Why rethinking imprest will add value in healthcare

The Direct to Imprest Model of procurement in the health system not only improves outcomes for patients but also improves efficiency.

A lot of procurement and supply chain attention in the healthcare sector is placed on preventing value leakage on important prostheses’ transactions or driving higher vendor managed inventory, and so the management of lower-value consumables – typically described as imprest – often takes a back seat.

Following concerns raised by the staff of a state healthcare system that the supply chain was contributing to the blood-borne infection rate, a study concluded that the greatest risk to the compromise of sterile packaging is overhandling. Ironically, most handling of sterile inventory occurs between the imprest store and the patient. There is no doubt, a poorly managed imprest, and the associated ‘squirrel stores’ that arise from this poor management, dramatically increase overhandling.

Yet, imprest stores are one of the most critical parts of the ‘last mile’ of the medical consumables supply chain. They provide an essential capacity buffer between wards and the upstream supply chain. However, because they are, generally, poorly managed, there is little to no system-level visibility of stock.

Consequently, stock-outs are frequent, driving front-line medical staff to maintain squirrel stores of essential supplies, even though we all know this is not the best practice. So, it might sound frivolous, but it makes sense to take this neglected area much more seriously.

Patient outcomes are a critically important measure of healthcare procurement and supply chain performance, yet this humble store at the end of every hospital corridor is rarely considered as a driver of strategic healthcare performance.

From a financial perspective, the cost of stock-outs and excess stock – largely invisible to the organisation – stacks up when multiplied across every item, in every imprest store, in every location. Unfortunately, this cost is usually similarly invisible to the organisation. As an added consideration, floor space within a hospital premise is a premium commodity. Yet close to the loading dock of so many hospitals, is a comparatively large medical consumables warehouse, which exists only to provide a capacity buffer to imprest locations. Many healthcare networks don’t have offsite warehouse facilities that can act as a capacity buffer for their network, and so suppliers routinely deliver directly to hospital-specific warehouses.

Release real estate, free-up medical staff

The Direct to Imprest Model largely does away with the hospital warehouse. There generally are a few exceptions for bulky, high-use inventory, such as fluids, but the space requirement can be drastically reduced and reallocated to higher-value functions.

A capacity buffer is still required, and this would generally come in the form of an off-site warehouse for the larger network. And, while this may sound like a significant investment if the healthcare network has two or more hospitals, the business case is clear. For independent hospitals that are not part of a larger network, the business case is based on moving the function out of high-value hospital space and into a lower-cost centre.

At the network level, a single offsite warehouse can have the capacity to fulfil the needs of an entire metro area healthcare region, as well as fringe regional hospitals, and so the dividends at scale are even more pronounced.

The warehouse isn’t just a capacity buffer though. Orders need to be picked at the imprest level, so warehouse staff will be picking each level quantities into medical-grade totes that can be put away directly into imprest stores. Just like that, we’ve reclaimed the time a masters’ qualified nurse would spend tearing up cardboard boxes outside the clean zone of the operating theatre, allowing them instead to spend their time doing value-added work.

Bringing value to the wards

A Direct to Imprest Model won’t bring any value to the wards if it makes life more difficult for the medical staff. Ward managers and nurse unit managers often spend substantial time doing inventory administration. A Direct to Imprest Model, combined with a radio frequency identification (RFID) Kanban system, where medical staff simply drops re-order or stocked-out tokens from each shelf location into a reader box, and the orders are placed automatically, will save incredibly valuable hours for high-value, in-demand professionals.

It is perhaps true that the procurement world is guilty of focussing too heavily on cost as the main driver of value. However, healthcare organisations must also be measuring the impact on patient outcomes. Organisations that have implemented a Direct to Imprest Model have achieved long term cost savings driven by greater efficiency, better material flow, and reduced write-off of damaged stock at the ward level – which manifests as reduced consumption. These efficiencies mean healthcare staff are freed-up from a significant administrative overhead to focus on patient care since non-value-added activities are now being completed further upstream in the supply chain.

While there is a degree of investment and change management required, the ROI can typically be measured in only a couple of years, with healthcare staff retention and better patient outcomes providing much shorter-term returns.