Reducing Hospital Costs by Reducing Supply Waste

Reducing Hospital Costs by Reducing Supply Waste

DOI: 10.4018/978-1-5225-4062-5.ch004
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Hospitals lose a large amount of money through waste as defined by lean. Processes have been in place many years at medical facilities and waste is often accepted as unavoidable in the rightful “patient first” mentality. The Plan, Do, Check, Act cycle is used for the control and continual improvement of the waste management process at the hospital where the study took place. By adapting and utilizing lean and statistical tools such as scatter diagrams, histograms, Pareto charts, fishbone diagrams, and control charts, waste can be identified and reduced or eliminated. The use of the statistical tools provides a visual presentation of the message that the team conveyed. They are especially useful to summarize the information that would normally require much time and effort to elucidate its complexity. Further, they provide a visual summation with still a great deal of details leading to increased satisfaction, efficiency, and creates competitive advantage.
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Supplies in hospitals account for a large part of the expense of a hospital’s budget. If supplies are not carefully monitored, costly waste can quickly accumulate. The redesigned process for controlling supplies will be implemented throughout the hospital after gaining stakeholder buy in and demonstration of successful results on two nursing units and thereby reducing costs for the hospital as a whole.

The major steps will utilize the Plan, Do, Check, Act cycle. To further utilize the scientific method, Identify and Define have been added preceding Plan, Do, Check, Act.

  • 1.

    Identify: Identifying and understanding why supply waste is a problem worthy of being addressed by a project by early research in a short and concise statement. A Gantt chart will also be developed. (IET Option(s) IET419, Total Quality Improvement, Week 1)

  • 2.

    Define: In this phase the problem will be clearly defined and the goal will be stated. A team will be built and stakeholders identified. (IET Option(s): IET319, Quality Control, Weeks 2 - 3)

  • 3.

    Plan: Data will be gathered and the current process will be analyzed using techniques and tools of Quality Management. (IET Option(s): IET317, Lean Systems, IET319, Quality Control, IET419, Total Quality Improvement, Weeks 4 - 5)

  • 4.

    Do: Process changes or physical layout changes resulting from the Plan phase will be implemented in the test nursing units. (IET Option(s): IET317, Lean Systems, IET419, Total Quality Improvement, Weeks 6 - 7)

  • 5.

    Check: Time studies and economic analysis will be compared before and after the process change. If goals are not met reassessment of changes will occur. (IET Option(s): IET 317, Lean Systems, IET319, Quality Control, Weeks 8 - 9)

  • 6.

    Act: If the results are positive the new process and changes will begin to be implemented throughout the hospital. (IET Option(s): IET319, Quality Control, IET419, Total Quality Improvement, Week 10)


The primary goal of this is to modify or design a process to reduce supply waste by increasing compliance of nurses charging supplies out to patients when used. Additionally, reducing calls made to the materials management department and decreasing the occurrence of temporary supply shortages within the inpatient supply storage areas are secondary goals.

Preliminary data will be gathered from each inpatient nursing unit will be evaluated for the amount of “lost chargeables” it produces. In this stage, data of PAR compliance vs. lost chargeables will be collected from the PAR system for each inpatient unit to be studied. Before the problem is properly identified it must be determined that the right issue is being examined. The simplest way to determine if a cause-and-effect relationship exists between variables is to plot a scatter diagram (Besterfield p. 50). Once the issue, stakeholders, scope and desired results are identified, this data will be utilized as a guide for the rest of the steps.


Once the issue has been identified by the continuous improvement team, a larger team consisting of the stakeholders affected will be created. The identified problem will be discussed among the stakeholders to solicit input. PAR Excellence software and hardware is in use and determines PAR compliance (how much in percent of lost chargeables are occurring) automatically on each nursing unit. The metrics of PAR compliance percentages and reduced lost chargeable cost, will be the primary metrics for which the success of this project will be measured. Next the goals concerning the amount of PAR compliance percentage and reduced cost will be discussed, agreed upon and stated.

Finally, a histogram will be constructed for the nursing units PAR compliance to help visually determine the poorer performing units. PAR compliance percent’s will be broken down weekly as the histogram data. After the problem is clearly defined, goals stated and agreed upon then a project charter will be created.

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