuracy of other items. Additionally, DRG codes are broad. In some cases, laparoscopic procedures that were converted to open remained coded as laparoscopic. Thus, materials used in such cases appeared in usage data and skewed frequencies. While exposure to standardization partially fulfills the Accreditation Council for Graduate Medical Education (ACGME) systems-based practice competency by promoting cost awareness and interprofessional collaboration, eliminating practice variation may negatively impact the education of medical students and residents by limiting experience with different tools and techniques (Accreditation Council for Graduate Medical Education [ACGME], 2013; Patterson, 2012).

A standardization process focused on usage frequencies lends itself to automated analysis, provided that qualitative overview occurs before any final changes are made. Fortunately, LVHN will soon transition to a new software system to track usage data, improving accuracy and streamlining efforts to reduce unnecessary variation. If this system is not capable of carrying out this task, the standard work for this analysis has been created for application to other DRGs. In order to determine which DRGs are most suited for standardization, it may be helpful to compare procedure costs at LVHN to those at similar institutions and focus initially on those that significantly differ (“Start with,” 2005; “Taking small,” 2009). Subsequently, specialties that utilize expensive implants, such as orthopedics or cardiology, should be identified as targets for cost reduction. Although transitioning from a traditional DPC to a “Core DPC” may be intimidating, proper implementation, appropriate personnel involvement, and maintenance can lead to sizable cost savings.

Acknowledgements

We would like to thank those who supported us throughout this experience and welcomed us as colleagues. Thank you to Dorothy Jones, Perioperative Administrator, for creating this opportunity for study and for serving as an invaluable mentor throughout the summer. We are grateful for the guidance and supervision of Jeanne Luke, who helped orient us to Perioperative Services at LVHN and monitored our progress. Thank you to Hubert Huang for organizing this program and providing opportunities for professional development. Hope Johnson, Lori Ziegler, and Jill Rothermel were instrumental in our understanding of operating room procedures and supply needs. Special thanks to Sue Toomey and her insight into the process of value analysis. All data was provided by Michelle Woodroffe, Perioperative Services Business Manager. Thank you to Renee Shelly for being the first smiling face we saw each morning. Finally, we are grateful for the research assistance of Senior Medical Librarian, Kristine Petre, in the composition of this article.

References

5S: a lean method to cut the clutter. (2007). OR Manager, 23(3), 15.

A Lean process for OR technology. (2010). OR Manager, 26(4), 20-21.

A physician-led value analysis process. (2007). OR Manager, 23(6), 16-17.

A practical approach to OR efficiency. (2013). Journal of Perioperative Practice, 23(3), 9-10.

Barlow, R. (2014). 2014 CS/SPD DEPARTMENT OF THE YEAR: Sanford Fargo stands for SPD excellence. Healthcare Purchasing News, 38(5), 10-15.

Castro, L., & Castilho, V. (2013). The cost of waste of consumable materials in a surgical center. Revista Latino-Americana De Enfermagem (RLAE), 21(6), 1228-1234. doi:10.1590/0104-1169.2920.2358

Common Program Requirements. (2013). Retrieved from www.acgme.org/acgmeweb/Portals/0/PFAssets/ProgramRequirements/CPRs2013.pdf -2013-09-06

DiConsiglio, J. (2005). A crash course in standardization. Materials Management In Health Care, 14(4), 40-41.

DiConsiglio, J. (2009). Lean...and saving green. Materials Management In Health Care, 18(10), 20.

Fast tracking an OR's cost reduction efforts. (1996). OR Manager, 12(4), 21-22.

Nilsen, E. (2005). Managing equipment and instruments in the operating room. AORN Journal, 81(2), 349.

Park, K., & Dickerson, C. (2009). Can efficient supply management in the operating room save millions?. Current Opinion In Anesthesiology, 22(2), 242-248. doi:10.1097/ACO.0b013e32832798ef

Patterson, P. (2010). A Lean process for OR technology. OR Manager, 26(4), 20-21.

Patterson, P. (2012). Tackling perioperative supply chain as a system. OR Manager, 28(7), 22-23.

Saver, C. (2010). The price is right for cost awareness. OR Manager, 26(11), 18-19.

Start with simple steps to cut procedure costs: tourniquet, disposable stirrup strap not needed. (2005). Same-Day Surgery, 29(11), 123-125.

Taking small steps to control supply costs yields a much better bottom line. (2013). OR Manager, 29(7), 1.

Where to look for supply savings. (2009). OR Manager, 25(4), 11-13.

Appendix

Figure 1. Box plot of average cost per case per surgeon for CY13.

The endpoints for each DRG indicate the range in average cost per case per surgeon for CY13. Because the spread is so wide, the average case cost per surgeon is highly variable, indicating a need for the elimination of unnecessary practice variation. Note the difference between the endpoints and the mean and median, located between the 2nd and 3rd quartile.

Unweighted Frequency =

Weighted Frequency =

Figure 2. Formulas to calculate unweighted and weighted usage frequencies.

Table 1. “Find and Replace” Cost Analysis Breakdown

Item Category

CHOLEL

APPEL

Total

CATH

$0.00

$84.06

$84.06

IMP

$359.63

$1,414.54

$1,774.17

NEED

$28.04

$12.82

$40.86

PHAR

$163.75

$112.80

$276.55

SOLU

$43.26

$0.00

$43.26

SSUP

$6,782.99

$15,580.21

$22,363.21

Waste

$656.88

$3,194.98

$3,851.86

Total Annual Savings

$8,034.55

$20,399.41

$28,433.96

% Reduction

1.07%

4.33%

2.33%

Savings/Case

$7.33

$40.56

n/a

Savings were calculated according to existing item categories for each DRG. These savings are a result of replacing more expensive items with more cost-effective equivalents. Total annual savings is a sum of potential savings within each category and includes savings from waste reduction based on CY13 data. Percent reduction is based on the total cost for each DRG for CY13. Savings per case calculations were based on the number of cases performed in CY13. Data from both DRGs were compiled to show the network impact of combined standardization efforts. CATH refers to catheters, IMP refers to implants, NEED refers to needles, PHAR refers to pharmacy, SOLU refers to solutions, and SSUP refers to special supplies.

(Figure Continues)

(Figure Continues)

Figure 3. CHOLEL “Core DPC.”

Although only the “Core DPC” for CHOLEL is shown, it is similar in structure and content to that of the adult and pediatric APPEL “Core DPCs.” A “Core DPC” includes “pull” and “have available lists” with items organized into the categories existing in the present system. Costs shown represent item prices as of June 2, 2014. Also included are ORMIS numbers for LVHN inventory identification. “Pull” items are retrieved for every case, while “have available” items remain in storage unless required for specific patient or surgeon needs. Standardized items are indicated by a quantity. For items where variety was only reduced, no quantity is listed. Instead, each surgeon is permitted to request items from this approved list, according to the recommendations listed under “NOTES.” Also listed on the “have available” list are “situational kits.” These are groups of items to be pulled according to patient need. For the CHOLEL, the items listed under the “Cholangiogram” heading comprise a “situational kit.” The “situational kits” for both adult and pediatric APPEL include “Catheter,” “Cautery,” and “Rupture.”

Table 2. “Core DPC” Cost Analysis Breakdown

DPC

CHOLEL

APPEL

APPEL(PED)

Grand Total

Avg. CY13 Cost/Case

$682.99

$975.12

$750.22

n/a

New Cost/Case

$595.50

$885.74

$701.99

n/a

Savings/Case

$87.49

$89.38

$48.23

n/a

CY13 Yearly Cost

$748,554.36

$374,446.08

$96,778.69

$1,219,779.13

New Yearly Cost

$652,673.13

$340,123.47

$90,556.71

$1,083,353.31

Total Annual Savings

$95,881.23

$34,322.61

$6,221.98

$136,425.82

% Reduction

12.81%

9.17%

6.43%

11.18%

Average cost per case from CY13 was based only on data from high volume surgeons. New cost per case was determined by summing individual item costs reported on the “Core DPC” “pull” list and included the average CY13 anesthesia cost per case. For non-standardized items, the cost of each item per case was determined using a weighted average based on CY13 usage data. New yearly cost was calculated by multiplying the new cost per case by the number of cases completed in CY13. Percent reduction was based on a comparison of total annual savings and CY13 yearly cost. Data from both DRGs were compiled to show the combined effect of network standardization efforts. APPEL (PED) refers to the APPEL pediatric DPC while APPEL refers to only the adult DPC.

Comments

Mentor: Dorothy Jones

Department(s)

Research Scholars, Research Scholars - Posters

Awards

2014 Research Scholar Overall Winner

2014 Research Scholar Best Quality Improvement Project Winner

Document Type

Poster

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