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PubMed2005

The role of purchasing in hospital performance.

In this article the authors review the core messages on getting value for public money spent on healthcare presented in a recent World Bank publication, Spending Wisely: Buying Health Services for the Poor, edited by the same authors. The authors discuss how interest of the poor would often be better served through a fundamental shift in the way public money is spent on the health services--notably by moving away from passive budgeting within the public sector towards strategic purchasing or contracting of services from non-governmental providers. The shift from hiring staff in the public sector and producing services "in house" to strategic purchasing of non governmental providers--outsourcing--has been at the centre of a lively debate on collective financing of healthcare during recent years. Its underlying premise is that it is necessary to separate the functions of financing from the production services to improve performance and accountability. Promoting good health and confronting disease challenges of course requires action across a broad range of activities in the health system. This includes improvements in the policymaking and stewardship role of governments, better access to human resources, drugs, medical equipment and consumables, and a greater engagement of both public and private providers of services. Managing scarce resources and healthcare effectively and efficiently in the hospital sector through more strategic purchasing is an important part of this story. This is the second in series of articles on the economics of hospital care. In the first article on the "Economics of organizational reform" the authors, Alexander S. Preker and April Harding, examined the role of economic incentives to good governance and performance in the hospital sector. A more detailed discussion on this topic can be found in the World Bank publication Innovations in Health Care: The Corporatization of Public Hospitals, 2003, edited by the same authors.

Developing Countries↗
PubMed1976

ABC inventory analysis and economic order quantity concept in hospital pharmacy purchasing.

ABC inventory analysis and the economic order quantity (EOQ) concept were studied as alternatives to the cyclical ordering system used by the pharmacy in a 558-bed general hospital. The inventory was divided into A, B or C groups according to the annual dollar value of the items. Two samples were selected to be studied (the first consisting of 10% of the total inventory and the second consisting of 10% of the A, or high cost, items). For each item in both samples the EOQ was calculated to estimate the proposed annual inventory cost as compared to the actual cost as determined from past inventory records. In the first sample, there was a statistically significant mean annual savings of $4.13 +/- $0.36 (S.E.) using the proposed annual cost. In the second sample there was a mean savings of $2.42 +/- $0.60 (S.E.) using the proposed method, which was not statistically significant. Most of the savings with the proposed ABC-EOQ system would occur with the low dollar value items (B and C items) which were being purchased too frequently.

Costs and Cost Analysis↗
PubMed1998

The costs of healthcare worker respiratory protection and fit-testing programs.

OBJECTIVE: We studied hospital costs associated with healthcare worker (HCW) respiratory protection and respirator fit-testing programs recommended by the Centers for Disease Control and Prevention (CDC) and mandated by the Occupational Safety and Health Administration to decrease nosocomial or occupational Mycobacterium tuberculosis (TB). DESIGN: The number and cost of high-efficiency particulate air (HEPA)-filter and dust-mist (DM) respirators for 1989 to 1994 were obtained from study hospital purchasing departments, and the costs of HCW fit-testing and education programs for 1994 were estimated from information provided by infection control practitioners. Costs of N-class respirator programs were estimated for study hospitals using retrospective cost analysis and an observational study. SETTING: Four urban hospitals with, and one rural community hospital without, documented nosocomial or occupational transmission of multidrug-resistant TB. RESULTS: During the study period, four of five hospitals introduced HEPA and DM respirators and respirator education and fit-testing programs. Median costs in 1994 were $83,900 (range, $2,000-$223,000) for respirators and $17,187 (range, $8,736-$26,175) for respiratory fit-testing programs. The projected median annual cost of N95 respirators was $62,023 (range, $270-$422,526). CONCLUSIONS: Compliance with CDC TB guidelines may require a substantial investment. However, outlays for respirators and education and fit-testing programs are more reasonable than would be suggested by analyses that estimated the costs of preventing one case of nosocomial TB.

Cross Infection↗
PubMed1983

Economies of purchasing group size.

The relationship of drug price and purchasing group size was evaluated. Thirty drug line items were studied in 26 private hospital purchasing groups of various sizes. Prices were analyzed relative to purchasing group size, age, and location. Drug prices were negatively correlated to group size in a linear relationship. Prices were significantly lower in groups representing greater than 10,000 beds. No significant relationship was found between group age or location and drug prices. The theory that increasing purchasing group size will result in better contract prices was supported.

Hospital Shared Services↗
PubMed1986

Medical equipment purchasing: how can it be made efficient and economical?

Over the years, hospital purchasing groups have been able to realize significant savings for their member hospitals on a variety of supplies. One area where they have weak historically, however, is in capital equipment; specifically, advanced diagnostic and clinical hardware. Authors Dillman and Holzman suggest reasons for this weakness and recommend some possible solutions.

Capital Expenditures↗
PubMed1987

Cost management techniques. Part II.

Reducing the cost of purchased products and services is of continuing importance to hospital purchasing and materials managers. In the first of three articles, the authors addressed the life cycle costing approach applied to purchasing as a means of evaluating total costs over the life of a product rather than only evaluating quoted prices. Life cycle costing is most appropriate for longer lived products, those with maintenance, repair, and disposal considerations. This article continues the discussion of cost management techniques focusing on ways to identify and manage total costs of purchasing and acquisition. The third article will present integrated cost and value management techniques.

Commerce↗