CASE STUDY Healthcare leader’s viewpoint

Summary Improving efficiency through System Baptist Health, Louisville, KY enhanced supply delivery and

Size inventory management processes. 8 Baptist-owned hospitals, 1 Baptist- managed hospital, 300 points of Cindy Gueltzow Kim Prather care, including outpatient, urgent Executive Director of Supply Chain Services System Director, care, physician offices, occupational Baptist Health, Louisville, KY Materials Management , physical therapy and diagnostics

Supply Budget $70 million-plus in distributed medical and surgical supplies

Challenges »» Replace automated point-of use system with cost-effective solution »» Improve par optimization »» Enhance supply chain efficiency

Solutions »» Implement 2-bin inventory replenishment program for all supply rooms »» Employ enhanced LUM system – Our Health System Our Challenges totes arrive “put-away-ready” in Headquartered in Louisville, the As part of an overall effort to supply rooms Baptist Health family of hospitals, centralize our supply chain activities, care centers, physician offices and we looked at our supply inventory Results health facilities is the largest not-for- systems and delivery methods to 2-bin profit health system in Kentucky. We reduce costs, improve par optimization own or manage nine hospitals totaling and enhance efficiency. »» Confidently maintain accurate par more than 2,700 licensed beds. Baptist levels in supply rooms Health has more than 300 points of Specifically, Baptist Health Louisville, »» Avoid costly upgrade care, including outpatient facilities, our system’s largest hospital with Enhanced LUM which offer urgent care, express 519 beds, had been using automated »» Totes arrive “put-away-ready” care, occupational medicine, physical point-of-use cabinets to store and therapy and diagnostics. replenish supplies in our »» Saves minimum one man hour a day floor par location areas for more Home care is also available in 39 than 20 years. This system’s current Kentucky counties, six counties in technological platform was approaching Illinois and six counties in Southern end of life within the next few Indiana. Our physician network of years and required a substantial more than 3,000 employed and upgrade that would be costly affiliated physicians continues to grow and time consuming. Given these as we endeavor to improve access to challenges, we decided to pursue healthcare and enhance the health of other opportunities and platforms Kentucky as a whole. for par management. cabinets with only some minor first bin — achieving automatic, stock At the same time, we also looked at retrofitting. By simply removing rotation. It’s a very simplistic, low-tech our supply logistics for those facilities the cabinet doors, we avoided the system, but very efficient for clinical that utilize delivery in lowest unit of cost of redesigning all of our par staff and materials management. measure (LUM). We were using custom location areas. palletization, but this process wasn’t If our par levels are set correctly, as efficient or cost effective as hoped. In February 2017, we piloted the products will never expire, and we system in one location before rolling it greatly minimize stockouts. This The Solutions out to our other par location areas in system also eliminates the tedious 2-bin inventory the facility. We solicited feedback from task of par counting. replenishment program clinical and materials management As we searched for more cost- staff, and tweaked the system for the The key to success is establishing effective, efficient ways to manage other 65+ departments. accurate par levels before supplies in par location areas, we implementation. We worked closely approached our supply distribution Seamless rotation with the Medline team to analyze and partner, Medline, and discussed Here’s how it works. Based on establish par levels. In our case, a four- implementing a 2-bin system for historical usage, predetermined day par was implemented — two days nursing floor par location areas at our quantities of each item are placed in for the front bin and two days for the Baptist Health Louisville hospital. It’s two separate bins on a shelf — one back bin. effective, cost efficient and simple for bin is placed in the front and the other our staff to use. Based on lean Kanban behind it. Each product has two assigned methods, the 2-bin system allows us bins and each bin has three labels. to confidently maintain accurate par When the front bin is depleted, the One is a bar code for our materials levels of products in well-organized nurse puts it in a designated area for management team that tells our bins while eliminating the traditional the materials management staff to inventory replenishment system par item counting process. pick up. The back bin is then pulled which product and how many go in forward on the shelf to be utilized by the bin. This part of the process is We were also attracted to the 2-bin the staff. That empty bin is our trigger a huge time saver compared to our system because it had an appealing for replenishment. Our materials previous system. The second is a par management option that allowed management staff restocks the bin and clinical staff-friendly item description us to use our existing point-of-use- places it back on the shelf behind the that is placed on the front of the bin

2-bin par inventory program — no more counting The 2-bin system allows us to confidently maintain accurate par levels of products in well-organized bins, eliminating the traditional par item counting process. When the front bin is depleted, the nurse puts it in a designated area for the materials management staff to pick up. The back bin is then pulled forward on the shelf to be utilized by the staff. That empty bin is our trigger for replenishment.

2 Case Study I Baptist Health Clinicians are comfortable using the system (2-bin) and,“ most importantly, have a high level of trust that they can get the “products they need to take care of their patients. for easy identification for our clinical customers. The third sticker is a color- To date, we’ve converted more than 50 A major challenge with this system coded dot to easily identify the bin locations at Baptist Health Louisville was we had to take the extra step by product category, so respiratory and still have about 15 more to go. to transfer the totes from the pallet products go together, wound care We’re also rolling it out at our other to a separate cart, which was then products are together, and so on. hospitals on a piloted basis. delivered to the specific departments.

Easier, accurate system So far, we’ve received positive Working with Medline, we no longer We had frequent calibration sessions feedback from our clinical and have to put the totes on the cart. That with our nurses to make sure this materials management teams. step is completed at Medline’s nearby process was working for them and Clinicians are comfortable using the distribution center. When Medline’s products were readily available for our system and, most importantly, have MedTrans trucks arrive at our docks, the patients. Ease of use of this system was a high level of trust that they can get products arrive LUM in totes, and on a key selling point with our clinical staff. the products they need to take care carts, pre-sorted based on our team’s of their patients. For our materials putaway path, ready for delivery to the When we scan the bin to replenish management team, this system has departments to be stocked on each product, our PeopleSoft ERP saved so much time that we’ve been the shelves. system decrements the inventory. The able to reallocate some of our team advantages from our old system are members’ time to work on other tasks. Medline puts a sort code on each clear: nurses no longer have to key in tote that corresponds to a specific an ID number to open the cabinet, and “Put-Away-Ready” – department. Generally each cart they no longer have to count and record Enhanced LUM contains bins for two or three how many products they removed from For several years, we’ve been utilizing departments that are geographically the bin. They can now walk into a par LUM logistics for specific par location located near each other for the most location and grab what they need and departmental delivery at our Baptist efficient delivery. get to the business of why we’re all Health Lexington, Louisville and here — to care for our patients. Richmond hospitals.

Enhanced LUM The “Put-Away-Ready” system enables products to arrive at the hospital’s dock in lowest-unit-of-measure totes on carts ready for delivery to the departments to be put away on the shelves. This improved process saves us at least one man hour a day because it eliminates the need for staff to pull the totes off the pallets, re-sort them and then put them on carts to take up to the floors.

3 Case Study I Baptist Health Supplies are delivered to our LUM facilities already on carts “ ready to be transported to our departments. This eliminates the time-consuming step for our staff of putting the totes on “the carts and frees up their time for more important tasks.

Time saving Similarly, we made a relatively simple About the authors This improved process saves us at least enhancement to our LUM logistics Cindy Gueltzow is the Executive one man hour a day, eliminating the service that made a big difference in Director of System Services need for our staff to pull the totes off our efficiency and time management. Supply Chain at Baptist Health in the pallets, re-sort them and then put Working with our distribution partner, Kentucky/Indiana. In this role, Cindy them on carts to take up to the floors. Medline, supplies are delivered to our is responsible for developing and LUM facilities already on carts ready executing the system-wide supply Par optimization to be transported to our departments. chain strategy for eight hospitals and We continue to achieve further savings This eliminates the time-consuming over 300 outpatient sites. Cindy has with par optimization efforts. We no step for our staff of putting the totes been with Baptist Health for over 18 longer drive efficiency and reduce cost on the carts and frees up their time for years and has been in a leadership by ordering every item by the “each.” more important tasks. role over Supply Chain for six years. We now analyze our ordering patterns Cindy holds a Bachelor of Arts degree on a monthly basis and use a “best According to Baptist Health’s Chief in Business Communications from the unit-of-measure” ordering approach Financial Officer Steve Oglesby, University of Louisville. for our facilities. For example, we “The improvements we’ve made in target items that we order in a higher inventory management over the Kim Prather is the System Director quantity, yet use a “less-than-case” past couple of years have been of Materials Management at Baptist unit of measure. By aggregating remarkable. Chief among them are the Health. In this role, Kim and her teams our ordering per line into a higher enhancements to customer service to are responsible for the distribution unit of measure, we’re mitigating — our physicians and other clinicians that and management of supplies from and sometimes eliminating — the ensure they have the right supplies, the dock to the bedside, for Baptist associated LUM service fees. in the right place, at the right time Health’s eight hospitals. She has and at the right price. Accomplishing worked closely with Baptist Health Summary this requires efficient and effective for 19 years, initially as the system’s Process improvement for supply daily inventory management. Other medical supply distribution partner chain logistics doesn’t always mean benefits include lower inventory and the last two and a half years in the adopting a high-tech approach. We carrying costs through reductions Supply Chain Materials Management implemented a 2-bin par model in expired, damaged or lost items role. Kim holds a Master’s Degree from in our largest hospital, which was and better matching of expenses the University of Louisville. a significant improvement over with revenues, which has improved our previous system for achieving financial statement reporting and cost replenishment, par level optimization accounting data.” and cost efficiency. Ultimately, 2-bin required no additional technology than we were already using via our PeopleSoft ERP.

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