Materials Management in Primary Health Centre: A Process Mapping

Study in Maharashtra
Nidhi Gupta

Citation:

Gupta N. (2013). Materials Management at the Primary Health Centre in Maharashtra: A

Process mapping study; In Primary Health Centres in Rural Health; S. Siva Raju and P. M.
Sandhya Rani (Eds.); (ISBN 10: 9350500736 / ISBN 13: 9789350500736)

Introduction
Material’s management mechanisms are mostly well laid-out in corporate hospitals
with dedicated software for material coding and inventory management. However, most
state governments have not laid any concrete guidelines for management of materials
like drugs, vaccines, equipment etc in public hospitals. Studying this phenomenon
becomes all the more important because various studies and surveys like District Level
Household Survey-3 have shown that, drug shortage and inconsistent supply of drugs,
non-provision of laboratory investigations in public facilities is an important reason for
non-utilisation of public health facilities. In most public health facilities the reasons for
non-provision of laboratory investigations is either non-functional equipment, non-
availability of reagents and at times shortage of human resource. At one end there are
no clear guidelines for materials management in public health facilities, and on the
other end very few studies (Roy & Jha, n.d.; Aggrawal, 1994; Gaur, 1994-6) have
documented the process in materials management at public health facilities. Against
this backdrop, a process mapping study was undertaken, to understand materials
management at a Primary Health Centre (PHC), in Baramati taluka of Pune district in
Maharashtra in the year 2009.

Materials in its broader sense refer to Drugs, Vaccines, Instruments, Equipments,

Laboratory, X-ray films and reagents, Stationary, Vehicles, Furniture, Linen etc.
However, the focus of this study was on drugs, vaccines, chemicals and equipment
management. The management of materials encompass their procurement process,
storage, distribution, maintenance and disposal (Mahajan, 2008). This paper maps
processes involved in materials management at PHC. As this study was undertaken in
2009, there was an opportunity to elicit the difference made by resources made
available under National Rural Health Mission (NRHM).
Objectives of the study
1. To study the processes involved in the procurement, storage, inventory control,
distribution and disposal of the drugs; and management of equipment at Public
Health Centre.

2. To identify the gaps in the process of management of drugs and equipment and
provide recommendations to improve provision of services at public health
facilities.

Methodology
This study is a exploratory study to examine the processes involved in the procurement,
storage, maintenance, distribution and disposal of materials especially drugs and
equipment at the Primary Health Center level. Data were collected through predesigned
checklist and semi-structured interviews of multiple stakeholders.

Stakeholders:

• Providers: Medical officer, Health supervisor for various national health

programmes and Pharmacist.

In-depth interview of the Pharmacist who handles the drugs store at the PHC was taken
to understand the processes involved in the procurement of the drugs from demand or
requirement calculation to procurement, storage, distribution of the materials to
different departments and disposal if any.

Medical officer at the PHC was interviewed to understand the processes in the
procurement of the drugs and equipment that are not supplied by the district health
office. Local procurement as well as financing of the equipment and the drugs was
understood at this level. Interviews with the Medical officer (MO), provided a complete
picture about the process because they are the signatory to initiate the process of
procurement, distribution and disposal etc. Without the permission of the MO at PHC
the pharmacist cannot proceed with any of the process. Further information on the
distribution of drugs as well as the funds for maintenance of the equipment was
understood during the course of interaction with different stakeholders.

The data were collected through semi-structured-interviews, with multiple

stakeholders based on the guidelines developed (based on material management cycle)
and Indian Public Health Standards (IPHS) (DGHS, 2006). The data was analysed and
the findings are presented as four distinct themes as they form the main steps in the
materials management cycle (procurement, storage, distribution and disposal).

There are different types of Materials in the Hospitals like: Drugs, Instruments,
Equipments, Laboratory reagents, X-ray films and reagents, Stationary, Vehicles,
Furniture, Linen etc. This study has been focused on the management of drugs,
equipments and instruments in detail with some information about other materials as
well. The above materials have been chosen in lieu of the fact that these are the most
important materials that the hospital needs for performing its primary functions.

Findings:

1 Material Planning and Procurement

1.1 Drug Demand Forecast:

The total utilisation in the last year is reviewed and 10% is added to the total utilisation
of drugs in previous year to formulate the demand for the current year. This calculated
demand is sent to the District Health Office (DHO) at Zila Parishad. The demand
requisition is then forwarded to the Pharmacist in the DHO office and the drugs are then
supplied to the PHC from the Main or the Central Store at Pune.

1.2 Drug Procurement:

The drugs are procured by the PHC from five different channels:

1. Drugs received from the Central Store as Annual Drugs Stock,

2. Drugs received as IPHS supply, in addition to annual stock.
3. Drugs received by sending a requisition/ indent to DHO.
4. Drugs for national health programmes, NLEP 1 and RNTCP 2 are received
from different sources discussed below.
5. Local procurement of drugs by the PHC in financial concurrence with Rogi
Kalyan Samiti (RKS).

1 National Leprosy Eradication Programme

2 Revised National Tuberculosis Control Programme
1.2.1 DRUGS RECEIVED FROM THE CENTRAL DRUGS STORE:

Though the drug demand is sent to the DHO at Zila Parishad, the drugs stock are sent to
PHCs based on the criteria set by the DHO office and not customised according to the
demand of a particular PHC. This stock is called the Annual Medicine Stock.

Distribution of Drugs in the Rural Health System

MAIN/ CENTRAL STORE,

KOREGAON Park, Pune

REQUISITION FOR DRUG SUPPLY

DISTRICT HEALTH OFFICE, ZILA
FLOW OF DRUGS

PARISHAD

PHC

SUB CENTRE

ANNUAL MEDICINE STOCK

The medicines are supplied to the PHC on the criterion set by the DHO at Zila Parishad.
The Zilla Parishad has categorised the PHCs in three categories:

 Group A – very High OPD PHCs i.e. PHCs with more than 1000 OPD a month.
 Group B- PHCs with medium OPD (more than 500 OPD per month)
 Group C- PHCs with less than 500 OPD per month

The Zilla Parishad sends a stock of Annual medicines to the PHCs based on this criterion
eg. The PHC under study falls in the Group A as its OPD per month is more than 1100
(one thousand one hundred) patients. Hence, this PHC receives good stock of medicines.
This stock is called the Annual Stock of Medicines. This stock is sent two to three
times in a year. Hence, this medicine is received as per the criterion set by the Zilla
Parishad and not as per demand sent by the PHC.

1.2.2 MEDICINE UNDER IPHS

Some stock of medicines is sent under the IPHS, as this PHC has been chosen for up-
gradation under IPHS. These medicines received are in addition to the medicines
received under annual stock from the central drugs store.

1.2.3 MEDICINES RECIEVED BY SENDING A REQUISITION/ INDENT TO DHO

An indent is sent to the DHO in case some medicine stock is depleting. The pharmacist
at the DHO checks if the medicines requested by the PHC are available in the central
store at Pune. They issue a voucher against the requisition and send the supply of the
medicine according to the stock availability at their warehouse.

COLLECTION OF MEDICINE FROM THE CENTRAL STORE, PUNE

Once, the medicine stock is ready for despatch, the Pharmacist at the DHO calls the PHC
and asks them to send a responsible person, an attendant in a jeep to receive the
medicines.

1.2.4 PROCUREMENT OF MEDICINES OF NATIONAL HEALTH PROGRAMMES

(RNTCP/ NLEP)

The medicines for RNTCP (DOTS), is distributed through Rural Hospital Baramati. This
hospital acts as the distribution point for RNTCP medicine stock. A requisition is sent to
the Medical Superintendent at the Rural Hospital (RH) and medicines are issued against
that indent. The staff from the PHC goes and collects the medicines from the RH and
enters it in the stock register (separate register for RNTCP). Medicines for NLEP are
received from the DHO, Pune on sending an indent by hand to the Zilla Parishad office.
This medicine is handed over immediately without any delay to the staff that goes with
the indent. There is no shortage of medicines for DOTS or MDT for NLEP.

1.2.5 LOCAL PROCUREMENT OF MEDICINE BY THE PHC

In case of emergency as well as at times when the stock of medicine is not available at
the main store at Pune, the medicines are purchased locally. Guidelines have been laid
by the state health department for local procurement of medicines.

• In case the cost of medicine to be purchased is below one thousand rupee:

The medicines can be purchased from local distributers. The price of the
medicine should not exceed the Rate Contract provided by the Zilla Parishad
office (DHO). The DHO provides a list of the medicines with the list of the
vendors and the Rate contract price list for medicines, equipment and other
supplies required by the PHC. The Medical officer (MO) sanctions the application
written by the pharmacist and then the medicines are procured by the
Pharmacist with the help of the clerk for the payment to the local distributor. The
distributer is made payment by cheque signed by the MO. Funds from the
Panchyat Samiti are also utilised to purchase medicines.

• In case the cost of medicine to be purchased are more than one thousand
rupees: The Medical officer keeps this issue as a discussion in the Rogi Kalyan
Samiti (RKS) meeting and asks the RKS members to release the money for the
same. If the committee feels that it is important to procure the medicines locally
and the community is facing problems then the RKS sanctions the funds
according to the rate contract (RC) list provided by the Zilla Parishad.

• If the cost of the medicine required is more than fifteen thousand rupees:
An advertisement is published in local newspapers and quotations are asked for
the same. Minimum three quotations are collected and the MO in collaboration
with the RKS members negotiates and finalise the vendor.

• If the cost of medicine is less than fifteen thousand and more than one
thousand rupees: The local vendors are contacted and at least three quotations
are invited. Then after negotiation if the cost is less than the RC, then the tender
is given to that vendor and payment is made by cheque to the vendor after
delivery of the medicines.
2 STOCK ENTRY AND STORAGE:
The stock is entered in various pre-designated registers:

a. Stock register for tablets, capsules, syrups

b. Stock register for surgical equipment, Ayurvedic medicines, ointment, injections

c. Stock register for NLEP medicine

d. Stock register for RNTCP medicine

These registers have separate columns for entry of stock received and disbursed from
the stores. The Performa of the stock register is displayed below:

Date Name of Quantity Total Date Stock Quantity Total

medicine of quantity Issued to of quantity
medicine balance department medicine balance
received disbursed

Other important registers where entries pertaining to materials are made are as
follows:

Expiry Date Register – this register is updated as soon as new stock is received by the
pharmacist. This register is constantly reviewed by the Pharmacist to check the near
expiry date drugs. The near expiry date drugs are the drugs whose expiry date is within
three months. In case any such medicines are available, then the Medical officer is
informed and the estimation of the utilisation is predicted. If the MO feels that these
medicines can be utilised in the PHC itself then the medicines are retained. Otherwise,
the nearby PHCs are approached and enquired if they have a requirement for the same,
or the RH is given the medicine against the indent and hence, it is made sure that the
medicines are utilised and not wasted.

Drug Storage
The materials are stacked in the store. There is one room in the PHC, which is
designated to store the materials ( drugs and instruments) except linen. The Pharmacist
is the in-charge of the stores and the sister is in-charge of the instruments and the
injections in the stores.

Material Identification code (MIC): There is no proper mechanism in place or any

coding in place to identify the material in the stores. However the stores are well
maintained under the guidance of the health supervisor, who is an experienced person
in the PHC. The medicines have been arranged in the store in different racks and the
medicines are well displayed. Proper demarcation and space allocation of the shelves of
the racks has been done under the following heads: Capsules; Tablets; Syrups;
Paediatric medicines; Ointments; External use medicines; Injections; Surgical supplies;
Ayurvedic medicines; IV fluids and Local purchase medicines. All these medicines are
arranged in alphabetical order in the shelves to help identify the medicines. The store
was very clean and well maintained.

STOCK TAKING and AUDITS

There are various internal and external audits mechanisms in addition to regular stock
taking by the pharmacist at the PHC. On regular basis, the Pharmacist does physical
stock taking once a month to ensure that the stock on records is in synch with the
physical stock. There is close vigilance on the stock as many audits take place regularly
due to its close proximity to the Rural Hospital.

Stock taking by Medical Officer

The Medical Officer checks the entries in the registers by verifying it with the physical
stock once a month. The stock-taking is done randomly. Some medicines are picked
randomly and the medicine stock is verified. This supervision is done as a surprise
check by the MO. The Taluka Health Officer checks the stock in the stores physically
once a month according to the new guidelines. These guidelines have been in place
since three months.

There is an audit from the DHO once a quarter. The stock is checked randomly by
taking physical stock and comparing it with the records. In case the stock is less than
what is shown in the register, the money is recovered from the pharmacist salary and in
case the stock is more than the mentioned in register then disciplinary action is taken
against the pharmacist.

Internal District Audit

This is an audit in which physical verification of the stock is done once a year. It is also a
surprise visit.

District level Audit- A team from the state department takes the physical stock of all
the material in the stores and prepares a stock discrepancy report. In case the stock is
less than what is recorded in the register, the money is recovered from the pharmacist
salary and in case the stock is more than recorded then disciplinary action is taken
against the pharmacist.

Agency scheme audit - It is a government audit that takes place once in four years.
During this audit complete physical stock taking is done and the stock is verified against
the records.

Panchyat Raj Committee Audit – this audit takes place to check the quality of services
rendered to the community. One of the components of the audit is stock verification.
This audit committee is a part of the Member of Legislative Assembly cabinet. This
committee has a lot of powers, and they can even question the CEO of the Zilla Parishad
and if they feel that the services are not rendered as per the standards set then they can
even suspend the CEO of the Zilla Parishad.

Ayurvedic medicine supply

In addition to allopathic medicine supply, ayurvedic medicines are also supplied to IPHS
certified PHCs, as a part of integration and mainstreaming of AYUSH 3 under NRHM. The
criterion is that, the PHC that is IPHS certified or is in the process of IPHS certification,
should have an Ayurvedic doctor. In lieu of this criterion, the DHO sends ayurvedic
medicines to these PHCs, though many of these IPHS upgrading PHCs have no Ayurvedic
doctor. In order to utilise the Ayurvedic medicines, the allopathic doctors prescribe
those medicines and the pharmacy disburses these medicines.

3 AYUSH: Ayurveda, Unani, Siddha and Yoga

3 Distribution of Drugs and instruments

The materials are distributed within different wards of the PHC as well as to the sub-
centres functioning under the PHC.

Drug distribution within PHC: The stock of the medicine required for a week is taken
out from the stores of the PHC and an internal indent is prepared for the same in the
name of the OPD (issued to OPD) and is entered in the stock register. Similarly when the
injections, medicines and instruments are issued to the other wards like IPD, OT, Sub-
Centres, an indent for the same is issued and the materials are handed over to the
concerned person in that department.

There are two registers that have the details of the daily expenditure of the materials:

 The Daily Expenditure Register (DRUGS) - maintained by Pharmacist

 The Daily Expenditure Register (INJECTIONS) - maintained by sister-in-charge

Drug distribution to Sub-Centre:

There are two types of supplies to the sub centre from the PHC. There are annual
medicine supplies in the form of Drug Kit A, Drug Kit B and Drug Kit C for the Sub-
Centre. Each carton contains medicines for five thousand population for the sub-centre.
However, many sub centres cater to more than 5,000 population hence there is a
shortfall of the medicine stock. Then, they give a requisition to the PHC and the MO
sanctions the medicines to the Sub-Centre as per her judgement about the requirement
at the Sub-Centre. Apart from the medicines in the drug Kit A, B and C, the Disposable
Drug Kit (DDK) is also supplied to the Sub-Centre to be distributed to the ANC cases to
ensure a safe delivery whether at home or institution. If the delivery takes place in the
institution, the beneficiary returns the DDK to the Sub-Centre.

4 Material disposal

The drugs are seldom disposed at the PHC. Normally the medicines are utilised at the
PHC or distributed to RH or other PHCs so that the medicines are utilised and not
wasted. However, if at all any drugs cross the expiry date, they are either buried in a pit
or burnt.
Other Material Procurement and Maintenance

Equipment:

The equipment is supplied by the DHO office at the Zilla Parishad. Before NRHM, the
PHC never gave any indent or requirement for equipment to the DHO office. It was upto
the DHO office to decide and supply the equipment to the PHCs and SC. However now,
after the formation of RKS under NRHM, the equipments like shadowless lamps,
operation table have been procured by the PHC. The process for the procurements is the
same as for the drugs. If the cost is more than Rs 1000 and below Rs 25,000, then three
quotations are taken and the deal is finalised as per the Rate Contracts (RC). The rate
should be less than the rates mentioned in the RC, else vendors listed in the RC are
contacted for the supply.

For small maintenance services, local technicians are called and the funds from Rogi
Kalyan Samitis, Annual Maintenance Grant (AMG) are utilised for maintenance.

Linen:

Due to very less IPD, there has been no need to purchase linen; however, some linen will
be purchased once the PHC shifts to the new building and IPD turnover increases. The
linen is sent for laundry locally. Annually, some blankets, linen, mattresses are sent to
the PHC by the DHO. This is sent not on the basis of request by the PHC but by the DHO
office based on the stock available in the DHO stores.

Furniture:

The furniture has been sent from the DHO office at the time of inauguration of the PHC.
Since then no new furniture had been procured or received. Since last year, (from the
time this PHC got IPHS accredited), some chairs in the waiting room have been
purchased under the IPHS fund. The old furniture has been recorded in the dead stock
register and a certificate is attached annually to state that although the furniture is in
the dead stock, however, it is in working condition.

Disposal of Furniture / Equipments

These materials are sold in scrap once a letter from the DHO is received. The money
collected will be deposited in the Panchyat Samiti account of the PHC. However, till date
none of the equipments or furniture has been laid off.

Findings from the beneficiaries

The people were generally satisfied with the services at the PHC, however, the supply of
paediatric medicine was inadequate and inconsistent. This was a general concern of the
people. The tonics for the children were available but medicines like syrup paracetamol
etc. for children were usually not available. Doctor does not admit patients requiring
Indoor patient care in the PHC. MO usually advises the patients to seek care in private
hospital for inpatient care. There are no laboratory investigations done in the PHC. Only
malaria testing is done and the patients requiring other investigations were referred to
any private laboratory.

Discussion and Recommendations

Materials are one of the crucial cost components and hence its management has to be
given prime importance. The materials management need to be focussed as an
important component of the entire framework in NRHM implementation. Approach
adopted in material management at PHC levels is operational and is giving results,
However the same can be strengthened to give more efficiency in terms of reduced time
handling and reduction in cost incurred. Currently, a piecemeal approach for
management of materials has been adopted. Standard Operating Practises (SOPs) for
management of processes and activities in materials management have not been
formulated comprehensively in Maharashtra.

Guidelines for a few activities and processes in management of materials have been
formulated and promulgated, while a few processes have been neglected completely.
The process that have well laid criteria are as follows: local procurement of drugs,
annual medicine stock despatch to PHCs, multi-level audit and accountability
mechanisms, stock entry and disbursement mechanisms and store management. On the
other hand, certain processes need to be upgraded to meet their desired optimal levels,
like drug supply at PHC from central store completely ignores the demand forecast sent
by the PHC to DHO, absence of material identification coding at PHC, drug disposal
mechanisms etc.

Various unethical practises, like prescription and disbursal of ayurvedic medicines by

the medical officers without having competence to determine the benefits and
indications of ayurvedic medicines, should be immediately checked. Disposal of
medicines exceeding expiry date should be checked and well-laid guidelines for the
disposal according to bio-medical waste management should be implemented to check
the ill effects of disposal of biomedical waste openly.

The PHC has received sufficient fund, to meet the needs of the patients, under NRHM.
These funds are given under the sub heads of RKS and IPHS. Despite the current
situation of managed materials, there is a need to frame mechanisms to streamline
materials management and preventive maintenance to meet the increasing demands of
PHC services. Recommendations based on the gaps identified are as follows:

Demand forecasting: Demand is forecasted on an annual basis by the PHC considering

historical figure and a pre-deterimined /conceived growth rate. This is one of the
conventional methods to estimate demand in the material management books, However
in reality there are various paratmeters which should be accounted to arrive at demand
projections for the next year like:

a. Trends of medicines used in last 2 years

b. Prevalence of certain type of diseases in that region
c. The age profile of beneficiaries
d. The population growth for the area under PHC

These parameters should be added in the existing Health Management Information

System (HMIS) software, so that the demand can be calculated automatically on
scientific basis based on above- mentioned criteria.

Annual Medicine Stock: At present the annual quota of medicines is as decided by the
DHO, which seems to be top-down approach and the relationship of medicines
projected by demand forecast and the annual medicine quota allocated is hard to arrive
at. The quota should consider the demand forecast given by PHC.
Material Identification coding (MIC) mechanism: This will help in identifying the
materials (like drugs) without error. It is very important to reduce time in identification
and it helps in proper storage (placing) of the materials eg. at times when the
pharmacist is not around, it becomes easy for any other staff to locate the medicine if a
coding mechanism is in place. The coding or tagging should be fed in a software
(provided by the state health department) to facilitate error free management of
materials. It also helps in tractability. The tagging philosophy for the medicines need to
be formulated and standardised, which will help in easy tracking of medicines from PHC
store to the beneficiaries.

Stock-taking: The stock-taking should become more systematic with a provision of

perpetual inventory system or continuous inventory system (physical stock taking daily
or weekly) for expensive materials and periodic inventory system for dead stock and
less expensive drugs and materials. At the end a stock discrepancy report should be
prepared. It helps in checking pilferages and reducing the costs.

Source: (Mahajan, 2008)

Re-order points and buffer stocks: All PHC should have automatic re-order point. Re-
order point is one in which the indent is forwarded to DHO for that particular medicine
once it has reached to critical levels. This is done to ensure that PHC do not run out of
stock in certain high usage (most commonly used) medicines and which have high lead-
time.

Supply chain: Supply chain efficiency needs to be improved and e-Supply chain needs
to be put in place which will help reduce the transaction cost and also help in tracking
the medicine usage trends for the PHC. E-supply chain can help the PHC pharmacist to
indent the stocks online, thereby avoiding the cost of sending manual indents to DHO
and the cost for duplicating the entries in hard register formats at each level. Similarly
DHO can review the indents and send their final demand sheet for each PHC to central
stores in e-format. This will help in reducing time delay at each end to transfer the
information from PHC to DHO to Central stores and vice versa apart from the human
cost involved who is otherwise involved in manual carrying of indents and medicines.
E-supply chain can also help in tracking the medicines for their expiry date and stock
available with each PHC would be available upfront with Central store which will help in
their upstream indent placements.

Proper Disposal of expired drugs: The procedure followed presently for the disposal
of drugs is hazardous as it is either buried or burnt. However, there should be a proper
procedure for the disposal based on bio-medical waste disposal guidelines and
legislation. Formal guideline should be set for the same at the earliest.

Preventive maintenance of the equipment should be introduced: It should be

introduced to reduce the breakdown of the equipment (ILR). This will help in providing
uninterrupted and quality services to the beneficiaries. There should be a standardised
Comprehensive annual maintenance contract (CAMC) of all the heavy equipments with
the provision of regular and emergency breakdown management.

Fixed Asset Life cycle concept: Life cycle policy for furniture needs to be formulated
defining the useful life of furniture at each PHC. The replacement policy of the fixed
asset, after its serviceable useful life, should be defined and the infrastructure
procurement should be done considering the serviceable useful life and not after its
breakdown.
Conclusion:
The general observation is that, there is ample amount of material and funds available
after the launch of NRHM, however there needs to be appropriate and well-laid
mechanisms for efficient utilisation of these resources. With the increased pace of
resource inflow, the mechanisation of work has increased at the PHC level. It has
enhanced the quality and quantity of health care service delivery that is the prime
objective of these facilities. The study findings suggest that the supply of drugs and
maintenance of equipment has improved after the launch of NRHM and local
procurement through community participation (in the form of RKS) is encouraged in
order to maintain consistent supply of medicines. Well-structured SOPs, based on the
recommendations made for comprehensive management of materials, would further
add value to the entire gamut of healthcare delivery system. Furthermore, this study
presents a case from the state of Maharashtra that is quiet progressive in terms of
health infrastructure, management as well as health outcomes. It would be beneficial to
have similar process documentation studies in other states to identify the gaps in
materials management and suggest ways to improve and streamline service delivery
and overcome regional disparities in health outcomes in the country.
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DGHS. (2006). Indian Public Health Standards (IPHS) for Primary Health Centres:
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Gaur, K. N. (1994-6). Study on the materials managementsystem for public health carein
the Jodhpur District of Rajasthan. Health Systems Development .

Mahajan, Y. C. (2008). Materials Management in Hospitals (Second ed.). unpublished.

Roy, C., & Jha, H. M. (n.d.). A study on the Logistics and Supply management system of
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