Healthcare Providers Aren’t Immune to Inventory Management Issues

Proper asset management is vital to the health of any supply chain organization, but it is especially critical to the financial health of non-acute healthcare facilities and the actual health of their patients.

According to Healthcare Advisory Board insights, approximately 95 percent of patient visits now take place in the non-acute facilities, yet 80 to 90 percent of healthcare spend occurs in hospitals per data from the CDC's National Center for Health Statistics. This disproportionate figure explains why ambulatory surgery centers (ASC), urgent care centers, rehabilitation clinics and long-term care facilities remain laser-focused on their spend as hospitals are starting to prioritize revenue generation over cost reductions. And, with supply costs higher than staffing costs for many ambulatory surgical centers, it’s no wonder that asset management performance is on the minds of non-acute facility administrators.

But even healthcare providers who choose to prioritize patient outcomes over operational costs would benefit from better inventory management capabilities, as inventory availability can affect patient outcomes.

The quality of patient care depends on your ability to get the right medical equipment and supplies to the right caregiver at the right time – whether that’s a prescription drug, an implant device or a new wound dressing. Struggling to locate certain equipment required for post-op rehab or finding out that you don’t have the supplies you need for a same-day surgery are not just inconveniences; they are costly consequences of poor inventory management, and they come at the patient’s expense.

That is why I often tell ASCs and other non-acute providers that “you have to spend more to save more.” Specifically, you have to spend more on technologies that provide real-time, around-the-clock visibility into the location and volume of your on-hand inventory in order to save more money on supplies and save more lives.

If it seems ironic that I’m advocating for ASCs, post-acute and long-term care facilities to increase investments on technology when I know how challenged they are by small budgets and tight margins, know that the costs of not investing in technology – of maintaining the status quo when it comes to asset management – will be far higher long-term than this single expense today.

Think about it…

Physicians, nurses and other members of your care team have a job to do, and it most likely does not entail inbound logistics or inventory counts. Given that many non-acute facilities are part of a larger health system, supply chain management and sourcing actions may not even take place on site. That means the people charged with purchasing the devices, equipment and supplies your healthcare providers and patients need are either relying on your team to tell them what to order (and when) or they are automatically re-ordering based on average utilization trends. While the first scenario is most ideal – it’s the best way to ensure you have the exact supplies you want and need at all times – it’s not necessarily realistic. (Remember, monitoring inventory is not the primary job description of the caregivers who rely on that inventory to do their jobs.)

Plus, the time that caregivers have to spend chasing down misplaced inventory or trying to figure out how to “make do” with available inventory can compromise the quality of patient care.

Therefore, automating your inventory management – or at least improving visibility into the levels and locations of your on-hand inventory and automating low quantity notifications across your network – can resolve two chronic pain points harming the health of your organization and your patients: wasteful spending and wasted time.

Implementing either a barcode or RFID-based inventory management system that leverages a combination of mobile computing, scanning, labeling and printing technologies will immediately empower you to:

1. Track your utilization by tracing the movement of every asset – The benefits of “track and trace” technology start at the beginning of your supply chain, but really multiply once those medical supplies, devices and drugs are delivered to the front (or back) door of your ASC or other non-acute care facility.

For example, RFID tagged-items such as wheelchairs, beds or IV stands can be located immediately via any internet-connected device. And barcode-labeled supply boxes or prescription bottles that are scanned and “inventoried” during put away can easily be found on a shelf by staff using a locationing app on the same clinical smartphone or rugged tablet that is being used to facilitate care team communications, manage patient records and administer other care functions.

However, expediting inventory retrieval is just one efficiency you’ll gain from implementing even the simplest “track and trace” system. You’ll also be able to track usage of every item within your four walls and know, via automated notifications, when remaining inventory levels drop to a certain threshold.  These shortage alerts will avoid the out-of-stock scenarios that require caregivers to revert to alternative device, drug or supply options that could prove less effective in the course of treatment. They also eliminate the sporadic re-orders that burden your staff and make it more challenging to manage your supply chain budget.

2. “Scan” for savings – Out-of-stocks aren’t the only thing you should pay attention to. Overstocks also strain your bottom line. If supply shipments aren’t documented properly when received and ultimately misplaced, staff might think there was a delivery issue or that the items are out of stock and request a duplicate order. Depending on the item’s typical usage, excess inventory could expire before needed, which leads to even more waste. By opting to document acceptance and storage of inventory shipments via scanned data inputs versus manual inputs, you reduce the risk of level inaccuracies.

The simple action of scanning an RFID tag or barcode label when a drug or device is received and again when it is used can also help you determine if you have the right variety and volume of inventory for your non-acute operations. You may start to notice usage trends start to shift for certain items, with some declining and others becoming more in demand. With this level of inventory intelligence, you’ll be able to adjust your sourcing selections so that you’re only buying what providers actually use or patients actually need. In turn, you’ll save on unnecessary expenses and extract more value from each dollar spent. At the same time, if you see an uptick in usage for certain items, you might be able to negotiate better volume discounts with your suppliers, which saves you money.

Plus, the increased inventory accuracy levels achieved by scanning assets at various touchpoints means you can adopt a just-in-time ordering model if you’d like. By knowing the actual inventory levels at any given time, you can wait to re-stock perishable products with short shelf-lives until they’re absolutely needed. That reduces the number of expired products that are ultimately wasted, again saving you money.

3. Comply with industry and regulatory “controls” – Several pieces of legislation ranging from the Falsified Medicines Directive to Unique Device Identifier (UDI) mandates that hope to control the quality of medical devices and drugs have been introduced to protect patients and healthcare providers alike. The good news is that the same clinical smartphones, scanners, barcode labels and RFID tags that you’re using to better control your supply-related expenses and patient care quality are the same technologies required to comply with these global supply chain “control” requirements. How’s that for a return on investment (ROI)?

Of course, these aren’t the only ways an investment in mobility-based track-and-trace systems will pay off. You can learn about the others in our Non-Acute Inventory Management brief or on our website.

Just know that the money you spend to gain real-time visibility of the assets dispersed across your facility will return significant gains in caregiver efficiency and care quality at the bedside and beyond.

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Editor’s Note:

Improved asset management is also a priority for acute healthcare providers such as Sanatorio Finochietto in Argentina. As you will see in this video, using RFID technology to optimize inventory management processes and laundry operations is saving this major healthcare system up to $300,000 annually.