Benefits to Hospital Finance from Hospital Pharmacy’s Vendor Management Inventory

Abstract

Objective: To assess outcomes from the application of Vendor Management Inventory (VMI) system between the warehouse and the dispensing rooms according to the following indicators: pharmacy inventory value, service level, and days of stock. Method: The study procedure was composed of 3 parts; 1) analysis of existing activity in inventory control, 2) design of the internal VMI model between pharmacy warehouse and OPD dispensing room 3) assessment of internal VMI model. The study began in October 2014 through May 2015 at Somdech Phra Debaratana Medical Center (SDMC) Building, Ramathibodhi Hospital. Thirty model drugs were chosen to assess the outcomes of VMI, with ten drugs representing each of the following three groups: 1) class A drugs (according to ABC analysis method) 2) drugs with frequent out of stock and 3) frequently dispensed drugs. Results: The pattern of utilization of the drug sample was categorized into three groups 1) regular (7 items): utilization pattern almost repeated in every week 2) Irregular (18 items): utilization pattern in each week differed and 3) by patient case (5 items): utilization pattern was related to patient visit and required case by case management. Along the downstream VMI model, amount of stock value at pharmacy dispensing at floor 1 of SDMC building declined for 30.98% and 25.73% in drug with regular and irregular pattern of use, respectively. Average days of stock in drugs with regular and irregular pattern of utilization reduced from 10 days to 6 and 8 days, respectively. Service rate was found nearly 100% at the same level as that of the pre-VMI period. However, due to different consumption patterns of drugs (regular or irregular), the efficacy of VMI to reduce the inventory volume and days of stock differed between groups. Pharmacist in charge should steadily monitor drugs with irregular pattern of use to prevent shortage. Conclusion: The implementation of a VMI system can lead to significant stock reduction and other benefits. Moreover, VMI reduces the working steps allowing pharmacists to concentrate more on other patient-care activities and also creates time available for the warehouse to plan a delivery.