The Association for Healthcare Resource & Materials Management's (AHRMM's) Benchmarking Task Force, comprised of representatives from AHRMM and HFMA, has been working on an ambitious benchmarking project to provide valuable information regarding supply expense costs. The Task Force has established a definition of supply expense and identified the items that should be included in supply expense reporting.
In the next phases, AHRMM will gather information to provide industry benchmarks for supply expense. AHRMM will seek the support of healthcare financial officers to ensure cooperation regarding tracking and information at the data solicitation phase. HFMA encourages all members to support this important benchmarking project.
Supply Expense Definition
The net cost of all tangible items that are expensed including freight, standard distribution cost, and sales and use tax minus rebates. This would exclude labor, labor related expenses, and services as well as some tangible items that are frequently provided as part of service costs.
Items to be Included in Supply Costs
- Surgical supplies including
- Implantable and prosthetic devices including
- Intra-ocular lenses
- Orthopedic implants
- Pacemakers and AICDs
- Organs (but not specifically listed)
- Anesthetic materials
- Sutures, endomechanicals, and suture needles/wound closure devices
- Surgical packs, kits and minor trays
- Replacement instruments both disposable and non-disposable (unless capital)
- General medical supplies including
- Bandages, gauze, and dressings
- PT, OT, RT supplies
- IV Sets
- Needles, syringes
- Paper products (EKG paper, dividers, etc.)
- Drugs/pharmaceuticals
- IV solutions
- Contrast media
- Radiopharmaceuticals
- Lab supplies including
- Phlebotomy supplies
- Chemicals, reagents, media
- Blood and blood products
- Supply portion (only) of any rental/lease/reagent agreement
- Oxygen and related medical gases
- Radiologic films and chemicals
- Dialysis supplies and fluids
- Linens, patient apparel, and hospital acquired scrubs and uniforms
- Dietary products
- Patient and cafeteria food
- Nutritional supplements
- Dish & flatware Disposable and non-disposable
- Housekeeping supplies
- Cleaning products, floor finishes
- Paper goods, toilet tissue, paper towels etc.
- Office type supplies including
- Computer Supplies
- Computer software (unless capital)
- Copy/printer paper
- Inks and toners
- Forms (internally or externally produced)
- Storage costs for supplier warehoused forms
- Freight associated with any supply item
- Standard distribution fees not including additional costs for stockless
- Supply portion of outsourced contracts
- Dietary
- Environmental Services
- Supply portion of any equipment rental or lease
- Sales tax
- Rebates (deducted from supply cost)
- Manufacturer Rebates
- Distributor rebates
- Dividends from Purchasing Groups
Not Included in Supply Costs
- Supplies for vending operations
- Supply costs used with an in-house laundry
- Routine maintenance items (not for new construction or significant remodeling)
- Paint
- Plumbing
- Lights
- Filters
- Grounds maintenance items including
- Vehicle consumables (gas/oil/parts)
- Non-supply part of outsourced services
- Supply portion of outsourced biomedical contracts
- Supply cost associated with outsourced copy center contracts
- Capital equipment
- Capital portion of any supply agreements
- Instrument costs incurred in a service start-up
- Construction/renovation projects
- Service agreements
- Maintenance agreements
- Repair parts including
- Medical equipment
- Non-medical equipment
- That portion of maintenance agreements for repair parts
- Other purchased services
- Regulated medical waste & municipal waste
- Marketing materials (brochures, give-aways)
- Rentals and capital leases
- Expenses related to operating leases
- Reference lab costs
- Laundry (except linen replacement costs if included)
- Depreciation and amortization
- Utilities including fuel for internally generated utilities (oil)
- Telecommunications, pagers, cell phones, answering services
- Travel, education training/education
- Dues & subscriptions
- Recruiting, promotion, marketing
- Interest expense
- Taxes (other than sales taxes), licenses, regulatory fees
- Outside contractor fees, consulting fees, temp help
- Bond costs
- Professional fees/services
- A/R collections services
- Wages, salaries, benefits
- Postage
- Provision for bad debts/doubtful collections
- Physician fees
- Insurance premium and payments
- Messenger Service
Posted September 29, 2005