Owens & Minor Balances…

Edition: September 2001 - Vol 9 Number 09
Article#: 1052
Author: Mark Thill

Owens & Minor reports that its two-year-old OR surgical specialty program is turning out to be a winner for the company, its customers and vendors. In hospitals in which the company has placed its medical specialties salespeople, sales of products and services have grown an average of 20 percent.


Richmond, VA-based Owens & Minor has no plans to push into specialty distribution, says Senior Vice President of Distribution Tim Callahan. Instead, the OR program is meant to complement the assistance that Owens & Minor already gives its customers with logistics and materials processes.


''You can't provide the logistical support in clinical areas without understanding product,'' says Callahan. ''And that's most important in the surgical suite.''


To date, 24 reps and three managers are in the medical specialties group. They report to Nick Mendez, who serves as the company's vice president of corporate accounts. The reps are spread throughout the country, and all have at least 10 years experience in OR sales, either with Owens & Minor or other companies, including manufacturers. ''We needed that expertise to get the program jump-started,'' says Callahan.


The reps maintain a delicate balance between talking about OR-product features and benefits, and talking about the company's logistics programs, including the PANDAC suture management program, SurgiTrack procedural delivery program, and low-unit-of-measure delivery.


''In order to improve logistics, you need to manage products better,'' says Callahan. ''The clinical sensitivity of many OR products is one of the factors that makes this industry different than others. So, our reps need a good base of understanding of clinical products if they are to assist hospitals with the logistics piece.'' For example, in order to drive standardization, reps need to understand how products are used in the clinical environment, he says.





Product Launches


The surgical specialty sales force has participated in the launch of a line of gloves and underpads, both from manufacturers with newly won GPO contracts. Other companies have approached Owens & Minor as well to see whether the OR team can help launch new products on their behalf.


Even so, Callahan emphasizes that Owens & Minor has no intention of becoming a specialty distributor, that is, one that focuses on introducing complex, innovative technologies to hospitals. He does, however, expect the program to expand into other clinical areas, such as the ER and cath lab.





Methodist Hospital


Methodist Hospital, a 450-bed acute care facility in Arcadia, CA, engaged the services of the Medical Specialties group last year, shortly after it had awarded Owens & Minor the distribution contract.


Based upon opportunities identified by Methodist and an outside consulting firm, Methodist executive Claire Hanks, RN MBA, vice president of professional and support services, and Tony Marino, CPM MBA, director of materials management, looked to its new distributor partner to provide solutions to address some inventory issues in the OR.


''We determined there was more than $1 million of inventory there,'' recalls Marino. ''In addition, people were complaining that they couldn't find products for surgery. It was obvious we had to move quickly.''


At Methodist's request, Owens & Minor brought in one of its OR materials experts to evaluate the hospital's layout. Once the analysis was completed, the company presented an overview to Hanks and Marino, identifying potential savings of more than $1 million. The primary opportunities were a reduction of excess inventory, an improvement of the efficiency of the hospital's supply chain, and a reduction in the amount of materials-management-related activities being performed by the nursing staff.


''We were shocked at the amount of time our nursing staff was involved in locating and picking supplies,'' says Marino. ''Given today's nursing shortage, it is important that we are able to optimize their time and productivity.''


''It is also a physician satisfaction issue,'' adds Hanks. ''They need to have exactly what they need when they need it.''


As part of its recommendations, Owens & Minor is assisting Methodist physically redesign the OR materials locations. This includes relocating racking, evaluating inventory requirements and properly slotting product locations to maximize staff productivity. ''We realized the OR has to operate as efficiently as the other areas of the hospital where product is stored and managed,'' says Marino. ''We see this as a significant opportunity to enhance our overall operational structure.''


In June 2001, Methodist implemented Owens & Minor's SurgiTrack program, in which the distributor provides procedure-based totes for individual surgeons' cases. The totes include both standard and physician-specific items.


Presently four different procedures have been brought into SurgiTrack at Methodist. ''Our goal is to have about 80% of our OR procedures running through it,'' says Marino. This will represent about 45 different procedures. ''The efficiencies we will realize will bring significant savings, and will ease the workload of the nursing staff. This is definitely a win-win for both our staff and our physicians.''


A Medical Specialties representative works with physicians and OR staff to ensure that preference cards remain updated. And each Friday, the implementation team including the Methodist OR staff, Owens & Minor Medical Specialties and distribution staff, Hanks and Marino conference to update the progress of SurgiTrack and the supply chain redesign programs. ''Tony and I want to be involved so we can gauge our progress,'' Hanks says. ''We also want to be able to address any concerns the staff may have with the changes.


''Owens has caught the vision with us to create, educate and plan around the advantages their programs provide. As a result, they have also provided us with the confidence we need to move forward quickly.''


She calls Owens & Minor a solid vendor partner which has ''shown us they are not just about moving boxes. They have established credibility as specialists in the OR.''


''Now, when the nurses have a procedure and it's not on SurgiTrack, they ask, 'Where is my tote?'''





Integrating with the Customer


''When you start getting involved in how ORs prepare their procedures as well as their product mix, you need to integrate product knowledge with logistics knowledge,'' says Callahan. ''We've been in the OR storeroom for a long time, and done asset management. But for us to integrate procedures to supply chain initiatives, we need to couple clinical product knowledge with logistics expertise.'' That's what the medical specialties group does.


Callahan expects Owens & Minor to bring on another 10 or so surgical specialty reps. ''I feel there are markets we still need to support,'' he says. ''And as we continue to work with our customers, there's a bigger demand for assistance in product management. And it's not just the OR, but other clinical areas, like the ER, cath lab and labor and delivery.