Retina Practice Efficiencies
April, 2012

Use Automation to Improve Tracking Efficiency

Have you discovered inventory discrepancies in your practice — or worse, do you have undiscovered discrepancies? A simple inventory tracking system may help avoid these costly problems.

The Expense of Doing Business
"In a practice like ours, with 23 locations, inventory management is extremely important, especially when you look at the cost of drugs today," says Pravin Dugel, MD. "If you have a drug that costs $2000 and it's not accounted for, even once in a month, it can take away a decent portion of your profitability. You need to manage that inventory because it is an expense, and many people don't look at it that way." Dr. Dugel says you should also account for the attrition that occurs as a result of spoilage, drug expiration and dropped vials.

"There's also the expense of collection. Billing must be on top of things to make sure your office is reimbursed for what you've spent when purchasing the drug," says Dr. Dugel. He states that often times, to get 100% rate of reimbursement, you need to hire extra or very experienced staff and that these staffing expenses are costly.

Inventory Management Systems
Inventory tracking systems are a good solution to tracking and billing problems. They are easy to implement, increase staff efficiency and ensure that costly drugs are not misplaced.

When selecting a system, choose one that will decrease staff involvement and add transparency to your inventory process, especially if you have multiple offices. A web-based product allows you to make changes and updates to the software that can be implemented immediately.

Barcode systems are a good way to track a drug from intake to dispensing. Barcodes uniquely identify and create labels for every drug dose that comes into an office. Then, a computer can track each dose through the entire inventory process. The ideal system will interface with a practice's management or billing system so that inventory usage is tied to collections.

A proper system is concerned with the inventory from the time it gets ordered to the time you receive payment for the product. A practice manager for multiple office locations, using an inventory management system, can check inventory at all offices for any coded drug, with a click of a mouse. This saves a great deal of time. The most important feature of an inventory system is that it offers process integrity, knowing what happens with every dose at any time point in the inventory process.

Error Reduction
Errors such as missed billing, billing for the wrong drug, or with the incorrect number of units are identified and reported through automatic email alerts and real-time, one-click reports with some systems. This feature alone provides significant value, as the identification of a single error can result in stopping a loss of more than $1000.

Billing verification not withstanding, the inventory portion can drive savings through productivity improvements. Staff can check real-time status of inventory levels of all drugs in all locations of a multi-office practice. The system should have automatic email alerts so that user-defined recipients are alerted when inventory reaches defined minimum levels or when existing inventory approaches the expiration date.

Because offices buy drugs with payment terms of 60-120 days, it's likely that part or all of the reimbursement for each dose used will be received before the practice pays the vendor for that dose. This "false profit" can be greater than the entire monthly revenue of the practice. For example, if the practice collects $2000 for a dose of drug and has not yet paid the vendor for the dose, the practice revenue will be up by $2000 — but only on paper. Multiply this by hundreds or thousands of doses being administered by numerous doctors, who are being reimbursed by multiple payers — all with differing payment times — and you face the difficult task of determining what the actual false profit is at any given time. While it is possible to manually approximate this "false profit" number, it can take a skilled manager hours to do so. An inventory system can do it with the click of a mouse.

EMR Gets in the Inventory Game
EMR systems are also adding inventory tracking to their systems in order to improve efficiency. One system has an inventory management module that allows practices to maintain a continual inventory of all items to be sold to patients. The system's EHR/PM solution comes with an integrated inventory management module. Office staff can easily add an injectable to inventory using a barcode reader. When the patient comes to see the retina specialist, the specialist indicates in the patient's medical record, under their treatment plan, that he's dispensing a drug such as Lucentis. The tech would then scan the box for what is being dispensed. The charges for the treatment are posted to the patient's ledger by the physician while in the medical record or later by the office staff. The posting automatically triggers a deduction from inventory. This integration automates the entire process.

Determine Your Needs
"You're not just managing the product itself, it's a matter of documentation — of managing lot numbers, because if something should happen, for instance, what's happened with endophthalmitis and compounding pharmacies, the dose can be tracked," says Dr. Dugel.

Dr. Dugel warns that there may be a point of diminishing returns with inventory systems. "You need to evaluate your practice's needs. If you have a one- or two-location practice, it may not be worth the effort and expense. You also need to determine which drugs will be tracked. For instance, you would not track your dilating drops. "We buy these drugs and that money is in our accounts receivable until we are reimbursed. We want our AR to be as low as possible, so our inventory management is very important with these expensive drugs. An inventory management system allows us to keep less in stock and be more efficient," concludes Dr. Dugel.

It may be worth your time to investigate what you're currently using to see if you can improve on your inventory management. The system needs to provide efficiencies and peace of mind for both doctors and staff.