Considerations and Best Practices for Building a Successful Hospital Item Master

By Kathy Wasner, CMRP
Vizient Consulting Director

The hospital item master is a central repository of information for all the materials, suppliers and equipment used in a hospital — in essence, it is the source of truth for supply chain and finance to assist in managing inventory, ordering new supplies, tracking costs, and ensuring that the right materials are available when and where needed.   

The item master touches all departments and can range from a few thousand-line items to several thousand-line items. Item numbers are assigned to medical supplies, equipment, pharmaceuticals, and other types of nonmedical supplies like cleaning products, food and office supplies, to name a few.
Considering the importance of the item master, it is crucial to understand some of the problems that can occur and how to combat them to build the most successful version possible.

Common problems

Lack of accuracy is often one of the biggest problems with the item master. If it is not kept up to date, it can become inaccurate, leading to problems with inventory management and the availability of supplies. If it is tied to revenue codes, it can result in under or over charging. The lack of a consistent nomenclature can lead to the wrong product being ordered and the extra expense of having to return and reorder product. Additionally, poor data quality can lead to errors that negatively impact patient care.

Lack of standardization with data/information inputs in an item master can also present challenges — if different locations or departments within a health system use different methods for managing their item master, it can be difficult to share information and track the use of supplies. Similarly, limited integration with the hospital’s financial and billing systems can mean it’s difficult to see the complete picture of its operations.

Other common problems include:

• Product changes: If the manufacturer changes formulation or design, then the reorder number can change along with the cost and the number per unit of measure (UOM).
• Distributor changes: If you change primary distributors, the distributor may have their own numbering convention — meaning the package will have the manufacturer’s reorder number while the packing slip will contain the distributor assigned number.
• Company mergers/acquisitions: When a company is purchased by another, the item master should reflect the new company/manufacturer name. In some cases, the reorder number also changes, as does the quantity in the UOM.
• Duplications: These can be caused by the end user’s inability to find the product, resulting in another item number being assigned by the buyer.
• UOM issues:  How is the quantity of packaging entered into the system? If the packaging string is 10 boxes of 100 in a case, is the quantity per UOM entered as 1, 10 or 1,000? Each system should determine the best practice and follow it.

Ensuring the accuracy of the item master

It also is crucial to:

• Normalize your vendor list and manufacturer list: Create a master list and use the same name consistently. Abbreviations, if used, should be standardized. Update this list as part of the item master review. 
• Train staff on how to use the item master: Proper training can help ensure that staff know how to use the item master correctly and can help to prevent errors from occurring. If the end user can’t find a product quickly in the item master, a request for the item will be sent to materials management, risking duplication.
• Limit one-time purchases: This should only occur for items that are truly one-time purchases —not non-stock items that aren’t in the item catalog but will be ordered again.

Building a successful item master

First, determine the scope of the master. Decide what items you want to include — such as medical supplies, cleaning supplies, equipment, implants or pharmaceuticals — then pull your purchasing history for the past 12 to 24 months and filter to determine which items were purchased most frequently.  

Next, gather information about the items that you want to include, such as the item description, vendor, manufacturer, reorder numbers, size, UOM and cost. It’s helpful to use a product classification such as the UNSPSC code — a home-grown classification system may work with smaller item masters but using the industry standard classification ensures continuity. Organizing the information in a logical way by UNSPSC code and spend category will make it easier to find information. 

Additionally, you should select a database management system to store and manage the item master with current and future needs in mind. Virtual item masters can be linked to other systems, such as the hospital’s electronic medical record (EMR) or the financial management system. Enter the information into the database, recheck each entry before accepting it and build requisition templates for end users. Taking this extra step will ensure that on-contract products and physician preference items are easy to locate. Building a hospital item master requires careful planning, consistency and attention to detail in order to ensure that the database is accurate, comprehensive and useful.