The item master is one of the most vital databases for your health systems, but often we see organizations attempt to conduct wide-reaching maintenance on the item master all at once. That creates a lot of pressure for the item master team and rarely solves the underlying process issues. Instead, we recommend making item master reviews a frequent, systemic part of your workflow. Here are four ways to proactively manage your item master.

1. Delete Inactive Items

Keeping a discontinued or unused item in the item master only creates room for error, as a staff member could mistakenly order and pay for the item. Every health system should establish guidelines for how inactive items are removed from the master. Our general recommendation is that, if an item has not been purchased in two to three years, it should be removed from the item master.

2. Ensure Units of Measure and Conversion Factors are Correct

We trace countless purchasing errors back to a product’s unit of measure. There are standard packaging units and each determines the unit quantity received as well the price (ie. CA/BX/EA). Inaccurate conversion factors in UOM can result in receiving more or less units than expected – creating a return to the vendor.  Similarly, the unit prices may not match causing exceptions and/or mispayments

In order to prevent this, take time to match the unit of measure listed on the purchase order with the item received on the invoice. If you ordered a case of something and received individual items, then the default order UOM for the item’s listing in the master should be revised to match. Changing the invoice to match the PO, which we see many hospitals do, doesn’t address the root cause of the error.

3. Adjust Item Pricing

In many cases, item prices are dictated by contracts—but that doesn’t mean the prices are set in stone. As contracts are formed or renewed, new prices must be updated in the item master on both the vendor and the hospital side. If an item is not included in a contract, then pricing may fluctuate and creates effort for the item master team to ensure the master’s accuracy. We recommend maintaining an open dialogue between the contracting team and the purchasing team to ensure item prices are well-communicated and properly linked in the item master.

4. Review Item Descriptions

There are industry standards for item descriptions, but we know from experience that many organizations choose to customize these standards for their own use. Develop standards to address the variations such as Name, Type, Brand, Ingredients, Age (geriatric, adult, pediatric), Gender, Size. Hospital employees tempted to change descriptions to better align with what they search for or expect to see in the field. However, you cannot count on everyone to understand the edited descriptions so ensure these standards are communicated with end users ordering items.

Take Control of Your Item Master

Maintain it well and your item master will ensure your healthcare organization’s purchasing is optimized for maximum efficiency and profitability. It’s a significant undertaking for any in-house team, but The Audit Group’s healthcare consultants are ready to help. Reach out to us and learn how we may provide guaranteed returns for your business.