THE IMPACT OF REVERSE LOGISTICS IN PUBLIC HOSPITALS; A CASE OF KAMUZU CENTRAL HOSPITAL AND NTCHISI DISTRICT HOSPITAL
DORICA C. SALAMBA CHIRWA
Submitted in partial fulfillment of the requirements for the degree of MSc Supply Chain Management
University of Bolton , Off Campus
The University of Bolton
23 April, 2015
Abstract
The Malawi Ministry of Health and its partners ensure that quality health care services are being offered in public hospitals, including the availability and accessibility of quality medicines that are in good condition, and that the hospitals are adequately stocked of pharmaceuticals for treating common illnesses. In spite of the efforts that the Ministry of Health has put in place to ensure efficiency in supply chain, and availability of medicines at all times, significant quantities of medicines and other medical supplies have been expiring in facility medicines store and warehouses, leading to a stock out of that product, on the other hand, overstocks of medicines have been experienced as they could not be consumed at certain particular time causing a challenge in supply chain as it is costly because most medicines end up expiring.
The study concludes that policy on waste management and reverse logistics has significant financial and operational advantages to the Malawi health pharmaceutical supply chain and in public hospitals. This is very important as it will reduce expiry of medicines in hospitals while overstocks shall be reallocated or redistributed within the system.
In this regard, the paper recommends immediate formulation of policy on reverse logistics procedures and waste management that would guide health workers to properly manage medicines in public hospitals. In addition, Ministry of health should build capacity in health workers that manage medicines so that they follow proper procedures of reverse logistics in case of stock imbalances and be able to make informed decisions.
The push system of distribution should be based on the actual needs of hospitals so as to minimize expiry of medicines in hospitals.
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Table of Contents
Abstract
Acronyms
Dedication
Acknowledgement
1.1Introduction
1.2Problem Statement
1.3Justification of Study
1.4Aim of the Study
1.4.1Specific Objectives
1.4.2Research Questions
1.5Format of the Study
1.5.1Chapter One
1.5.2Chapter Two
1.5.3Chapter Three
1.5.4Chapter Four
1.5.5Chapter Five
1.6Chapter Summary
CHAPTER 2: LITERATURE REVIEW
2.1Introduction
2.2Policy governing reverse Logistics in Malawi’s Health Commodities Supply Chain System
2.2.1Definitions of Reverse Logistics
2.2.2Information Sharing and collaboration
2.2.3Reverse Logistic in other Hospitals
2.3Malawi Supply Chain System
2.4Why Consider Reverse Logistics?
2.5Why Are Products Returned
2.6Management of Expired/Returned or Recalled Products
2.7Waste Management Practices
2.8Why Reverse Logistics Strategies
2.9Improving Process of Returns/Recalls
2.9.1Local Screening
2.9.2Collection
2.9.3Sorting
2.9.4Disposition
2.10Waste Management Policy
2.11Chapter Summary
CHAPTER 3: RESEARCH METHODOLOGY
3.1Introduction
3.2Research Philosophy
3.2.1Research Approach
3.2.2Research Strategy
3.3Sample size
3.4Data Technique and Collection
3.4.1Document review
3.4.2Expert Interview Guide
3.5Time Horizons
3.6Data Analysis
3.7Data Validity and Reliability
3.8Ethical Consideration
3.9Interpretation of Data
3.10Chapter Summary
CHAPTER 4: SURVEY FINDINGS AND DISCUSSION
4.1Introduction
4.2Findings from primary Data
4.2.1Reverse Logistics
4.2.2Management of Overstocks at Hospital level
4.2.3Reasons for Overstocks in Hospital Pharmacy
4.2.4Management of Expiries at Hospital level
4.2.5Challenges with Reverse Logistics
4.2.6Expert interview Guide
4.2.6.1Policy on Reverse Logistics
4.2.6.2Role of Partners and Stakeholders
4.3Findings from secondary Date
4.3.1Assessment of stock imbalances in fifty facilities
4.3.2Facilities experiencing stock imbalances per month in 2014
4.3.3Stock imbalance by Product
4.3.4Chapter Summary
CHAPTER 5: CONCLUSION AND RECOMMENDATIONS
5.1Introduction
5.2Conclusion
5.3Recommendations
Bibliography
APPENDICES
Appendix 1: Checklist for primary data Collection
Appendix 2: Approval Letters to undertake the study
a)Request letter to the Ministry of Health to collect data in health facilities for academic use
b)Letter from Ministry of Health to Health Facilities collect data in health facilities for academic use
Appendix 3: List of Facilities where secondary was collected
List of Tables
Table 1.1: Overstocked Medicines and Medical Supplies in CHAM facilities
List of Figures
Figure 2. 1: Cost of expiration in Mwanza, Chikhwawa and Thyolo among 30 commodities
Figure 2.2: Conceptual Framework
Figure 4.1: Reasons for overstocks
Figure 4.2: Management of Expiries
Figure 4.3: Challenges with Reverse Logistics
Figure 4.4: Comparative analysis of stock imbalance 2013/2014
Figure 4.5: Facilities experiencing stock imbalances per month in 2014
Figure 4.6: Comparative analysis of Facilities that experienced stock imbalance by product-2013/2014 amongst essential medicines, according to therapeutic use of medicines.
Figure 4.7: Comparative analysis of Facilities that experienced stock imbalance by product-2013/2014 amongst Anti-malarials.
Acronyms
3TCLamivudine
ABCabacavir
AIDSAcquired Immunodeficiency Syndrome
ARTAnti-retroviral Therapy
ARVsAnti-Retroviral
CHAIClinton Health Access Initiative
CHAMChristian Health Association of Malawi
CHBCCommunity Home-Based Care
CMSTCentral Medical Stores Trust
DANCEDDanish Co-operation for Environment and Development
DANIDADanish International Development Agency
DBSADevelopment Bank of Southern Africa
DFIDDepartment for International Development
FEFOfirst to expire first out
FICAFlanders International Cooperation Agency
GAVIGlobal Alliance for Vaccines International
GFGlobal Fund
GTZDeutsche Gesselschaft Fur Technische Zusammearbeit Gmbh
H/CHealth Centre
HIVHuman Immunodeficiency Virus
HTCHIV Testing and Counseling
HTSSHealth Technical Support Services
KfWKreditanstalt für Wiederaufbau (Reconstruction Credit Institute)
MoHMinistry of Health
MRIManchester Royal Infirmary hospital
MSHManagement Sciences for Health
NGONon-governmental Organization
O&MA Malawian Supply Chain consulting Firm
ODPPOffice of the Director of Public Procurement
PHCPrimary Health Care
PMPBPharmacy Medicines and Poisons Board
PMTCTPrevention of Mother-to-Child Transmission of HIV
QECHQueen Elizabeth Central Hospital
RHZrifampicin+ isoniazid+ pyrazinamide
RLReverse Logistics
SOPStandard Operating Procedures
SSDISupport to Service Delivery Integration
TVTelevision
UNFPAUnited Nations Population Fund
UNICEFUnited Nations Children’s Fund
USAIDUnited States Agency for International Development
USAID | DELIVER PROJECT: A USAID funded supply chain project
WHOWorld Health Organization
Dedication
This research paper is dedicated to my late dad, Lester Salamba who always encouraged me to work hard at school. May his soul Rest in Peace.
Acknowledgement
I would like to thank my supervisors Mr Peter Mwanza and Dr Farr, for the guidance and untiring support at the time of putting together this dissertation. Their knowledge in research approach and speed in providing feedback on work submitted for review was outstanding and invaluable in the success of this work.
I am grateful to my Husband, Sam, for his moral support during my module studies and at the time of assembling this dissertation. I thank God for him into my life.
To my dear mother, Grace Imelda Salamba and my lovely sister Dora Salamba Makwinja for the encouragement and untiring support during my entire study period. My entire family and friends, receive my gratitude for your support.
Lastly, but not least am grateful to Dr Frank Chimbwandira and Logistics team at the department of HIV and AIDS, who understood that l needed some days off from work in order to meet my academic requirements
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1.1Introduction
The Malawi Ministry of Health’s (MoH’s)publicsector healthcare system provideshealthcare services in three levels namely primary healthcare (in Health centers (H/C) and community clinics) and mostly located in rural areas; the secondary healthcare (district hospitals) which currently are twenty-eight in number; and lastly the tertiary level, with four Central Hospitals and one Mental Hospital. The Ministryand its partners ensure that these hospitals are adequately stocked of pharmaceuticals for treating common illnesses. The Central Medical Stores Trust (CMST) is the major supplier of essential medicines to all the public hospitals,while The Global Fund (GF) provides support in acquisition of HIV related commodities and anti-malarial medicines; USAID and UNFPA/DFID support with family planning commodities; GAVI, FICA,KfW and the government of Malawi have ensured vaccines are always available in-country; whereasDFID, Norway and KfW pooled together financial resources to procure essential medicines when the country had serious stock outs, just to mention a few with DFID singularly following up with a further eighteen months medicines project.
In recent years, the Malawi health supply chain system has seen mushrooming of donor-driven parallel distribution systems and mostly using either monthly or quarterly “push” replenishment systems. As for CMST commodities, hospitals “pull” monthly to top-up to three months of stock from its three regional warehouses strategically allocated according to political regions demarcating the country: Northern, Southern and Central. Each regional warehouse supplies medicines to health facilities in the corresponding political regional border.
A “Pull system” is where the decision on quantities to resupply facilities is arrived at by the person placing the order. In this system, the service delivery points order commodities as may be needed mostly based on what the hospital is able to consume at a particular period of time. “Logistics Handbook (2011). While “Push system” is where the decision on quantities to resupply facilities is determined by the person who fulfills the order. The Central level decides what commodities to push down and when to move or redistribute. This is the system that is being implemented by parallel supply chain to ensure availability of medicines in hospitals, clinics all the times.
Note should be taken that use of “Product” and “Commodity” have been interchangeable in the dissertation as both mean the same thing: Medicine or Medical Supply.
In spite of the efforts that the Ministry of Health has put in place to ensure efficiency in supply chain, and availability of medicines at all times, significant quantities of medicines and other medical supplies have been expiring in facility medicines store and warehouses, damaged due to non-compliance to proper storage management of medicinesleading to a stock out of that product, on the other hand, overstocks of medicineshave been experienced as they could not be consumed at certain particular time causing a challenge in supply chain as it is costly because most medicines end up expiring.
With the foregoing, it is therefore valuable to consider the proper ways of managing the stock imbalances in the public hospitals with focus on overstocks and expired medicines.
With this in mind, Reverse Logistics becomes key to the health supply chain system to help manage unused medicines due to either expiration or damages or oversupply to improve efficiency in supply chain. Up to now, the Ministry has not considered documentingprocedures for ‘proper reverse logistics. However, the department of HIV, under Ministry of Health is implementing a system called ‘relocation of ARVs’ within or in a neighboring district. This is where a facility that is stocked out of ARVs would actually report to district hospital for resupply while waiting for the next round of distribution or if facility has excess or expired stock would report to central level that would eventually facilitate redistribution or recollection for proper disposal, ART/PMTCT Guidelines (2014).
Reverse Logistics considers issues of management of expired and overstocks. According to Rogers et al, (2010) reverse logistics includes processes of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal.
If Reverse Logistics system is implemented in hospitals, it would ensure that proper procedures are in place to manage the overstocks through redistribution to recapture value, and to manage expiries or obsolete stocks by properly disposing them to prevent endangering the environment.
The study therefore focused on how public hospitals manage overstocks and expired/obsolete medicines, and made some recommendations to incorporate issues of reverse logistics in pharmaceutical supply chain.
1.2Problem Statement
The Ministry of Health policy on drug management accords only registered pharmacy personnel to manage medicines and medical supplies in all public hospitals. This cadre undergoes a though pre-service course on management of medicines including dispensing. Currently, the pharmacy cadre in Malawi is responsible for not only managing medicines and medical supplies but also analyzing and using logistics datafor decision-making. However with shortage of human resource to manage medicines, Medical Assistants, Nurses and Health Surveillance Assistance are also responsible for management of medicines and medical supplies in almost all the health facilities in the country.
The health system also provides that the district teams conduct supportive supervision in lower level health facilities regularly so that decisions on stock imbalances are handled properly within that level of care. However, reports from the districts show that this is not done due to resource constraints, and most health personnel at facility level do not have capacity to determineoverstocks besides failure to decide on what to do with them. Worsestill, expired medicines are hardly removed from shelves.
The mushrooming of parallel systems in the country coupled with poor coordination and the use of “push distribution system” by most of the parallel supply chains, has seen huge volumes of short shelf-life commodities being distributed to public health facilities resulting into expiry of most of these commodities. Some of the parallel systems have distributed slow-moving commodities, resulting into expiry. In addition, some facilities have received commodities they do not want but may be of importance in other facilities also resulting into expiration.
O&M with support from UNICEF conducted an assessment in sixty-three Christian Health Association of Malawi (CHAM) health facilities in December 2013 who noted that on average forty-four of the sixty-three health facilities were overstocked with 10 health commodities assessed, representing seventy per cent. Latest expiry date for these commodities was May 2014 and therefore it means a good proportion of these commodities expired before all were consumed.
Table 1.1: Overstocked Medicines and Medical Supplies in CHAM facilities
Commodity / #of Facilities(out of 63) / Percentage
Cotrimoxazole tablets / 47 / 75%
Doxycycline tablets / 51 / 81%
Erythromycin tablets / 43 / 68%
Promethazine tablets / 48 / 76%
Ferrous Sulphate / 42 / 67%
Hydrochlorothiazide tablets / 41 / 65%
Metronidazole tablets / 33 / 52%
Albendazole tablets / 52 / 83%
50% Dextrose / 46 / 73%
BBE paint / 39 / 62%
AVERAGE / 44.2 / 70%
Source: O & M, January 2014
While in Table 1.1 above, Doxycycline, Erythromycin, Cotrimoxazole and Metronidazole were among the overstocked commodities in CHAM facilities, a similar assessment in September 2013 noted that government hospitals were in need of the same medicines and medical supplies. This means an opportunity was missed to have re-distributed the overstocked commodities in CHAM before expiring. In Thyolo district, almost all the health facilities were lacking Hydrochlorothiazide tablets when other districts and CHAM facilities were overstocked.
The September 2014 HTSS monitoring report indicated that fifty-six percent of commodities in six hundred and thirty-two (632) health facilities were overstocked.
This proportion undoubtedly includes “slow-moving” commodities and short shelf-life commodities that are at risk of expiring even before use.
All this is experienced in an economy where the government budget alone cannot afford to cover all the required quantities of medicines to treat basic health conditions.
The foregoing triggers the need to study how the expired, damaged and overstocks are managed at public hospital level and suggest strategies of designing proper reverse logistics system in the health supply chain system that would direct proper procedures of managing expiries and overstocks.
1.3Justification of Study
The current health supply chain system does not pay much attention to reverse logistics and there are hazy regulations for management of expired, damaged medicines as well as disposal procedures, but none for management of stock imbalances (SOPs 2014). The only clause of regulation related to reverse logistics, outlines disposal of goods, old vehiclesand supplies ODPP policy 2012.
This has forced hospitals to makeshift procedures for disposal of medicines because there is no standard way of doing it. It is against this background that the researcher found it vital to conduct this study as it would endeavorto influence introduction of a proper reverse logistics into the Malawi health supply chain.
1.4Aim of the Study
The overall aim of the study was to assess the impact of reverse logistics in Malawi public hospitals.
1.4.1Specific Objectives
- To evaluate procedures of reverse logistics in public hospitals
- To assess challenges associated with reverse logistics in public hospitals
- To recommend strategies for the reverse logistics system in Malawi Health Supply chain system
1.4.2Research Questions
- How is reverse logistics done in public hospitals?
- What are the challenges of reverse logistics in public hospitals?
- What strategies should be developed for the implementation of reverse logistics in Malawi Health Supply Chain system?
1.5Format of the Study
1.5.1Chapter One
The study has five chapters with chapter one introducing the study and the background to the statement of the problem. It goes further to provide the aim and objectives of the study and research questions. Lastly the chapter also provides the justification of conducting the study and the chapter summary as well as study format.
1.5.2Chapter Two
Chapter two analyses the literature related to the study, the aim and objectives that has been sourced from supply chain experts who have written something on reverse logistics, books, journals and newspapers. Finally, the literature review chapter summary
1.5.3Chapter Three
Chapter three outlines the approach the study applied. It describes the research design, methodology for sampling, data collection techniques and tools that were used to collect data. Finally how the validity and reliability of the data was ascertained and limitations of the study.
1.5.4Chapter Four
Chapter four discusses the research findings mostly through graphs and pie charts that will assist in demonstrating trends in responses from different respondents. The findings also provide answers to the research questions
1.5.5Chapter Five
Chapter five provides the researcher’s conclusions and recommendations, based on the research findings. These demonstrates the findings from literature review and the responses from the supply chain experts of the public hospitals where the study took place.
1.6Chapter Summary
In this chapter, the researcher set out the framework for an investigation into the impact of reverse logistics in public hospitals, set out the goal, objectives and research questions. It further made statement on the justification of the study and finally the chapter presented the format of the study.