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7 Hospital Inventory Management Techniques to Reduce Costs

Michael Wilson | Jan 26, 2017

Category: Healthcare

Proper hospital inventory management can be tricky: administrators and healthcare supply chain professionals must make sure their facilities have enough product to meet demand ...

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Proper hospital inventory management can be tricky: administrators and healthcare supply chain professionals must make sure their facilities have enough product to meet demand from doctors and nurses, but not too much that it negatively impacts the hospital’s budget or takes up too much space.

Here are seven helpful tips for hospital administrators who want to ensure that they can improve the efficiency of their inventory management while keeping a handle on their supply costs:

1. Collect Data from the Supply Chain  

Failing to use supply chain data can result in billions of wasted dollars. Instead, use this data to determine if your inventory management is as cost-effective as it could be. While supply data has been siloed in the past, more organizations are looking to build IT systems that use value-based reimbursement models, according to a 2016 Black Book survey. Using these value-based models, organizations can more accurately link supplies needed and patient outcomes.

2. Assign Team Responsibilities Clearly

Everyone whose work involves a hospital’s supplies must have a strong understanding of his or her role in healthcare inventory management. Whether they are cleaning the rooms, ordering the supplies, or checking the purchase orders for accuracy, it is important that hospital staff members all understand what their role is and how it contributes to successful inventory management.

3. Frequently Analyze Usage Vs. Order Frequency

This ratio is one of the most important numbers to understand when it comes to efficient hospital inventory management. You should be sure that you know how much of a certain item you are ordering per week, month, or quarter compared to how much of that item you are using in the same timeframe. If the numbers don’t match, you could have a situation in which you have too little or too much product. Making periodic adjustments to your ordering patterns based on the result of this analysis is best practice.

4 . Organize the Supply Room More Efficiently

We all have that closet in our facility that slips through the cracks, but a messy hospital supply area can be a serious hindrance to healthcare inventory management. From lost revenue due to misplaced supplies to not having an ability to tell how much of a certain item is available, disorganization is a bad situation for any supply room or closet. It is best to organize your supplies in a linear fashion, so that the most used tools are easy to find. If you want to reduce the amount of wasted materials, try placing products that will expire the soonest towards the front when organizing your supplies — this way they can be used first.

5. Consider New Hospital Inventory Management Technology

Think about the type of inventory management tools you are using, from software to computer equipment. Are they meeting all of your needs? Sit down with your management team and identify the biggest issues you experienced in your inventory management. Does your current software offer a solution? Would a new type of software on the market better manage your major problems? Finding the limitations in your technology is a good way of determining if you are using the software correctly, if purchasing a new technology is necessary, or if new procedures need to be created.

6. Improve Recordkeeping

If you aren’t using one already, you may consider adopting a more sophisticated digital platform with a forecasting feature to determine how many supplies you have in stock compared to what kind of demand you will have in the future. Also, remember to think about how accurate your inventory records are: they should be frequently reviewed to ensure that there are no errors, which can cause serious challenges for hospital supply management.

7. Adopt a Lean Strategy  

Your inventory management has costs outside of the supply purchasing itself. There are many factors to be considered in price. For example, movement and management costs, expired products, excess supplies, and purchase price variance. A better understanding of your costs can, in turn, save you money. Implementing a lean supply chain will ensure that you have the right number of supplies at the right place when and where you need them. In 2016, Caldwell Memorial Hospital in North Carolina, for instance, reported that it saved $2.62 million over two months with a lean strategy.

Staying in control of inventory at any kind of healthcare facility requires attention to detail and a good eye for ways that management techniques can be completed more efficiently. Be sure to employ these and other tips that can help you spend less money on ordering new hospital supplies while wasting less of the supplies that you do order because of mistakes with inventory management that could have been prevented.

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Editor's Note: This blog was originally published February 25, 2015 and has since been updated and expanded upon with new information. 

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