Significant Clinical Practice Cost Savings through Downsizing Office Supply Inventory and Just in Time Ordering
Gonzalez, Chris M., Tom Jang, Melanie Raines, and Anthony J. Schaeffer
Cost containment in the office is becoming more important secondary to increasing overhead costs and lower reimbursement. In an attempt to limit these particular expenditures we analyzed and restructured our methods of ordering, storing and distributing office supply inventory.
Materials and Methods: In a large academic practice with 11 urologists and approximately 20,000 annual patient visits an attempt was made to decrease overhead costs using the principle of just in time inventory popularized by large manufacturing companies. We initially issued a return of excess and/or unused supplies from our office inventory stock room. Our main supply room was then centralized to contain office supplies for up to 4 weeks. The 12 individual clinic rooms were stocked with appropriate supplies to last 1 week. Limited access to the main supply room was established and a supply manager was established to log all input and output.
Results: The initial credit for the return of unused/overstocked supplies was $10,107 in January 2004. Annual office supply charges in calendar year 2004 were $87,444 compared to charges in calendar year 2003 of $175,340. No stock outs occurred during year 2004 and all standing delivery orders were terminated. The total number of patient visits in calendar year 2004 was 20,170 compared to 19,455 in calendar year 2003.
Conclusions: Decreasing overall inventory through accurate demand forecasting, judicious accounting, office supply centralization and just in time ordering is a potential area for significant overhead cost savings in a clinical practice.
Gonzalez, Chris M., Tom Jang, Melanie Raines, and Anthony J. Schaeffer. 2006. Significant Clinical Practice Cost Savings through Downsizing Office Supply Inventory and Just in Time Ordering. Journal of Urology. 176(1): 267-269.