Peking University First Hospital's Zhang Lulu: Medical Consumables Cost Control Is Not About Mechanical Usage Restriction, But Data-Driven, Cross-Disciplinary Collaboration!

On July 31, 2019, the General Office of the State Council issued the Notice on the Reform Plan for the Governance of High-Value Medical Consumables. The plan explicitly stipulated that by the end of 2019, all public medical institutions must implement “zero-markup” sales for medical consumables, with the selling prices of high-value medical consumables aligned with their procurement prices. This signifies that, two years after the comprehensive elimination of markups in the pharmaceutical sector, the “zero-markup” policy for medical consumables has been formally implemented. Given the substantial proportion of medical consumables in the current revenue structure of hospitals, the implementation of this policy will have a significant impact on the income of public hospitals.

In contrast, the operational performance of public hospitals in recent years has been far from optimistic. According to the “2019 HIA Hospital Operations Analysis Report” released by the HIA Alliance in October 2019, the average revenue growth of tertiary public hospitals in China showed a slowing trend, with revenue growth turning negative for the first time in 2018, placing these hospitals at a loss. The sudden outbreak of the COVID-19 pandemic in 2020 undoubtedly further exacerbated the deteriorating operational situation of hospitals.

Amid such a challenging landscape, what measures can hospitals adopt to strengthen medical supply management and achieve lean operations? Extracting value from data may offer a promising approach. In September 2020, Zhang Lulu, Deputy Director of the Medical Equipment Department at Peking University First Hospital (hereinafter referred to as “PKU First Hospital”), presented in the Wanghai Kangxin [5A Supply Chain · Master’s Perspective] live-stream series a clinical specialty-focused medical supply management framework grounded in cost control. She provided an in-depth analysis of the construction pathways and methodologies for specialized, data-driven management of high-value medical supplies—led by orthopedics—from dimensions such as “how to manage, how to stock, and how to evaluate.”

Under the overarching framework of China’s healthcare reform, which integrates medical services, health insurance, and pharmaceuticals, the pace of reform has been uneven. While pharmaceutical reforms have advanced aggressively, reforms for medical consumables have generally lagged behind. In light of the significant achievements in pharmaceutical reform, the state’s resolve to regulate medical consumables has intensified. If time is viewed as a progress bar, 2019 marked the beginning of the acceleration phase.

On June 19, 2019, the National Health Commission, in conjunction with the National Administration of Traditional Chinese Medicine, promulgated the “Administrative Measures for Medical Consumables in Medical Institutions (Trial),” hailed by the industry as “the most comprehensive set of regulations on consumables management in the past decade.” The document is highly detailed, providing a thorough overview of the entire lifecycle management of medical consumables—including selection, procurement, acceptance, and storage—and putting forward relatively specific regulatory requirements.

Six days later, the National Healthcare Security Administration issued the “Notice on Guiding Opinions for Standardization Work in Medical Security,” explicitly proposing the establishment of a unified national coding system for medical consumables with “uniqueness,” and formulating coding rules and methods comprising 20 digits divided into five segments. This revolution, likened to the transition from various “dialects” to “Mandarin,” has laid a solid foundation for the refined and standardized management of medical consumables in healthcare institutions.

Six months later, the results of the national unified coding system for medical consumables were released—the National Healthcare Security Administration announced the first batch of 30,332 unified codes for medical consumables, serving as foundational infrastructure to support CHS-DRG. Among these, orthopedics, a major category of high-value consumables, accounted for 18,537 items, representing more than half of the total.

Entering 2020, the state’s regulatory intensity over medical consumables continued to intensify. In April, just as public hospitals were beginning to recover from the pandemic, they faced the release of the “List of Administrative Law Enforcement Matters (2020 Edition)” by the National Healthcare Security Administration, which explicitly prioritized inspections on key issues such as the volume of consumable usage and compliance with centralized procurement practices. In June, the “Operational Manual for Performance Assessment of National Tertiary Public Hospitals (2020 Edition)” was released, adding a new assessment metric for the proportion of revenue from high-value consumables relative to total hospital revenue, thereby sharply increasing cost pressures on hospitals following the elimination of markups on medical supplies.

Underlying all these policies is a single core imperative: “control consumable costs, promote rational use, and free up room in the medical insurance fund.” In this context, medical consumables—once a revenue stream for hospitals and now reclassified as a cost item—are entering a phase of specialized, standardized, and data-driven management from a cost-control perspective.

However, medical consumables are widely recognized within the industry as “difficult to manage.” Zhang Lulu stated that high-value consumables, particularly orthopedic implants, possess strong professional specificity and uniqueness, posing significant challenges in management.

First, there is significant uncertainty in the stocking of orthopedic consumables. The stocking methods, quantities, specific brands, and models can only be determined at the time of surgery. In the past, orthopedic consumables were mostly managed through a direct procurement and delivery model. However, under the current policy environment that explicitly mandates the “separation of prescribing and dispensing,” the consumables management department must facilitate bidirectional coordination between clinical departments and suppliers, clearly define clinical needs, and ensure that supplier deliveries are both sufficient and timely.

Secondly, the management of orthopedic consumables is further complicated by severe "data silos." Due to the diversity of hospital information systems, data on consumables are scattered across multiple platforms, including anesthesia and surgery systems, Hospital Information Systems (HIS), and logistics management systems. This fragmentation prevents the formation of an effective traceability chain, making data-driven cost control virtually unattainable.

More critically, compared with medical equipment, hospitals have generally paid insufficient attention to consumables management. In the past, hospitals focused more on logistics and distribution services; now, with the sudden imperative to control consumables costs, many hospitals find themselves at a loss as to where to begin. Meanwhile, debates within the industry over cost-control models centered on “reducing usage, streamlining product varieties, and driving down prices” have remained heated.

“Cost control of medical consumables is by no means about prohibiting certain types of supplies, nor is it about mechanically restricting their usage; rather, it emphasizes refined, multidisciplinary management aligned with the concept of value-based healthcare.” In Zhang Lulu’s view, the management of medical consumables should not only focus on the products themselves but also return to patient needs and promote rational use. Hospitals must first identify which categories of consumables incur significant expenditures, while avoiding a “one-size-fits-all” approach. Instead, they should delve into specific clinical disciplines, enhance communication with clinical staff, and consistently ask “why.”

Meanwhile, Zhang Lulu also believes that consumables management must first break down data silos scattered across various “information islands” before the inherent value of data can be fully realized. “Hospitals need to thoroughly assess which stage of informatization development they are currently in. If foundational infrastructure is not yet in place, the first step should be to establish a solid and robust foundation. If data has already reached the standardization stage, the next step is to explore data interoperability. For instance, achieving standardized surgical procedures requires integration with the anesthesia information management system (AIMS), while streamlining billing necessitates seamless connectivity with the Hospital Information System (HIS). Only after achieving efficient data interoperability can hospitals engage in the continuous accumulation and enrichment of data, identify key management priorities through data analytics, and then explore effective solutions.”

Undoubtedly, data-driven approaches have been a highly popular topic in recent years. However, the healthcare industry lacks substantial reference models for practical implementation. One immutable rule is that data from individual systems or fragmented sources are worthless; only data that are interconnected and integrated across multiple systems hold meaningful value.

This principle is vividly demonstrated in the management practices of Peking University First Hospital. According to Zhang Lulu, to achieve closed-loop management of orthopedic consumables and comprehensive data capture across the entire supply chain, the hospital has adopted “surgery” as the entry point. Based on standard surgical procedures, it has established corresponding standardized kit packages. When clinicians initiate a surgical request, they select the appropriate kit package, which is then submitted to the Department of Medical Equipment for review. The department subsequently forwards the order to suppliers to complete the procurement of consumables. In this process, the Department of Medical Equipment primarily serves as a “link,” effectively connecting patients, physicians, and suppliers in an orderly manner, collaborating closely with clinical teams to facilitate smoother surgical operations.

Currently, Peking University First Hospital has achieved end-to-end closed-loop management for orthopedic surgeries and various orthopedic consumables—covering ordering, acceptance, intraoperative use, billing, and supplier settlement—by integrating systems such as the Anesthesia Information Management System (AIMS), Hospital Information System (HIS), and Operating Room Efficiency System (OES). The hospital also supports automatic billing via consumable barcode scanning and automatic inventory reduction in the OES system, which significantly improves consumables management efficiency while ensuring the authenticity, comprehensiveness, and validity of data acquisition.

With data support, Peking University First Hospital began drafting a data report on orthopedic consumables. Although it was the first attempt, the report’s practicality and guidance value gained widespread recognition. By comprehensively analyzing the entire supply chain management process—including surgical requests, inventory preparation, acceptance, and usage—the report provided data-driven recommendations to enhance compliance, mitigate supply risks, analyze clinical-engineering collaboration, identify cost-control points, drill down into surgical consumable usage, track physicians’ usage patterns, and assess brand substitutability, thereby empowering lean management of medical consumables.

Taking the processing of surgical request forms as an example, data analysis reveals that a portion of these forms are voided. In such cases, hospitals can promptly implement operational controls to intercept voided documents. Leveraging data interoperability and information technology support, this approach maximizes the assurance of surgical quality and patient safety.

Taking the inventory acceptance process as an example, a total of four suppliers were involved in all surgical cases that required restocking. Among them, Company C had the highest volume, indicating that the hospital should strengthen its supervision and management of Supplier C in the future, thereby providing effective data support for subsequent supplier selection.

Meanwhile, data from inventory acceptance checks can reveal significant discrepancies between the accepted quantities of consumables used by certain physicians and their actual usage rates, which fall below the departmental average. This highlights the need for hospitals to pay attention to sterilization costs. In response, the Department of Medical Equipment at Peking University First Hospital will collaborate with the Medical Administration Department to communicate with lead surgeons, determining whether these discrepancies stem from patient-specific factors or individual usage habits, thereby guiding the management focus of the Department of Medical Equipment.

Any uncontrolled demand will be infinitely amplified, and health insurance is no exception. For hospital consumable management, health insurance control drives the rationalization of consumable usage and the continuous optimization of cost-effectiveness in procurement. Hospitals need to think from the perspective of value-based healthcare, providing more discipline-specific professional analysis and evaluation, thereby continuously optimizing the consumable utilization model, ultimately achieving the final goal of “rational selection and appropriate use of consumables.” From the dimension of hospital supply chain management, constructing a full-chain management solution for medical supplies featuring “optimal selection, optimal procurement, optimal supply, optimal management, and optimal evaluation” may become the new direction and pathway for future hospital management.

Certainly, this is a long-term development process that requires solidifying foundational information work, effectively supporting clinical practice, and fulfilling the role of a vital link. By empowering the supply chain with data, we can reduce costs while providing higher-quality diagnostic and therapeutic services to patients, thereby fostering a culture of value-based care and strengthening the hospital’s core medical competitiveness.