Description

Create an 8-10 slide PowerPoint presentation that explains basic inventory management concepts and analyzes the current state of an organization’s inventory of personal protective equipment (PPE).

Expand All

Introduction

Health care operations is a complex topic, encompassing many aspects including (but not limited to) service locations, personnel, policy, leadership, finance, strategy, and quality. While the industry is generally viewed as a service industry, its systems are faced with complex operational challenges including supply chain, strategy, quality and project management, and service delivery. Given the changing landscape from a health reform and financial perspective, health care organizations must focus on improving their operations and improving efficiencies to remain competitive. A component of the health care delivery process is the procurement, stocking, and dispensing of supplies. Within this process, opportunities exist to add value, reduce waste, and create standardization throughout the organization (Kros & Brown, 2013). Effective management of health care operations creates value for all stakeholders.

One way to potentially create value in operations is through inventory management. Whether you realize it or not, you are most likely familiar with the concept of inventory. For example, when you visit the grocery store perhaps they are out of your favorite ice cream, or, before you left home, maybe you took stock of your cupboards to determine what items you need to pick up on the grocery store trip. Both of these are everyday examples of the concept of inventory. In health care, inventory management is vital for many reasons, including regulatory compliance and investment protection. When we think about the inventory of a health care organization, we must take into consideration items ranging from pots and pans to medical devices and surgical instruments (Kros & Brown, 2013).

Finance and accounting principles in health care operations and supply chain management are key concepts to understand, at least at a foundational level. At a minimum, health care professionals should be familiar with the basic components of financial statements and financial ratios utilized by health care organizations, as well as concepts related to the value of money. Over the years, the health care industry has been subject to several changes in reimbursement methodologies. Each methodology was implemented with the intent of addressing the concerns facing the industry at the time (fraud, quality, utilization, et cetera). Current methodologies regulate the payment amount or payment rate that organizations will receive in return for treating each patient. Changes to these payment methods have had major financial implications for health care organizations (Kros & Brown, 2013). To remain fiscally responsible, health care professionals must streamline operations to ensure costs are managed, productivity is maximized, and resources are optimized (Kros & Brown, 2013). Outside of payroll and benefits, supplies and materials are close contenders for health care organizations’ highest expenses.

Regardless of whether you work in a clinical or non-clinical unit, it is imperative to understand how to read and understand the organization’s financial statements. In addition to financial statements, each department operates off of an annual budget. These budgets are established as financial guidelines for the department’s operations and always contain line items for materials and supplies.

Reference

Kros, J. F., & Brown, E. C. (2013). Health care operations and supply chain management: Operations, planning, and control. Jossey-Bass.

Preparation

This assessment is based on the Vila Health: Personal Protective Equipment Inventory media simulation, which is linked in the Vila Health: Personal Protective Equipment Inventory section of Assessment 2. Go to that section to complete the scenario at this time. You will use the information you gather in this scenario, in which you assume the role of an inventory analyst, to provide context and information necessary for the assessment.

If you have questions about or would like to review tips on using PowerPoint, the following resources may be useful as you prepare to complete this assessment:

Instructions

Based on the media simulation you completed, one of the directors has asked you to examine the ordering, stocking, and use of personal protective equipment (PPE) for the Emergency Room and Medical Surgical Inpatient Care Unit at St. Anthony Medical Center. In addition to your inventory investigation, you have been encouraged to research additional topics, such as inventory management, inventory control, inventory ordering systems, economic order quantity (EOQ) calculations, and inventory stocking techniques. As you research, consider industries outside of health care, as techniques utilized in other industries may apply. After you have concluded your investigation and research, you have been asked to prepare a PowerPoint for the director to help them communicate with other stakeholders the basics of inventory control, the importance of having inventory control strategies, and the current state of the medical center’s PPE inventory.

Your PowerPoint needs to address the following criteria. (Note: The questions under each criterion are there to help you think through each.)

Explain inventory control.
1. Discuss why EOQs are conducted.
2. Discuss the impact of the medical center’s volume (past, present, and projected) from a strategic perspective (related to personal protective equipment [PPE] use) on the overall success of the organization.
Describe options for inventory ordering.
1. Define quantities to order.
2. Identify inventory ordering systems.
3. Discuss pros and cons of the identified systems.
4. Determine when other PPE should be considered.
5. Determine when alternative stocking should be considered (ordering inventory vs. consignment).
Analyze leaders’ responsibilities in addressing the identified inventory recommendations.
1. Identify what leaders should address related to inventory.
2. Discuss consequences of leaders not addressing inventory needs.
3. Discuss implications of not adhering to the recommended inventory purchase.
Analyze the implications of having inventory control.
1. Discuss the impact of efficient inventory control on the organization’s effectiveness.
Present your findings based upon your review of the EOQ and organizational data.
1. Compare PPE use this year, from prior year, and projected budget year.
2. Summarize your finding and recommendations.

You might want to (but do not have to) organize your presentation using the following outline:

Slide 1: Title of the presentation.
Slide 2: Overview of inventory control.
Slide 3: Review of EOQ purpose and data.
Slide 4: Recommendations for inventory ordering.
Slide 5: Leadership.
Slide 6: Implications.
Slide 7: Conclusions.
Slide 8: Reference list.

General PowerPoint Guidelines

Keep the design simple. Use Arial or Verdana font, size 24 point, at minimum.
Keep the slides concise. Use 5–7 bullet points per slide and 5–7 words per bullet. Use speaker notes to explicate the bullets.
For best color contrast, use light text on dark background (for example, yellow on black, white on dark blue).
Use the proper slide layout. For example, if a slide has a title and text, create it using the correct Title and Text layout.

Write clearly and logically, with correct use of spelling, grammar, punctuation, and mechanics.

Apply the principles of effective composition.
Determine the proper application of the rules of grammar and mechanics.

Write following APA style for in-text citations, quotes, and references.

Determine the proper application of APA formatting requirements and scholarly writing standards.
Assess the relevance and credibility of information sources.

Additional Requirements

Your presentation should consist of:

Length: A minimum of 8–10 bulleted slides.
Notes: Speaker notes that fully explain each slide.
References: A minimum of three references, in addition to the course textbook.
APA formatting: Appropriate APA citations and peer-reviewed references on each slide, as necessary.

Competencies Measured

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and scoring guide criteria:

Competency 1: Describe when and how the senior leader would directly impact health care operations.
- Analyze leaders’ responsibilities in addressing the identified inventory recommendations.
Competency 2: Analyze the impact of the various success factors of a health care organization.
- Explain inventory control.
Competency 3: Analyze the concept of competitive strength by considering efficiency and effectiveness of organizational processes.
- Describe options for inventory ordering.
- Analyze the implications of having inventory control.
Competency 4: Apply management concepts to lead an efficient health care system.
- Present findings based upon review of the EOQ and organizational data.
Competency 5: Communicate in a manner that is scholarly, professional, and respectful of the diversity, dignity, and integrity of others and is consistent with health care professionals.
- Write following APA style for in-text citations, quotes, and references.
- Write clearly and logically, with correct use of spelling, grammar, punctuation, and mechanics.

Writes with few errors, making text difficult to follow at times; errors involve spelling, grammar, punctuation, and mechanics.

Non Performance

Writes with many errors, making text difficult to follow; errors involve spelling, grammar, punctuation, and mechanics.

Personal Protective Equipment Inventory

Vila Health ® Activity

Introduction

As the health care industry continues to evolve, organizations routinely seek innovative ways to remain competitive, improve efficiency and quality, and meet consumer demands in a fiscally responsible manner.

One way to do that is to keep a careful eye on the organization’s inventory.

PPE Problem

You are an inventory analyst at St. Anthony Medical Center. You monitor the hospital’s inventory purchase, use, and quality for the Emergency Room and Medical Surgical Inpatient Care Unit at St. Anthony Medical Center. It’s part of your role to communicate information regarding inventory that is no longer meeting the needs of the organization, not being utilized per projections, is costing the organization, or is routinely out of stock or in short supply.

Email from Bernadette Holt, VP of Operations St. Anthony Medical Center

Subject: PPE Inventory??

Good morning. I’m not sure what else you’ve got on your plate today, but with the increasing shortages of PPE, I need some numbers on our PPE inventory. Can you do an EOQ calculation and get back to me with some recommendations for the next fiscal year?

Thanks!

––Bernadette

Research

You check with a couple of people to find out what you need to know in order to do the EOQ calculation.

PPE Data Usage Data

Prior annual use:

Based on 45 patients per day in a Medical Surgical unit and 285,000 patients seen per day in the Emergency Room, and the average cost of PPE per acute patient per day at $13.40, the following estimates are:

$3,819,603.00 cost per patient per day for PPE

Budgeted use for next fiscal year:

$6,450,000.00 cost per patient per day for PPE

Kenneth Dunn’s Desk

You stop by Kenneth Dunn’s desk to talk about supplying PPE for the hospital.

Inventory Analyst: Hi, Ken, with the sudden increase in COVID patients, I am gathering data on PPE usage. Can you tell me how many pieces of PPE we’ve used so far, this fiscal year, for the Medical Surgical Unit and the Emergency Room?

Kenneth Dunn: Let me check. Okay, based on our average volume and current patient per day usage we’ve used the following amounts per day over the last 11 months in both units…

Medical-Surgical Unit (45 patients) and ED (285,000 patients):

Gloves: 4,725 pairs of gloves per day
Gowns: 285,900 gowns per day
Simple masks: 285,450 simple masks per day
N95 respirators: 285,117 N95 masks per day

Total: 861,192 PPE usage per day.

Inventory Analyst: Okay, now, I know we pay an average of $13.40 per each PPE and we budgeted less than this amount. Do you know what our future PPE cost will be? And do you know what our projected patient volume will be in each unit?

Kenneth Dunn: Due to the recent pandemic, the future cost of PPE is expected to rise to an average of $20.40 per each PPE. Based on the last 2 months of data, patient volume projections will continue to increase. It is estimated that Medical Surgical unit will see an average 55 patients per day and the Emergency Room will see an average of 300,000 patients per day.

A Question About Demand

Your research prompted Kenneth Dunn to alert Bernadette Holt, VP of Operations, and Ian Silverman, Chief Financial Officer, about PPE demand for the next year.

Email from Kenneth Dunn

Subject: PPE Inventory??

Hello Bernadette and Ian,

I just talked with our inventory analyst, and we talked about the number of PPE we’ve gone through. It got me to thinking… I think by this time last year, we had gone through way more PPE than 285,045 per patient per day, which is why we raised the demand to 300,000. But based on this year’s patterns, the demand may increase significantly.

Then again, the last 2 months of the fiscal year was our heaviest month for PPE usage last year. I don’t know what the expected numbers will be due to the increase in PPE demands since the pandemic has occurred. So, if the average patient volume and PPE usage numbers remain what was averaged the last two months, patient volume projections will continue to increase. It is estimated that the Medical Surgical unit will see an average 60 patients per day and the Emergency Room will see an average of 400,000 patients per day. It’s possible the number of PPE per patient per day could go as high as 400,060.

If this keeps up, we may want to consider an inventory software system upgrade.

Anyway, I just wanted to let you know. I’ve attached an EOQ Calculation Worksheet in case it’s useful.

––Ken

Calculations

Use the EOQ Calculation Worksheet to determine the total annual cost and EOQ. You should see different results for each if demand rises, falls, or stays the same.

EOQ Worksheet

Please download the EOQ Worksheet.

Please answer the following questions.

Question 1: Why is it important to understand organizational demand when ordering inventory?

Your response:This question has not been answered yet.

Feedback: Some potential reasons are:

Reducing ordering costs: Ordering the appropriate number of inventory items based upon use and demand will reduce overall ordering costs as the organization will be placing fewer orders resulting in fewer administrative costs.
Allowing for accurate ordering: Predicting organizational demand will allow inventory management professionals to place orders that will (at their best) be accurate to accommodate the anticipated need.
Allowing for alternative stocking methods to be considered: One consideration for when to seek alternative stocking methods is product demand. If the organization is uncertain about their demand, they may wish to consider alternative stocking methods as they do not wish to tie up their capital in product that may never be consumed.

Question 2: What are some of the key pieces of information needed to determine how much of a given product to order, and why are they important?

Your response: