Cost-Saving Supply Strategies Tailored to Ambulance Services

EMS insiders share their best tips for saving money & creating efficiencies

The National Bureau of Economic Research says the Great Recession ended in June 2009. We may have turned the corner, but the federal stimulus money that has helped keep many states and municipalities afloat during the downturn is drying up.

 

Experts are warning municipal bondholders of “deadbeat” cities and counties teetering on the brink of default. States are threatening large Medicaid cuts. Income and property tax revenue is still depressed, and the housing market remains in a slump. Wages are anemic, health insurance costs continue to soar, and unemployment remains stubbornly high. Public employee pensions are straining state and local budgets, and headlines across the country announce public safety cutbacks. The economy may be moving in the right direction, but budgets will likely be strained for years to come.

 

On that cheery note, several EMS insiders offered a few excellent ideas for trimming supply costs without reducing services. Better yet, several have proved to have positive effects on other aspects of the operation.

Rewards programs

Many of us take advantage of cash rewards programs offered through credit cards. Those same plans can work for EMS agencies, assuming the purchases are well monitored and paid off monthly to avoid interest charges. MedStar EMS of Fort Worth, Texas, initially used a cash-back program offered through the state using Chase cards for all fuel purchases. (Currently, the city is using a similar program.)

 

“The program gives us 1.7% cash back on all purchases,” says Matt Zavadsky, MS-HSA, associate director of operations for MedStar. “This is done on an annual basis.” MedStar, which operates a fleet of 57 ambulances and responds to approximately 105,000 calls per year, estimates the agency will purchase about $1.2 million in fuel this year alone–that’s a $20,400 rebate. “And, as fuel prices rise, our cash back also rises,” Zavadsky says.

 

MedStar is also investigating which of its vendors will accept the VISA and is looking to use the card to purchase supplies and even vehicles. “We anticipate another $900,000 in purchases through this card process for an additional $15,000 in rebates, or $35,700 in total annually.”

Streamlined supply operations

Southwest Ambulance–a division of Rural/Metro Corp. and Arizona’s largest ambulance service provider–uses an innovative bin system for replacing its ambulance and first-responder supplies. The system was initiated about two years ago, but it’s been so successful that Rural/Metro is rolling out the program nationwide.

 

Southwest operates approximately 300 ambulances throughout Arizona and serves 40 communities across the state. Managing the costs and logistics associated with keeping not only their ambulances but many of their first responder partners’ vehicles appropriately stocked proved challenging. “Every ambulance was stocked to the brim for Armageddon,” says Sheree Valdez, director of distribution and resources at Southwest. “In doing that, we were well stocked, but we didn’t turn our inventory correctly. It was a true loss of money for our company, and a waste of goods through expired items. We needed a better way.”

 

Seeking to streamline the supply process and reduce waste, the company initiated a unique bin exchange program for restocking vehicles. Bins were created for “high-usage” procedures–such as starting an IV line, administering fluid or providing respiratory therapy–as well as for less-common procedures, such as obstetrics kits.

 

Valdez says they consulted a committee of field providers regarding how they’d like to see the bins built and where those bins should be located. Each new bin is sealed with plastic wrap and labeled on the outside to easily identify the product and quantity, as well as provide a medical identification number for inventory.

 

Because the service territory is so large, Southwest has about 75 substations where ambulances are located. “We don’t run our cars directly out of one facility,” Valdez says. “Some of them come up and down out of their own quarters. So each of our cars has its own full line of bins and, at their quarters, every car has a secured locker that always has two full replacement sets of bins.”

 

Previously, each substation was stocked as a mini-warehouse, with multiple shifts and multiple people responsible for making sure plenty of stock was available at each of those locations. “By taking all of that stock out of the field and putting it back into the hands of the distribution and warehouse inventory management people, we were able to control our costs so much better,” she says.

 

Today, the ambulance crews return to their quarters at the end of each shift, remove bins with a broken seal and replace them with new, sealed bins from the secured locker. An assigned crewmember then submits a replenishment order to supply by reporting which bins need to be replaced, Valdez says. Supply personnel then deliver new bins to each of the outlying ambulance quarters.

 

Currently, six full-time employees manage this supply process for Southwest’s 300 ambulances as well as for several of their fire first responder partners. This team controls the assembly line from start to finish, from unloading trucks and sorting the bins to rotating stock, replenishing supplies and shrink-wrapping.

The benefits

Valdez estimates that in the first year alone Southwest saved “well over $250,000″ by streamlining the supplies its vehicles carried and by increasing productivity. She says that by year two, they were able to bring non-controlled drugs into the bin system, “so now our crews are not held up at the pharmacies, and the hospitals increase their efficient use of manpower–besides just saving Southwest money, we save other people money too.”

 

The crews are also extremely happy with the new system. “Caring for patients is their job, not inventory management,” Valdez says. “At first, everyone was nervous about making the change, but once it actually started and the crews realized that they didn’t have to do inventory control anymore and how much quicker it was, it became very popular.”

 

Southwest also provides on-scene, one-for-one supply restocking for many of its fire first responder partners. The bin system has proved equally popular with the fire agencies, because bins are custom-designed for each service area for supply consistency. “They want to replace their equipment, one-for-one on the scene so that they don’t have to go out of service. We have specialty bins created just for our fire departments, and they can replenish right out of those bins. Our crews give them the items, they mark it down on our PCRs, and they’re on their way.”

Preventing expiration waste

Smaller systems may not benefit from the type of bin process Southwest Ambulance uses. However, simply paying greater attention to the waste associated with expired medications and supplies can save a considerable amount of money in services large and small.

 

Jason Jonas, a firefighter-paramedic from the Kansas City area, worked at a service where “we noticed we were throwing away an inordinate amount of unused expired medication and expired supplies, like IV catheters and endotracheal tubes that were never used. We were just chucking dollar bills into the trash can.”

 

He says they closely tracked supply use for about three months to assess exactly what they were using and what they “would never use in a million years.” The fire-based ambulance service also specifically evaluated which supplies were needed on the fire trucks, “and we stripped off all the things that the fire truck paramedic would never have an opportunity to use.

 

“The ambulances had more of the stock because they were the transport vehicle and had more time with the patient. We aligned our protocols and supply power lists with the amount of time we had with the patient and with the likelihood we’d give that medication.”

 

He says savings were “significant.” Equally exciting was the unexpected improvement in response time that they realized after adjusting their supply practices.

 

“If you don’t have to worry about all these different modalities, your transport times will drop,” Jonas says. “We were getting back to the core of EMS–rapid transport to definitive care. Instead of having an entire pharmacy in the back of the ambulance, we had exactly what we needed to handle life threats and other critical incidents, but we didn’t bog our paramedics down with having 9,000 different options. We were having better outcomes with the patient because we simplified.”

 

Another simple supply tip: Contact your suppliers and ask what the true shelf-life is and if it can be extended. Jonas says that the shelf life or the shelf life potency is not the same as the expiration date, and products can sometimes be extended to save money.

Make your own kits

Zavadsky says MedStar’s logistics manager, David Lamb, has researched where buying in bulk and creating their own supply kits proves cost effective. For example, MedStar is saving $13.50 per airway kit by purchasing individual components and assembling kits in-house. “We use five of these a day for an annual savings of $25,000,” he says.

 

The cost of pre-packaged chest compression kits was $130 each, he says, “and we are able to produce them from bulk stocked items and package them in-house for $3 each. We only use about 20 of these a year, for a savings of $2,500 annually.” Similarly, MedStar creates its own CPAP kits for $64.14 each, versus purchasing preassembled kits for $69.75. “We use 300 of these a year for a savings of $1,600 annually,” he says.

 

Assembling kits in-house isn’t always the most cost-effective practice, Zavadsky says. “We worked with a vendor to have them pre-package IV start kits for us and saved 12 cents per kit to have the vendor pre-assemble them. We start about 100 IVs a day for an annual savings of nearly $4,500,” he says.

See what your GPO can do

Zavadsky says MedStar recently had two group-purchasing organizations competing for its business. One of the suppliers negotiated a lower bid and offered to supply two of their own full-time employees for stocking at MedStar’s warehouse.

 

“Using this approach, our projected supply cost savings is $70,000 annually on a supply budget of $1.4 million. In addition, we are eliminating three [full-time employees] FTEs at a personnel cost savings of $130,000 annually. This means that our total savings on this approach is $190,000 annually,” he says.

 

Zavadsky says, to his knowledge, this is a unique staffing arrangement. However, with businesses eager to gain and retain business, it may pay off to think outside of the box and suggest novel service arrangements. After all, suppliers are equally concerned about containing losses.

 

Note: The March 2011 issue of EMS Insider features a unique scheduling model that’s reducing staffing costs and boosting employee satisfaction.

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