AHRMM Keys for Supply Chain Excellence

Health Care Supply Chain Key Performance Indicator (KPI): Expired Products as a Percentage of Total Number of On-Hand Products in Inventory

Purpose:

Establish improvement targets or measure target achievement of the percentage of expired products within a health care organization’s inventory.

Value:

Minimize the loss of product through expiration date monitoring, which Supply Chain can control, and avoid using product that is no longer appropriate for patient use, thereby improving patient safety.¹

Equation:

Note: it is favorable to have a lower value for this Key. The lower the value the better.

Example:

• A hospital has 500 expired products for a specific month.
• The hospital’s total number of products on-hand for that specific month is 50,000.

Input Descriptions and Sources:

Sources of Data for KPI Calculation:

• Actual expired product recorded during periodic Supply Chain review of inventory
• Health Care Supply Chain Key Performance Indicator (KPI): Number of Expired/Obsolete/Wasted Product(s) as a Percentage of Total Purchases²
• Inventory Management, Managing Outdates, Policies & Procedures Manual for the Health Care Supply Chain, 2nd Edition³

Points of Clarification:

• Does not include obsolete and wasted products. However, organizations may want to group expired/obsolete/wasted together as an overall loss.⁴
• Appropriate removal of a product based on its expiration date may vary by department based on historical usage.
• Expiration dates that appear as month and year (e.g. 11/20) are considered safe to use through the last day of the month.⁵
• “Total on-hand inventory” is the price determined by the organization.
• It is helpful to report the location or category of expired products to monitor for any trending.
• This Key should be tracked monthly and by department.
• Products for patient care are labeled with an expiration date after which the product is no longer considered appropriate for use. The loss through expiration can be avoided by keeping the next expired product in position to be used with the first expired first out (FEFO) and first in first out (FIFO) methods.
• Monitoring the historical usage rate of the product should be considered when determining the appropriate time to remove the product. Items that are not used daily should be organized and monitored to be redeployed within 90 days of expiration so the likelihood that they will be used next is greater.
• Supply Chain should remove items that are set to expire within 30 days of expiration and attempt to return them to the supplier for exchange or partial credit before accepting total loss.
• Consignment agreements should be used, when applicable.

References:

1. Inventory Management, Managing Outdates. Policies & Procedures Manual for the Health Care Supply Chain, 2nd Edition
2. Health Care Supply Chain Key Performance Indicator (KPI): Number of Expired/Obsolete/Wasted Product(s) as a Percentage of Total Purchases.
3. Inventory Management, Managing Outdates. Policies & Procedures Manual for the Health Care Supply Chain, 2nd Edition
4. Health Care Supply Chain Key Performance Indicator (KPI): Number of Expired/Obsolete/Wasted Product(s) as a Percentage of Total Purchases.
5. Inventory Management, Managing Outdates. Policies & Procedures Manual for the Health Care Supply Chain, 2nd Edition

Health Care Supply Chain Key Performance Indicator (KPI): Recall Management – Closed Volume Percentage Rate

Purpose:

Measure the rate (as a percentage) at which a hospital/system has closed recalls received from the manufacturer and the U.S. Food and Drug Administration (FDA).

Value:

Allows hospitals/systems to assess their effectiveness in acknowledging and responding to recall product notifications. The implementation of such effective processes affects patient safety and care, and liability (both financial and risk) to the health care organization.

Equation:

Note: it is favorable to have a higher value for this Key. The higher the value the better.

Example:

• A hospital’s number of product recall alerts closed is 9.
• The hospital’s total number of product recall alerts received is 10.

Example:

Percent of closed volume: Target 75 percent for Class III recalls, 90 percent for Class II recalls, 100 percent for Class I recalls.

Example Response Rates:

Percent of closed volume: Target 75 percent for Class III recalls, 90 percent for Class II recalls, 100 percent for Class I recalls.

Input Descriptions and Sources:

Sources of Data for KPI Calculation:

• Third part recall management sources
• FDA class ranking
• MedWatch reporting site
• Internal hospital data sources, including but not limited to, materials management information system (MMIS), electronic medical record (EMR), point of use (POU) systems, and others that would serve as references against recall notifications

Points of Clarification:

• This Key assumes that an automated alert system and/or a centralized process exists within the health care organization. If your organization does not have either you should first establish a third-party alert/internal organizational process for recall management.
• This Key uses the FDA classification rankings for recall management (as follows); however, there are no federal mandates for recalls. AHRMM proposes these recommendations as guidelines for practice.
• Class I recall: A situation in which there is a reasonable probability that the use of or exposure to a violative product will cause serious adverse health consequences or death.
  • Example: A situation in which a catheter may kink or rupture during use leaving remnants behind in the patient that will cause serious injuries or death.
• Class II recall: A situation in which use of or exposure to a violative product may cause temporary or medically reversible adverse health consequences or where the probability of serious adverse health consequences is remote.
  • Example: A package defect in which sterility has been compromised and could lead to contamination of the medical device and result in patient complications.
• Class III recall: A situation in which use of or exposure to a violative product is not likely to cause adverse health consequences.
  • Example: Labeling defect where the expiration date does not appear on the product label. A mislabeled package that contains one size of a particular medical device but is labeled as another size.
• By tracking the compliance rate, health care organizations can determine the effectiveness of their recall management processes and how to set best practices/notable practices towards better management.

Health Care Supply Chain Key Performance Indicator (KPI): Recall Management – Delayed Recalls Percentage Rate

Purpose:

Measure the percentage rate of open recalls received from the manufacturer and the U.S. Food and Drug Administration (FDA) that are at least 7 days past the notice date.

Value:

Allows hospitals/systems to assess their effectiveness in acknowledging and responding to recall product notifications. The implementation of such effective processes affects patient safety and care, and liability (both financial and risk) to the health care organization.

Equation:

Note: it is favorable to have a lower value for this Key. The lower the value the better.

Example:

• A hospital’s number of product recall alerts remaining open after 7 days is 5.
• The hospital’s total number of product recall alerts received is 10.

Example Response Rates:

• Closure of Class III recalls within 21 days
• Class II recalls within 14 days
• Class I recalls within 7 days

Input Descriptions and Sources:

Points of Clarification:

• This KPI assumes that an automated alert system and/or a centralized process exists within the health care organization. If your organization does not have either you should first establish a third-party alert/internal organizational process for recall management.
• This KPI uses the FDA classification rankings for recall management (as follows); however, there are no federal mandates for recalls. AHRMM proposes these recommendations as guidelines for practice.
• Class I recall: A situation in which there is a reasonable probability that the use of or exposure to a violative product will cause serious adverse health consequences or death.
  • Example: A situation in which a catheter may kink or rupture during use leaving remnants behind in the patient that will cause serious injuries or death.
• Class II recall: A situation in which use of or exposure to a violative product may cause temporary or medically reversible adverse health consequences or where the probability of serious adverse health consequences is remote.
  • Example: A package defect in which sterility has been compromised and could lead to contamination of the medical device and result in patient complications.
• Class III recall: A situation in which use of or exposure to a violative product is not likely to cause adverse health consequences.
  • Example: Labeling defect where the expiration date does not appear on the product label. A mislabeled package that contains one size of a particular medical device but is labeled as another size.
• By tracking the delayed recall rate, health care organizations can determine the effectiveness of their recall management processes and how to set best practices/notable practices towards better management.