Deck 17: Health Care Purchasing and Supply Management

Question 1

The health care industry is expected to grow and consume even a greater share of GNP in the next few years. At the same time, many health care organizations will be driven from the market because of ______________. This radical shift is the result of _____________________.

A) poor management and increased competition / increasing health insurance costs and government regulation
B) uncontrollable salary costs and increased insurance costs / declining profits and governmental deregulation
C) uncontrollable non salary costs and declining profits / increased price competition and the regulatory environment
D) uncontrollable expenses / governmental deregulation
E) increased competition / increased price competition

Answer 1

C

Question 2

In the _______________ method, users or buyers review quantities periodically at fixed intervals of time and an order is placed for a quantity sufficient to replenish the stock to a predetermined maximum level.

A) fixed inventory level (FIL)
B) predetermined inventory level (PIL)
C) professional order quantity (POQ)
D) fixed order interval (FOI)
E) Fulbright Order Quantity (FOQ)

Answer 2

D

Question 3

The assumptions of constant uniform demand and the instantaneous replenishment of stock at the zero level may reflect clearly the inventory situation faced by most hospitals.

Answer 3

False

Question 4

There are five important factors to consider when looking for prime vendors. The following list contains five factors. One is incorrect. Which one is it?

A) The supplier must have acceptable production capacity.
B) Electronic data interchange systems must be employed.
C) The supplier must have a high-quality product.
D) The supplier must have a well-developed distribution system to achieve "on-time" deliveries.
E) The supplier must at least meet minority business opportunity (MBO) goals. This is a federal aid program for women and minority businesses.

Question 5

There is little doubt that the system that would be most useful may not be one of the pure systems discussed (in the textbook) but a combination of all of them. This is particularly true because of the ________________ of the different departments of the hospital.

A) people and personalities
B) complex and various needs
C) make-up
D) goals and objectives
E) mission

Question 6

In the current climate of increasing health care costs, ____________ must be optimized without sacrificing the level of service provided.

A) production
B) customer service
C) patient care
D) technology
E) systems inventory

Question 7

The _______________ system is the process where a hospital's prime suppliers manage product purchasing, storage, delivery, and inventory control of medical/surgical supplies used in the hospital. ______________ systems have the potential to reduce redundant activities in the system, the investment by the hospital in inventory, the storage space required, and the handling functions.

A) positive inventory / Positive inventory
B) managed inventory / Managed inventory
C) just-in-time ordering / JIT
D) stockless inventory / Stockless inventory
E) managed ordering / Managed ordering

Question 8

(n) ____________ system is one in which inventory is checked (theoretically) on a perpetual basis after each inventory transaction. When the inventory is withdrawn to a point at which there is just sufficient material to cover the demand during the replenishment lead time, an order is initiated for a ___________.

A) predetermined order (PO) / two-week's supply
B) managed inventory supply (MIS) / month's supply
C) essential order supply (EOS) / minimum order quantity
D) fixed order quantity (FOQ) / fixed quantity
E) maximum inventory level (MIL) / maximum quantity

Question 9

The supply management system is driven by eliminating fast-moving supplies and by implementing a full-service distribution service for most of the hospitals in the system; and changing the attitudes and behavior of the nursing staff and physicians.

Question 10

When a supplier can manage ____________ for several hospitals, both the buyer and supplier can take advantage of the economies of scale in warehousing and in transportation inherent in such a situation.

A) stockless inventory systems
B) mutual inventory systems
C) mass inventory systems
D) cooperative systems
E) matrix inventory systems

Question 11

The primary objective of a supply management program is to ensure systems are adequate to keep departments supplied ___________.

A) with essentials
B) without delays
C) with low cost goods
D) with high quality supplies
E) without stockouts

Question 12

There are two primary functions of __________ in the hospital setting: "(1) Maximize supply service consistent with maximum efficiency and optimum inventory investment; and (2) cushion between the forecasted and actual demand."

A) Buying
B) Purchasing
C) supplies
D) inventory
E) technology

Question 13

It is true that there is only one system that is the best overall. Certainly the size, purchasing power, and level of control that the supply management department has within the hospital are all factors that must be evaluated. The degree to which the hospital is automated and to which computer systems are integrated is also a factor in the decision in terms of the complexity of the systems models and in the level of calculations required. Clearly, cost/benefit analyses must be performed and systems developed that perform and provide the desired service level.

Question 14

Many of the items necessary in the operation of hospitals are ___________ purchased items. However, there are items that are produced in the hospital setting for which the supplies follow a ______________ pattern and the inventories supporting these functions are essentially raw materials used in production.

A) independently / on-demand
B) critical-demand / non-critical-demand
C) independent-demand / dependent-demand
D) essential-demand / non-essential-demand
E) locally / JIT

Question 15

Today, _____________ is critical to an institution's financial health. Better supply management practices must be implemented in order to ensure appropriate service levels in the new _______________ environment.

A) cost containment / cost containment
B) gross margin / gross margin
C) competitive pricing / competitive
D) profit / insurance
E) national health care / governmental

Question 16

s in any business concern, the functions of all departments must be consistent with the overall mission and purpose of the business. In hospitals, the primary objective is to provide patient care; the supply management function is in place to _____________.

A) support this objective
B) obtain the best prices on supplies
C) maintain a large inventory of supplies
D) provide supplies at low costs
E) negotiate supply contracts

Question 17

Operating cost in hospitals has become extremely important as the reimbursement system is no longer based solely on cost. In the mid-1980s, a system of reimbursement based on specific _______________ was instituted. Under the ______ system, the hospital is reimbursed a flat rate based on a patient's _________ regardless of the associated costs.

A) flat fee schedules (FFS) / FFS / ability to pay
B) flat fee schedules (FFS) / FFS / insurance company
C) diagnosis related groups (DRG) / DRG / diagnosis
D) diagnosis related fees (DRF) / DRF / insurance group
E) insurance related fees (IRF) / IRF / insurance provider

Question 18

To ensure successful implementation (of the Stockless Inventory System), several criteria must be met, including the existence of _____________ and excellent communication and cooperation within the hospital departments, as well as between the hospital and its supplier.

A) a purchasing department
B) a supply management system
C) performance standards
D) a strategic plan
E) a prime supplier contract

Question 19

There are several instances in which hospitals may be interested in the _________ method: (1) when there is frequent ordering, calling for stringent control; (2) when it is convenient to order many items from one supplier; (3) when serving the needs of discrete or irregular usage; (4) when there are large-volume orders that represent a large portion of the supplier's capacity; and (5) when storeroom balances are calculated only periodically. This will be a particularly important method for hospitals that move increasingly into assembly and "production" of their supplies.

A) predetermined inventory level (PIL)
B) Fulbright Order Quantity (FOQ)
C) fixed order interval (FOI)
D) fixed inventory level (FIL)
E) professional order quantity (POQ)

Question 20

Traditional inventory control methods used in manufacturing are common in the hospital settings.

Question 21

Two factors that are used in the application of all methods of inventory management are problematic for the health care system: (1) inaccurate demand estimations or forecasts and (2) safety stock.

Question 22

Some hospitals now have ___________ for patients, where a plan is made for each new admission to a unit. These plans are outcome-driven, where certain outcomes are expected at certain points of time during the patient's stay. If these ____________ could be linked by computer programs to supply management, forecasting for material needs would be more accurate.

A) PERT plans / PERT plans
B) essential treatment plans (ETP) / ETP
C) critical path plans (CPPs) / critical path plans
D) critical treatment plans (CTP) / critical treatment plans (CTP)
E) essential path plans (EPPs) / essential path plans (EPPs)

Question 23

In the case of dependent demand in which the hospital is producing an item, ____________ approach can be taken. This approach resembles a classic material requirements plan, based upon a master production schedule.

A) an explosion-type
B) a master planning
C) customized inventory
D) POS
E) MBO

Question 24

ommunication between the _____________ and the supply management function are vital, and this is inevitably the area in which the system breaks down.

A) nurses
B) practitioners
C) suppliers
D) hospital administration
E) care givers

Question 25

Primary sources assume most of the functions of the supply management department, much the same as the stockless inventory method described in the textbook. There are many advantages to this arrangement in that __________ costs for the hospital are reduced and redundancy of activities as well as stock is reduced.

A) overhead
B) manpower
C) fixed
D) material
E) supply

Question 26

If demand from several locations can be pooled, the overall variance of demand is __________ so that safety stock required to provide the same level of customer service is _________.

A) increased / increased
B) reduced / lowered
C) maintained / improved
D) reduced / improved
E) increased / improved

Question 27

apital equipment acquisitions require health facilities to go through an internally defined process. Differing corporate policies and preferred methods of financing will impact this process. A capital item request initiates the process. The requesting departments are required to provide _______________. It is important that this information be as accurate and precise as possible.

A) information on cost savings
B) a list of the specifications for the desired item
C) a price-cost analysis
D) an approved budget for the item
E) information on utilization statistics

Question 28

The health care industry is increasingly looking to proven business techniques to improve performance in many functional areas. This desire to adapt more businesslike approaches is a direct result of the ______ system of reimbursement and ____________.

A) MRI / pressure from insurance providers
B) AARP / pressure to lower expenses
C) DRE / increased pressure from insurance companies
D) DRG / increased competition
E) AGA / increased governmental regulations

Question 29

The most significant trend in the area of supply management in hospital settings is simply the magnitude of the importance and resulting attention to efficiency and cost-effectiveness.

Question 30

_____________ is defined as: No stockout is allowed for the region. Interdepartmental and inter-facility transfer can be used to satisfy the stockouts, but the item must be available in the region as a whole.

A) Facility-location urgency
B) Use-location urgency
C) No urgency
D) Regional-location urgency
E) Strategic urgency

Question 31

The __________ schedule is a counterpart to the master surgery schedule and short-term (three- to six-week) forecast for other expected patient care. Material requirements can be derived from the surgery schedule and forecast, and "exploded" backwards to determine when to begin the production of certain supplies assembled or (produced) within the hospital.

A) critical supply inventory
B) materials production
C) supply production
D) master production
E) surgery supply production

Question 32

____________ is defined as: No stockout is allowed at a facility. Interdepartmental transfers can be used to satisfy these local stockouts. However, the item must be available in the facility as a whole.

A) Use-location urgency
B) No urgency
C) Facility-location urgency
D) Metro-location urgency
E) Regional-location urgency

Question 33

_____________ is defined as: No stockout is allowed at a use location. These are the most urgent items and must be available to the materials users at all times.

A) Facility-location urgency
B) Regional-location urgency
C) Metro-location urgency
D) No urgency
E) Use-location urgency

Question 34

The substitutability issue is one of great concern to the supply manager, and often a difficult one to reconcile with _____________. A current listing of one- and two-way substitutability of products must be maintained and updated.

A) suppliers
B) administrators
C) insurance plans
D) governmental agencies
E) practitioners

Question 35

The nursing unit managers would be a natural choice for product-line managers of selected DRG- or CPP-related products. Careful planning and communication are paramount to success of such a plan. Extensive audits and interviews using feedback and constant monitoring are the fundamental elements if supply master planning should be implemented. Again, communication is the key. By whatever innovative method, cooperation and communication must be improved so that higher throughput and lower cost will result.

Question 36

With the availability of computers in all areas of health care today, forecasting demand using past data and statistical techniques is a far more realistic possibility than it was in the past. Forecasts are never perfect, but they can assist the supply manager to _____________ inventory to the best ___________ advantage of the hospital.

A) purchase / competitive
B) provide / strategic
C) better control / economic
D) manage / financial
E) control / competitive

Question 37

Unique to health care is a classification of the stockout tolerances of a hospital, categorized by Reisman as urgency requirements. They are as follows:
Use-location urgency.acility-location urgency.Regional-location urgency
No urgency

Question 38

osts of stockouts are influenced by many factors in the health care arena. These factors include the costs of extra materials, personnel inconvenience, personnel and transportation costs, costs of expedited or emergency orders, lost sales as well as a myriad of intangibles ranging from mild dissatisfaction of the practitioner staff, to the serious impact that a shortage might have on the treatment and health of a patient. Stockouts can be prevented on a temporary basis with substitutable products.

Question 39

___________ is defined as: Items for which stockouts are allowed at all levels.

A) Facility-location urgency
B) No urgency
C) Use-location urgency
D) Metro use-location urgency
E) Regional-location urgency

Question 40

There is no doubt that high technology is a main component of health care today. However, the advanced technology associated with hospitals is in the areas of diagnosis and treatment of illness. Using automation technology and sophisticated information systems in the operation of a hospital is becoming more common but is significantly behind the advances in industry. Its time has come, as evidenced in several studies of the implementation of bar coding in pharmacy inventory management. Results of this application have been reported to be those things listed below, with one exception. Which one is the exception?

A) increased manpower utilization
B) increased efficiency
C) decreased total inventory costs
D) improved storage space utilization
E) reductions in inventory values

Question 41

The _______________ from which to solicit bids will be a subjective list of those already known to the user department.

A) initial base of suppliers
B) regional list of suppliers
C) yellow book list of suppliers
D) National Association of Manufacturers roster
E) Medical Suppliers Association membership

Question 42

mployers are responding to the increased health care benefits costs by moving away from traditional employer-sponsored insurance plans to consumer-driven health-care plans.

Question 43

final factor to be considered with capital expenditures is the need in some states for governmental permission to purchase. If the ____________ is not granted by the state, all the key factors outlined in the textbook are meaningless. The goals of a ______ are to protect the consumers, generate benefits for them, and prevent the acquisition of unneeded equipment (i.e., ensure access to quality service at a reasonable cost).

A) certificate of need (CON) / CON law
B) community need certificate (CNC) / CNC
C) consumer protection law (CPL) / CPL
D) community protection certificate (CPC) / CPC law
E) acquisition approval law (AAL) / AAL

Question 44

efore developing an initial base of qualified suppliers, the purchasing and requesting user departments must develop a list of ____________ that are as detailed as possible.

A) potential suppliers
B) manufacturers
C) functional specifications
D) attributes
E) benefits

Question 45

The financial merits of the various proposals are then considered. That is, if two projects are judged to be of equal financial worth, the preference for expenditure would be for the project serving the larger number of people, the one that prevents disease rather than simply preventing fatality, or the one serving children versus the aged. Several qualitative factors are also of utmost importance in identifying capital expenditure projects in health care, namely, community need, marketability of the project, urgency for the capital item, competition, and technological need. ____________ must be given the utmost consideration for capital expenditure project selection.

A) Marketability of the project
B) Competition
C) Community need
D) Urgency for the capital item
E) Technological need

Question 46

The ____________ system is one useful method of specification. It is not the only one, nor should it be used for all capital equipment purchases.

A) Martin point
B) preference point
C) Parmer evaluation
D) Skinner Evaluation and Point
E) Palmer Preference Evaluation Point

Question 47

______________ relates to whether or not the capital item is for the replacement of current equipment, expansion of current technology, or expansion into a new technological field.

A) The Hospital's Mission
B) The Hospital's Strategic Plan
C) Hospital Business objectives
D) The Operations and Strategic Plan
E) The Capital Budget

Question 48

The _____ step in choosing the right supplier is to derive the total cost of the equipment over its expected life by weighting for service and installation.

A) final
B) second
C) first
D) fifth
E) fourth

Question 49

ollowing appropriate justification and formal approval for the acquisition of a new piece of capital equipment, the actual purchasing process begins. The objective of this process and subsequent consumer need evaluation is to fulfill a hospital's need with the best equipment for its intended function at the lowest possible total cost.

Question 50

______________ can be defined as a method of evaluating current and requested capital equipment by considering the results of published clinical investigations and of physical assessment of the equipment in the decision-making process.

A) Capital budgeting
B) Technological assessment
C) Price-cost analysis
D) Strategic and Operations Planning
E) Capital assessment

Question 51

Once a final list is established, ___________ should be arranged. This meeting involves representatives from all potential vendors and all relevant hospital departments in order to discuss general perceived requirements of the equipment.

A) a separate meeting with each supplier
B) a vendor conference
C) a reverse auction
D) a vendor planning session
E) a pre-bid conference

Question 52

Those state officials reviewing _____ applications try to determine the need for such a project by looking at the current utilization of like services and their specific locations.

A) CNC
B) AAL
C) CPC
D) CPL
E) CON