Case Study: Capacity Planning at Arnold Palmer Hospital
Video Case: JIT at Arnold Palmer Hospital 1. Read the case that follows. 2. View the video tour of Arnold Palmer Hospital that addresses this issue. (http://media.pearsoncmg.com/ph/bp/bp_heizer_opsmgmt_8/chapter_content/video_clips/vidclips16_03.html) 3. If you wish to have further background, reread the material in this chapter of the text. 4. Answer the questions about the case, and if your instructor wishes, email them to him or her.
Orlando’s Arnold Palmer Hospital, founded in 1989, specializes in treatment of women and children and is renowned for its high quality rankings (top 10% of 2000 benchmarked hospitals), its labor and delivery volume (more than 10,000 births per year, and growing), and its neonatal intensive care unit (5th highest survival rates in the nation). But quality medical practices and high patient satisfaction require costly inventory—some $30 million per year and thousands of SKUs. With pressure on medical care to manage and reduce costs, Arnold Palmer Hospital has turned toward controlling its inventory with just-in-time (JIT) techniques.
Within the hospital, for example, drugs are now distributed at nursing workstations via dispensing machines (almost like vending machines) that electronically track patient usage and post the related charge to each patient. The dispensing stations are refilled each night, based on patient demand and prescriptions written by doctors.
To address JIT issues externally, Arnold Palmer Hospital turned toward a major distribution partner, McKesson General Medical, which as a first-tier supplier provides the hospital with about one quarter of all its medical/surgical inventory. McKesson supplies sponges, basins, towels, mayo stand covers, syringes, and hundreds of other medical/surgical items. To ensure coordinated daily delivery of inventory purchased from McKesson, an account executive and two service personnel have been assigned full-time to the hospital. The result has been a drop in
Orlando’s Arnold Palmer Hospital, founded in 1989, specializes in treatment of women and children and is renowned for its high quality rankings (top 10% of 2000 benchmarked hospitals), its labor and delivery volume (more than 10,000 births per year, and growing), and its neonatal intensive care unit (5th highest survival rates in the nation). But quality medical practices and high patient satisfaction require costly inventory—some $30 million per year and thousands of SKUs. With pressure on medical care to manage and reduce costs, Arnold Palmer Hospital has turned toward controlling its inventory with just-in-time (JIT) techniques.
Within the hospital, for example, drugs are now distributed at nursing workstations via dispensing machines (almost like vending machines) that electronically track patient usage and post the related charge to each patient. The dispensing stations are refilled each night, based on patient demand and prescriptions written by doctors.
To address JIT issues externally, Arnold Palmer Hospital turned toward a major distribution partner, McKesson General Medical, which as a first-tier supplier provides the hospital with about one quarter of all its medical/surgical inventory. McKesson supplies sponges, basins, towels, mayo stand covers, syringes, and hundreds of other medical/surgical items. To ensure coordinated daily delivery of inventory purchased from McKesson, an account executive and two service personnel have been assigned full-time to the hospital. The result has been a drop in