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Purchasing card system saves MUHA millions by Dick Peterson Public Relations The mission: Purchase goods and services for the Medical Center—including MUSC’s 600-bed hospital —with a purchasing staff of eight, and only four of them buyers. It was July 1, 2000. The possibility of a Medical University Hospital Authority loomed on the horizon. The Purchasing Services Office took the challenge. Members of the Medical University Hospital Authority Purchasing Office include Chad Chadwick, from left, Bert Red, Lee Gardner, Virgie Bryant-Green, Joe Logan, Karen Pressley, LaToya Vandyke, Phonicia Flowers, and Ivan Brooks. Bryant-Green displays the Palmetto Leadership Award from Bank of America. “First we had to scrutinize the old purchasing processes, define new ones, identify the costs and streamline the purchasing of supplies while ensuring safeguards against fraud and abuse,” said Purchasing Services Office manager Chad Chadwick. “The office established new contracts, administered the existing contracts through the transition, and answered questions from people throughout the Medical Center unfamiliar with the new purchasing function, policy and procedures.” But key to a mission accomplished was the use of Bank of America purchasing cards. “We had to maximize our efficiency,” Chadwick said. “By using the purchasing card system as a tool to accommodate not only small purchases, but as a payment mechanism for our prime vendors and other existing contracts, we have dramatically reduced the processing costs of doing business throughout the entire purchasing and payment process.”  There were some fears it couldn’t be done, but Joe Logan, Purchasing Office manager accepted the challenge. He could lose control of the money and fail audits. But instead, the purchasing card system has saved the authority more than $3 million and passed two audits.  “I’m glad the authority can now show greater operational efficiency and flexibility because of an idea that works and works well,” Logan said. Bank of America is glad too, glad enough to bestow on the Medical University Hospital Authority its Palmetto Leadership Award in recognition of being the highest dollar volume agency in the State of South Carolina. Logan and Virgie Bryant-Greene, buyer and assistant card program administrator, accepted the award at festivities in Columbia last month. The high volume comes from the purchasing cards’ used by 155 card holders in 55 departments throughout the Medical Center. Logan explained that at one time blanket releases were required to be entered on SmartStream as purchase orders, receivers were required to be forwarded and entered on SmartStream, invoices were required to be processed, and checks were required to be written for each transaction. The new approach gave the same authorized users the ability to streamline the process by handling the same blanket releases using the cost-efficient purchasing card.  Once our user departments recognized the benefits and ease of the process, they really liked it and solidly backed the new concept. With the card, a control document is created, the receipt/packing slip is attached and all the documentation is maintained in the department’s files by the department’s purchasing card liaison. The card-holder’s liaison allocates the transaction to the appropriate account number and cost center. Instead of 4,000 checks being written each month, one check is written to the Bank of America. From July 1, 2001, through June 30, 2002 there were 36,000 MUHA purchasing card transactions. Ninety-two percent of these transactions were under the Authority’s $2,500 small purchase limit. “The cost savings of processing these transactions, as compared to the old process has exceeded $3 million,” Logan said. “For example, instead of costing MUHA $133 per check payment by a purchasing order, now the cost is $35 per transaction. Logan added that  he owes the program’s success to balancing controls with flexibility by thinking outside of the box to identify and develop new uses for the card, and by closely monitoring the program. “The Authority’s business managers, cardholders and liaisons should be recognized for their hard work throughout the process.” Chadwick pointed out the fact that Accounts Payable, headed by Iola Powell, as part of the Purchasing Services group greatly enhanced the ability to move forward at a relatively fast pace with a lot of work and few problems that couldn’t be resolved. “We also received a lot of cooperation from Ralph Green and Denise Pickford. It was essential in that we closely cooperate and coordinate payments with Fiscal Services.” Chadwick credits Logan for being the absolute driving force behind developing the program to the point it is now and administering the purchasing card system to make sure that the program is not being abused. While the potential for abuse remains, he said, Logan regularly monitors the transactions for unusual activity. He has cancelled a few cards with no loss to the authority. Benefits of the Purchasing Card Orders are expedited Departmental Users have more control of purchases Managers can track their department’s expenditures daily SmartStream purchase orders are not required Receivers do not have to be entered on SmartStream New vendors do not have to be entered on SmartStream Invoices do not have to be processed in Accounts Payable Check-with-Orders are reduced Matching exceptions are reduced Credit holds are reduced Change orders are reduced Credits do not have to be processed in Accounts Payable Checks do not have to be printed and mailed Keying errors are reduced Payments to wrong vendors are reduced Double payments are reduced Payment discounts  Phone inquiries are reduced Catalyst Online is published weekly, updated as needed and improved from time to time by the MUSC Office of Public Relations for the faculty, employees and students of the Medical University of South Carolina. Catalyst Online editor, Kim Draughn, can be reached at 792-4107 or by email, catalyst@musc.edu. Editorial copy can be submitted to Catalyst Online and to The Catalyst in print by fax, 792-6723, or by email to petersnd@musc.edu or catalyst@musc.edu. To place an ad in The Catalyst hardcopy, call Community Press at 849-1778.