HEALTH CARE MANAGEMENT

MATERIAL MANAGEMENT IN HOSPITALS

INTRODUCTION

 Material may be defined as equipment, apparatus

and supplies procured, stocked and utilized by an
organization.
 Management is a process which is applied to
convert inputs into outputs (goods or services) or
a process of planning, organizing, staffing,
directing and controlling, usually by a manager.
MATERIAL MANAGEMENT

 A scientific technique concerned with

 Planning,
 Organizing &
 Control of flow of materials
from their initial purchase to destination
AIM

To ensure
1. The Right quality
2. Right quantity of supplies
3. At the Right time
4. At the Right place
5. At the Right cost
BASIC PRINCIPLES
 Effective management & supervision. It depends on managerial functions of
 Planning
 Organizing
 Staffing
 Directing
 Controlling
 Reporting
 Budgeting
 Sound purchasing methods
 Skillful & hard poised negotiations
 Effective purchase system
 Should be simple
 Must not increase other costs
 Simple inventory control program
OBJECTIVE OF MATERIAL MANAGEMENT
Primary
 Right price
 High turnover
 Low procurement &storage
cost
 Continuity of supply
 Consistency in quality
 Good supplier relations
 Good information system
 Low storage cost
 Good records
Secondary
 Forecasting
 Inter-departmental harmony
 Product improvement
 Standardization
 Make or buy decision
 New materials & products
 Favorable reciprocal
relationships
FOUR BASIC NEEDS

 To have adequate materials on hand when needed

 To pay the lowest possible prices, consistent with
quality and value requirement for purchases
materials
 To minimize the inventory investment
 To operate efficiently
IMPORTANCE OF MATERIAL MANAGEMENT

 Financially: Large proportion (25-40%) of health

expenditure is on materials
 For better availability: Material supplies are not
satisfactory at present
 Complex requirement: Medical and non-medical
items are more in number
 To maintain cold chain for vaccines
 There is need and potential for increased efficiency
and effectiveness
ADVANTAGES OF MM

 Improved accountability
 Better coordination

 Better performance

 Analysis of data

 Better team work

TERMINOLOGIES
Stock: The goods kept on the premises of a business or
warehouse and available for sale or Distribution
Inventory: Total quantity of material available in the
store
Logistics: Defined as function of moving, storing and
distributing resources and goods
Shortage cost: Deals with the cost of not having a
material. It would vary according to the nature of an
item
Ordering cost: Cost of placing an order to the firm
 Purchase cost– actual cost of material
 Carrying cost- cost of using or borrowing money
 cost of storage space
 cost of additional manpower

 cost of deterioration

 cost of breakage
ELEMENTS OF MATERIAL MAMANGEMENT

1. Demand forecasting and planning

2. Purchasing
3. Receipt inspection and stores
4. Inventory control
5. Issue and distribution
6. Disposal and condemnation
7. Minimizing losses and pilferage
DEMAND FORECASTING AND PLANNING
Forecasting is the method of estimating demand based on time series
analysis of past while anticipating the future.

Demands for materials could be certain or predictable, and uncertain or

unpredictable.

Following guidelines:
Trends in consumption pattern during last 2-3 years.
 Objective of the hospital.
 Morbidity pattern of the community
 Cyclic changes in epidemiological occurrence of disease.
 Resources constraint
 Existing stock position
Methods of forecasting of demands in hospital
 Last period demand
 The arithmetic average &
 Moving average– it generates the next period’s
forecast by averaging the actual demands for the last
‘n’ time periods
PURCHASING-PROCUREMENT
PROCUREMENT- Process of acquiring supplies

Three sources:
 Purchase
 Donations
 Manufacturing

Objective of well procurement system:

 Acquire needed supplies as inexpensively as possible.
 Obtain supplies of high quality
 Assure prompt, dependable delivery.
 Distribute the procurement workload to avoid period of idleness &
overwork
METHODS OF PURCHASING

Centralized: De-centralized:
All purchases are made User departments
centrally. purchase according to
Advantages: their needs.
 Lower purchasing cost

 Quantity discounts

 Lower inventory cost

 Better management
control
PURCHASING PROCEDURE

 Drawing up specification
 Inviting quotations(Open tender)

 Preparing comparative statement

 Short listing

 Issuing purchase order

TERMINOLOGIES
Negotiated procurement
 Buyer approaches selected potential suppliers and
bargain directly.
 Used in long time supply contracts.
Direct procurement
 Purchased from single supplier, at his quoted price
 Prices may be high
 Reserved for low priced, small quantity and
emergency purchases.
Rate Contract-- Firms are asked to supply stores at
specified rates during the period covered by the
contract.
Spot Contract-- It is done by a committee, which
includes an officer from stores, accounts and
purchasing departments.
Risk Purchase-- If supplier fails, the item is
purchased from other agencies and the difference
in cost is recovered from the first supplier.
POINTS TO BE NOTED BEFORE PURCHASE

 Latest technology
 Reputed manufacturers

 Availability of maintenance and repair facility

 Post warranty repair at reasonable cost

 Low operating cost

 Installation facilities and guidelines

RECEIPT INSPECTION AND STORES

Receipt inspection
 All materials, equipment, supplies, and services are
subject to inspection and test. Items or services that
do not meet specifications may be rejected.
 If latent defects are found, the vendor is responsible
for replacing the defective goods within the delivery
time originally stated in the solicitation and is liable
for any resulting expenses the institution incurs.
STORAGE
 Medical store should be accessible to supplies
 Location of store will, therefore, be guided by the flow
activities of the store. Also, light, ventilation, cupboards,
shelves should be of adequate size.
 Items received later from the supplies should be stored
behind similar items and the principle of FIFO should be
adopted.
 Refrigerators or cold rooms are necessary.
 Combustible and non-combustible– should be kept
separate
 Rodent free.
STORAGE METHODS
The Two-Bin system—stock of each item is physical
separated into two bins
Working bin and Reserve bin
When working bin empty the store keeper changes to
the second bin and is alerted that new supplies are
needed
Double shelf system – modification of two-bin system
This system works well only if the supply time is
half the purchasing interval
INVENTORY
 Inventory is the raw materials, work-in-process
products and finished goods that are considered to be
the portion of a business's assets that are ready or
will be ready for sale.
INVENTORY CONTROL
 Process of ensuring that appropriate amounts of
stock are maintained by a business, so as to be able
to meet customer demand without delay, while
keeping the costs associated with holding stock to a
minimum.
CONTROL OF INVENTORIES
 Stock control, otherwise known as inventory
control, is the coordination and supervision of the
supply, storage, distribution, and recording of
materials to maintain quantities adequate for
current needs without excessive oversupply or
loss.
 The goal of inventory control is to maximize
profits with minimum inventory investment,
without impacting customer satisfaction levels.
ANALYSIS

• ABC Analysis (Always Better Control)

• VED Analysis (Vital Essential Desirable)
• SDE Analysis (Scarce Difficult Easily available)
• HML Analysis (Highest Medium Low)
• FSN Analysis (Fast moving, Slow moving, Non-
moving)
• Economic Order Quantity (EOQ)
ABC ANALYSIS
 CLASS A: Small in
number, but consume large
amount of resources
 CLASS B: Intermediate
 CLASS C: Larger in
number, but consume lesser
amount of resources
VED ANALYSIS
VITAL: Shortage cannot be
tolerated
ESSENTIAL: Shortage can be
tolerated for a short period.
DESIRABLE: Shortage will not
adversely affect, but may be
using more resources. These
must be strictly Scrutinized
SDE ANALYSIS FSN ANALYSIS
Based on availability Based on utilization.
SCARCE Fast moving.
Managed by top level Slow moving.
management Non-moving.
Maintain big safety stocks
DIFFICULT HML ANALYSIS
Maintain sufficient safety stocks Based on cost per unit
EASILY AVAILABLE Highest
Minimum safety stocks Medium
Low
ECONOMIC ORDER QUANTITY (EOQ)

 Economic order quantity (EOQ) is the order

quantity of inventory that minimizes the total cost
of inventory management.
 Total cost= Purchase cost + order cost + Holding
cost
ISSUE AND USE

 Issue should be made after receiving written

indents
 Distribution system can be either by direct supply
or through a sub store
 Push method (allocation system)
 Pull methods (requisition system)
 Push Method: Initiates
production in anticipation
of future demand
 Pull Method: Initiates
production as a reaction to
present demand
CONDEMNATION & DISPOSAL

A CONDEMNATION COMMITTEE should be

constituted for assessing whether or not an equipment
should be condemned and disposed of based on the history
sheet & recommendations of the user department.
 This committee should meet periodically at regular
intervals, at least twice an year.
 However, for condemnation of costly hospital equipment, a
SPECIAL CONDEMNATION BOARD may be
constituted as per rule of the organization.
CONDEMNATION & DISPOSAL
Minimum criteria to be Procedures:
followed for  Circulate within the
condemnation hospitals, wards, OPD
 Non-functional and beyond  Return to vendor if he is
economical repair willing to accept
 Non-functional and  Sell to scrap dealers
obsolete  Local destruction
 Functional but obsolete
 Functional but hazardous
 Functional but no longer
required
MINIMIZING LOSSES AND PILFERAGE

 Lost, stolen, and misplaced equipment is creating

significant financial losses for hospitals while
increasing costs for patients and threatening the
level of care they receive.
 Hospitals are susceptible to a huge amount of
theft by a large number of people.
TO REDUCE LOSS AND PILFERAGE

 Access to all stores should be limited.

 Locking and unlocking of stores and handling of
keys should be strictly controlled.
 Strict policies and procedures guiding purchase,
receipt, storage and distribution
 Proper monitoring
HOW IS IT IN HOSPITALS NOW A DAYS?
CONCLUSION

 Material management is an important management

tool which is very useful in getting the right quality
& right quantity of supplies at right time.
 Provides good inventory control & helps in adopting
sound methods of condemnation & disposal, and
therefore improves the efficiency of the organization,
whether it is Private, Government, Small
organization, Big organization or Household. All
these makes the working atmosphere healthy.
REFERENCE