Question 1

Materials management focuses on the timely processing of laundry materials in the hospital.

Accepted Answer

The basic mission of materials management in the hospital setting is to direct and control the movement of goods in an efficient manner through the organization.

Question 2

In a typical hospital organization, the materials management function reports to the Chief Nursing Executive.

Accepted Answer

Despite the clinical impacts of supplies to patient care, materials management generally reports to the Chief Financial Officer.

Question 3

Materials management can be organized as either a cost center or a profit center.

Accepted Answer

There are potential revenues gains to be made from prudent management of medical and pharmaceutical supplies.

Question 4

Culturally, materials management is similar to housekeeping and maintenance.

Accepted Answer

Materials management, like housekeeping and maintenance, involves organizing, maintaining, and ensuring the efficient use of resources within an organization.

Question 5

Hospitals generally adopt one best markup percentage for fees associated with supplies.

Accepted Answer

There is no single acceptable markup percentage. Markup ratios need to be created comprehensively by understanding required profit levels, analyzing historical deduction rates, and modeling supply usage patterns.

Question 6

The purchasing function can represent a significant source of potential financial value to a hospital.

Accepted Answer

Since supplies are 50% of a hospital's expense budget, there are great opportunities in managing this cost element.

Question 7

Segregation of duties in the purchasing function entails implementation of a three way match process where steps in ordering, receiving, and paying for goods are handled by three separate persons.

Accepted Answer

Segregation of duties is a key internal control that ensures no single individual has control over all aspects of a transaction, reducing the risk of errors or fraud.

Question 8

A spend analysis includes all of the following characteristics except:

Accepted Answer

Spend analysis typically focuses on financial data related to vendors, items, and cost savings, not on the influence of physicians on vendors.

Question 9

Code sets that describe supply items include:

Accepted Answer

HCPCS (Healthcare Common Procedure Coding System) includes codes for a variety of services, including supply items.

Question 10

Which of the following is not a technology used to capture supply charges in hospitals?

Accepted Answer

The answer of Which of the following is not a...

Question 11

Characteristics of a Group Purchasing Organization (GPO) include which of the following?

Accepted Answer

Characteristics of a Group Purchasing Organization (GPO) include the following:
a. They are similar in concept to unions which collectively bargain for favorable prices and terms: This is true. GPOs aggregate the purchasing power of multiple organizations to negotiate better prices, discounts, and terms from suppliers and manufacturers, much like unions negotiate on behalf of their members for better wages and working conditions.
b. They work well in markets where there are few vendors: This statement is somewhat true. In markets with few vendors, GPOs can be particularly effective because they can leverage the collective buying power of their members to negotiate better deals with those limited suppliers. However, GPOs can also be effective in markets with many vendors by increasing competition among suppliers for the business of the GPO members.
c. They work less well where products are more standardized: This statement is not necessarily true. In fact, GPOs can work very well with standardized products because it is easier to aggregate demand and negotiate bulk purchases when product specifications are uniform. Standardization can lead to larger volume purchases, which are attractive to suppliers looking for guaranteed sales, allowing GPOs to secure competitive prices.
d. They compile best prices from among many vendors and provide a consolidated price list to member hospitals: This is true. One of the key functions of a GPO is to conduct research and negotiate contracts with suppliers to secure the best possible prices. They then provide this information to their members in the form of a consolidated price list, which simplifies the purchasing process for member organizations and ensures they benefit from the negotiated savings.
In summary, a Group Purchasing Organization (GPO) is designed to leverage collective buying power to secure favorable pricing and terms from suppliers, and they can be effective in various market conditions, including those with standardized products and both few or many vendors. They provide valuable services to their members by negotiating contracts and offering consolidated pricing information.

Question 12

Some future trends in hospital purchasing include all of the following except:

Accepted Answer

Hospitals are likely to move towards more standardization of products to streamline operations and reduce costs, rather than less standardization.

Question 13

Describe the major groups of customers served by hospital materials management and the supply chain.

Accepted Answer

The answer of Describe the major groups of customers served...

Question 14

Describe the concept of par levels and how they are implemented in hospitals.

Accepted Answer

The answer of Describe the concept of par levels and...

Question 15

Describe the effect of group purchasing organizations in the hospital supply chain.

Accepted Answer

The answer of Describe the effect of group purchasing organizations...

Question 16

Describe how appropriate segregation of duties can be implemented using information technology in the hospital supply chain.

Accepted Answer

The answer of Describe how appropriate segregation of duties can...

Quiz 16: Purchasing and Materials Management