Abstract
As supply chain costs constitute a large portion of hospitals’ operating expenses and with $27.7 billion spent by the US hospitals on drugs alone in 2009, improving medication inventory management provides a great opportunity to decrease the cost of healthcare. This study investigates different management approaches for a system consisting of one central storage location, the main pharmacy, and multiple dispensing machines located in each department. Each medication has a specific unit cost, availability from suppliers, criticality level, and expiration date. Event-driven simulation is used to evaluate the performance of several inventory policies based on the total cost and patient safety (service level) under various arrangements of the system defined by the number of drugs and departments, and drugs’ criticality, availability, and expiration levels. Our results show that policies that incorporate drug characteristics in ordering decisions can address the tradeoff between patient safety and cost. Indeed, this study shows that such policies can result in higher patient safety and lower overall cost when compared to traditional approaches. Additional insights from this study allow for better understanding of the medication inventory system’s dynamics and suggest several directions for future research in this topic. Findings of this study can be applied to help hospital pharmacies with managing their inventory.
Similar content being viewed by others
References
Kamani P (2004) Hospital supply chain savings. Ascet, San Francisco: Montgomery Research Inc. www.unspsc.org/AdminFolder/Documents/Montgomery_Kamani_FINAL.pdf. Accessed 10 October 2008
Grossman RL (2000) The battle to control online purchasing. Health Forum J 43:18–21
McKone-Sweet KE, Hamilton P, Willis SB (2005) The ailing healthcare supply chain: a prescription for change. J Supply Chain Manag 41:4–17
Institute of Medicine (2005) Building a better delivery system: a new engineering/heath care partnership. A Report of the Institute of Medicine, Washington DC
Connors V (2003) Merchandise management and the pharmacy technician. Tech Talk. http://www.pharmacygateway.ca/tech_ce/pdfs/TT_CE_Nov03_ENG.pdf. Accessed 24 October 2008
Doloresco F, Fominaya C, Schumock GT, Vermeulen LC, Matusiak L, Hunkler RJ, Shah ND, Hoffman JM (2011) Projecting future drug expenditures. Am J Health Syst Pharm 68:921–932
American Hospital Association (2010) Fast facts on US hospitals. http://www.aha.org/aha/resource-center/Statistics-and-Studies/101207fastfacts.pdf. Accessed 04 December 2011
Pedersen CA, Schneider PJ, Scheckelhoff DJ (2010) ASHP national survey of pharmacy practice in hospital settings: monitoring and patient education. Am J Health Syst Pharm 67:542–558
Institute of Medicine (2006) Preventing medication errors: quality chasm series. A Report of the Institute of Medicine, Washington DC
Joint Commission (2011) National patient safety goals. http://www.jointcommission.org/2012_national_patient_safety_goals_-_easy-to-read_version. Accessed 26 December 2012
Guida R, Iannone R, Miranda S, Riemma S, Sarno D (2012) From patients’ needs to hospital pharmacy management: an holistic approach to the process modelling. In: Backfrieder, Bruzzone, Longo, Novak, Rosen (eds) Proceedings of the International Workshop on Innovative Simulation for Health Care 2012, Vienna Austria
Mooney EL (2005) SIMPL—a C++ simulation programming library. Unpublished Documentation, Montana State University
Vila-Parrish AR (2010) Dynamic inventory management policies for perishable and short lifecycle products under demand uncertainty. Dissertation, North Carolina State University
DeWalt KM, DeWalt BR (2002) Participant observation. AltaMira Press, Walnut Creek
Danas K, Roudsari A, Ketikidis PH (2006) The applicability of a multi-attribute classification framework in the healthcare industry. J Manuf Technol Manag 17:772–785
Lee HL, Padmanabhan V, Wang S (1997) The bullwhip effect in supply chains. Sloan Manag Rev 38:93–102
Miragliotta G (2006) Layers and mechanisms: a new taxonomy for the bullwhip effect. Int J Prod Econ 104:365–381
Kelepouris T, Miliotis P, Pramatari K (2008) The impact of replenishment parameters and information sharing on the bullwhip effect: a computational study. Comput Oper Res 35:3657–3670
Danas K, Ketikidis PH, Roudsari A (2002) A virtual hospital pharmacy inventory: an approach to support unexpected demand. Int J Med Mark 2:125–129
Al-Qatawneh L, Hafeez K (2011) Healthcare logistics cost optimization using a multi-criteria inventory classification. International Conference on Industrial Engineering and Operations Management, Kuala Lumpur
Cheng SH, Whittemore GJ (2008) An engineering approach to improving hospital supply chains. Thesis, Massachusetts Institute of Technology
Rosales CR (2011) Technology enabled new inventory control policies in hospitals. Dissertation, University of Cincinnati
Simchi-Levi D, Kaminsky P, Simchi-Levi E (2008) Designing and managing the supply chain. McGraw-Hill/Irwin, New York
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Gebicki, M., Mooney, E., Chen, SJ.(. et al. Evaluation of hospital medication inventory policies. Health Care Manag Sci 17, 215–229 (2014). https://doi.org/10.1007/s10729-013-9251-1
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10729-013-9251-1