MedEsthetics magazines offers business education and in-depth coverage of the latest noninvasive cosmetic procedures for physicians and practice managers working in the medical aesthetics industry.
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INVENTORY MANAGEMENT THE GOALS OF INVENTORY CONTROL Inventory control systems provide a number of benefits to practices, including loss prevention and improved cash flow. Instead of purchasing a lot of expensive supplies all at once with a large outlay of cash, you can parcel out expenditures over time by ordering products on an as-needed basis. A good system also eliminates time wasted searching through cluttered supply closets for needed items. An aesthetics practice may stock dozens, even hundreds of different products, making it impossible for staff members to determine at a glance what they have on hand and what supplies are running low. Lewis A Lippner is the administrator for Advanced Dermatology (advanceddermatologypc.com), the largest dermatology group in the Northeastern United States, with 12 offices in two states. The biggest mistake he sees practices make is "loss of control—not knowing what you're using or what you have in stock." The basic steps of inventory control include: • Performing regular physical counts of products within the practice • Setting reorder levels • Receiving shipments and verifying orders against the purchase orders • Stocking products to ensure that older products are used first PHYSICAL COUNTS AND REORDER LEVELS The first step in establishing an inventory control system is to make a physical count of all supplies on hand. "We use simple forms anybody can fill in," says Lippner. The forms list all the products the practice uses. The person taking the inventory counts fills in the amount of each product currently in the practice. "We long ago discovered that having a set day and time for reviewing inventories is far more effective than hoping someone simply remembers to check the inventory of an item," says Rosha. You may do inventory as often as once a week. The professionals interviewed for this article recommend taking inventory at least once a month for more expensive items such as fillers and toxins. For routine medical supplies you may only need to do inventory quarterly. You may find it helpful to categorize your supplies as A, B or C level supplies. A-level products are those items that you use a lot of that don't cost a lot; B-items are moderate volume, moderate cost items and C-level products are expensive items you don't use very often. You can establish different inventory intervals for each class of products. 48 MAY/JUNE 2013 | MedEsthetics Next, you'll need a picture of how you're using those supplies to set reorder levels. "Get a handle on your utilization," says Lippner. "You have to know what you're using so you'll know what to order." Billing records will tell you your history of use. You may need to adjust inventory levels throughout the year to meet seasonal demand. "Utilization goes up at certain times of year," says Lippner. "There's less use around the holidays or when the weather is very cold, but it goes up in the spring." Franklin recommends looking at what you sell per week, per month or per quarter to establish your reorder levels throughout the year. You will also need to consider how long it takes to receive a supply of each item. "Take into account reasonable problems that may arise that could cause a lag in the time for resupply," advises Rosha. Weather delays, miscommunications and other factors could delay orders by a week or more. Finding the right inventory level for each product may take some trial and error. The most efficient systems allow for enough inventory to always meet patient demand, without forcing you to tie up too much of your capital in supplies that aren't being used. "The biggest mistake I see doctors make is having too big an inventory," says Franklin. "They carry much more product inventory than they need. I think this is because they depend on the staff to make the orders, and if the person making the orders isn't the one paying for them, there's a tendency toward ordering too much 'just to be safe.'" ASSIGN AN INVENTORY SPECIALIST Inventory control systems work best when a single staff member is responsible for maintaining the inventory, including receiving, stocking and re-ordering. If one person receives supply orders, puts the products on the shelf, keeps track of what's being used and places orders to resupply, that person quickly becomes familiar with usage patterns and how long it takes to receive orders from various suppliers. The employee will also spot abnormalities such as missing product, unfulfilled orders or products that are expiring before they're used. "A physician's time is far more efficiently spent on things that only the physician can do," says Rosha. "Inventory control does not require a medical degree or license, but seeing patients does." In some practices the office manager oversees inventory, while other practices assign the job to a nurse or a medical assistant. This person should report to the practice administrator or the physician. Whoever is in charge of supplies should receive new orders and compare them to the purchase orders to