Waste Reduction

Healthcare costs have been under the microscope, and recently we have seen increased focus on cost containment and waste reduction. Because of the Affordable Care Act, focus is shifting from volume of procedures to value and the total cost of care. Operational concerns such as waste, patient safety, charge capture accuracy and transparency are under intense scrutiny because of their impact on the cost of care.

Despite pressures to streamline, most hospitals and health systems have not effectively addressed a main source of rising costs and inefficiency – inventory waste. The result is an estimated $5 billion of annual waste in medical devices.

Six Steps

There is no shortage of supply chain and inventory management solutions. When looking to optimize inventory and workflow, make sure any solution you consider delivers on these six attributes.

Ease of use: The best solution reduces the time clinicians spend managing inventory. Inventory management systems must be simple and intuitive or clinicians will work around them, waste time using them, or not use them at all. Imagine a clinician placing a stent in a cabinet, and the cabinet automatically capturing data from the stent and updating the inventory profile of the department. Then imagine removing the stent from the cabinet and the cabinet automatically raising a flag in the system that a stent is missing.

Accuracy counts: An automated system that is not fully accurate is not acceptable. While 95 percent accuracy may sound great, this could mean that five out of every hundred devices are not adequately tracked. If automated systems are not optimized or trusted, the practices of hording, overstocking, audits, cycle counts and write-offs continue. The right technology can facilitate near-perfect inventory management.

Real-time tracking and charge capture: Many hospitals audit their inventory once per quarter, limiting visibility needed for day-to-day challenges. Real-time automated systems manage daily procedures and right-sizing inventory. This ensures sufficient inventory levels and redeployment or return of soon-to-be expired inventory. Tracking devices to the point of use ensures that items are accounted for from the storeroom to clinical documentation and billing.

Trending analytics: Hospitals can incur significant losses if par levels are too high or too low. Excess par levels leads to capital being invested in unneeded supplies that may expire before use. Analyzing historical trend data and matching inventory par levels to usage patterns can lower overall par levels without risking shortages, while allowing planning for recurring trends. Analytics also support par level matching for usage, cost-per-case analysis and product standardization efforts.

Future-proof solutions: Systems that adapt to emerging technologies will extend the life of the investment. Inventory management solutions should anticipate change and be built on a flexible framework that allows for innovation. For example, the rapid proliferation of near-field communication (NFC) technology, fast becoming available in every smartphone and wearable technologies such as the Apple Watch. Soon, clinicians, materials managers and other employees could use a cell phone or tablet with NFC technology to scan and track RFID tagged products. Ensuring inventory management solutions are compatible with this and future technologies will increase the long-term ROI.

Scalability: Returns can be realized when complete visibility is achieved. Inventory management solutions need to be compatible with multiple levels of use across products, departments and health systems. Solutions must account for diversity of supplies while keeping an accurate view of inventory. A complete view of inventory across departments ensures that par levels can be reduced and product can be allocated where needed before expiration.


Leveraging supply chain management technology to establish efficiencies can free up capital. Lowering inventory levels by keeping supply reserves at a central point of distribution is only possible with shared information through inventory management solutions.

Because of changes to healthcare, we must evaluate and improve the total cost of care. The supply chain is an area with potential for savings. Using these considerations is an important step in tackling waste and maximizing revenue. Now is the time to reevaluate traditional supply chain approaches and improve the total cost of care.