Hospital supply inventory management creating a cottage industry for technology
Skip to main content
Sister Publication Links
  • Modern Healthcare Metrics
MDHC_Logotype_white
Subscribe
  • Subscribe
  • Register
  • Login
  • News
    • This Week's News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • People
    • Regional News
    • Digital Edition
    • Letters: Let’s keep humanity in discussions about patient safety
      Jim Allison playing the harmonica
      Documentary tells tale of Nobel winning researcher
      Chest x-ray from a patient with a vaping-related lung injury
      Vaping-related cases lead to care guidelines from Intermountain
      Modern Healthcare CEO Power Panel
      Hospital leaders increasingly open to negotiated price caps
    • November was healthcare's second strongest hiring month of 2019
      Primary-care provider ChenMed to enter five new markets
      Lacking specialist access drives health disparities
      Genetic Counseling
      Addressing barriers to expanding genetic counseling
    • Joan Budden
      Q&A: Priority Health CEO eager to share best practices with Total Health Care
      Silver-loading, CSR elimination lowered premiums for some rural enrollees
      Centene to sell Illinois plan to CVS Health
      Blue Cross of Idaho unveils souped-up short-term health plans
    • Capitol Building with pills
      Week Ahead: House to vote on drug bill; SCOTUS hears risk-corridor case
      MedPAC thinks hospice payments are too high
      MedPAC says ambulatory surgical centers don't need a pay raise
      States focus on healthcare costs to address coverage problems
    • Analysts to CommonSpirit Health: Show us the savings
      Smallest hospitals saw biggest earnings gains last month
      Sutter Health postpones financial filing
      doctor helping patient stock image Sandoz
      Sponsored Content Provided By Sandoz
      As hospital executives look to reduce costs, biosimilars offer a compelling option
    • astronaut
      Astronauts developed bloodstream issues in space
      Sponsored Content Provided By ABM Healthcare
      Protecting and Maintaining Medical Devices
      human hand robotic hand stock image
      Sponsored Content Provided By Deloitte
      The Health System of the Future: How Digital Health Technology is Transforming Care
      EHR
      EHR vendors most in-use throughout Medicare incentive program
    • MRIs of dense breasts find more cancer but also false alarms
      Flu season takes off quickly in Deep South states
      Uber driver says South Carolina hospital dumped patient on him
      1 in 3 adults age 45 and older reported being lonely in a 2018 AARP survey
      Data Points: Loneliness and its impact on health
    • Jim Allison playing the harmonica
      Documentary tells tale of Nobel winning researcher
      Seema Verma
      Seema Verma's bold initiatives land her in No. 1 'Most Influential' spot
      New CEO takes the helm at Lurie Children's Hospital of Chicago
      Mayo Clinic taps Dr. John Halamka to lead its Google partnership
    • Midwest
    • Northeast
    • South
    • West
  • Special Features
    • Best Practices
    • InDepth Special Reports
    • Innovations
    • Chest x-ray from a patient with a vaping-related lung injury
      Vaping-related cases lead to care guidelines from Intermountain
      Arkansas Children’s was a founding partner in Solutions for Patient Safety.
      Children's hospitals collaborate rather than compete on patient safety
      Peer recovery specialists at St. Barnabas Medical Center work with nurse Brenna Zarra.
      Peer recovery helping patients with addiction seek treatment
      UNC Health Care trains staff to treat dementia patients
    • Linda Kenney
      Patient advocate recalls two medical errors that nearly killed her
      Arkansas Children’s was a founding partner in Solutions for Patient Safety.
      Children's hospitals collaborate rather than compete on patient safety
      Kim Hollon
      Hospitals fall short of patient-safety goals 20 years after 'To Err is Human'
      Dr. Mark Chassin
      One-size-fits-all approach to patient safety improvement won’t get us to the ultimate goal—zero harm
    • Randy Oostra, CEO of ProMedica
      HCR ManorCare deal laid foundation for ProMedica’s growth
      Advanced ICU Care
      Telemedicine helps rural hospitals meet intensivist shortage
      Paging Dr. Robot: Artificial intelligence moves into care
      A child being screened for vision problems using a smartphone.
      App screens kids for eye problems before they can talk
  • Transformation
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • ProMedica doubles down on social needs data analysis
      Amazon taps first pharmacy for Alexa Rx management
      Trump administration unveils new price transparency rules
      A child being screened for vision problems using a smartphone.
      App screens kids for eye problems before they can talk
    • VA dives into artificial intelligence R&D
      Home health to pare down therapy services, up telehealth offerings
      Amazon launches medical transcription service
      Hospitals' uncompensated care continues to rise
    • Chest x-ray from a patient with a vaping-related lung injury
      Vaping-related cases lead to care guidelines from Intermountain
      Advanced ICU Care
      Telemedicine helps rural hospitals meet intensivist shortage
      Peer recovery specialists at St. Barnabas Medical Center work with nurse Brenna Zarra.
      Peer recovery helping patients with addiction seek treatment
      UNC Health Care trains staff to treat dementia patients
    • Value-based pay still struggles to improve costs, quality
      Hospitals sue HHS over negotiated price disclosure rule
      Bundled payments get a boost in two states with employee programs
      CMS wants primary-care docs to take on financial risk
  • Data/Lists
    • Rankings/Lists
    • Data Points
    • Modern Healthcare Metrics
  • Op-Ed
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
    • Randy Oostra, CEO of ProMedica
      HCR ManorCare deal laid foundation for ProMedica’s growth
      Steve Strongwater
      How Atrius Health stayed independent by not shying away from risk
      Why moving the VA to a new EHR was a pivotal decision
      Why AdventHealth's rebrand was more than a name change
    • Terry Shaw
      A diverse and inclusive culture should empower others
      Paving the path to diversity and inclusion
      The next step in healthcare evolution
      Breaking Bias: A road map to boost women and minorities into healthcare leadership
    • Dr. Richard Snyder
      Outdated privacy laws hinder coordinated care, especially in the fight against addiction
      David Dill and Keith Myers
      Healthcare partnerships are a proven path to better care, healthier communities
      Health systems need to devote more resources to caring for the caregivers
      Chip Kahn and Alan Morgan
      Rural healthcare needs innovation, policy changes to survive
    • Letters: Let’s keep humanity in discussions about patient safety
      Hospital with money
      Letters: Let providers set their prices,
 and then publish them all
      Letters: Ambulatory surgery centers aren't getting a break on regulation
      Letters: Rising Medicaid spending isn't a windfall for providers
    • Sponsored Content Provided By Optum
      How blockchain could ease frustration with the payment process
      Sponsored Content Provided By Optum
      Three steps to better data-sharing for payer and provider CIOs
      Sponsored Content Provided By Optum
      Reduce total cost of care: 6 reasons why providers and payers should tackle the challenge together
      Sponsored Content Provided By Optum
      Why CIOs went from back-office operators to mission-critical innovators
  • Awards
    • Nominate
    • Award Programs
    • Previous Award Programs
    • Other Award Programs
    • Nominations Open - Top 25 Minority Leaders
      Nominations Open - Health Care Hall of Fame
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Top 25 Minority Leaders
    • Top 25 Women Leaders
    • Excellence in Nursing Awards
    • Design Awards
    • Top 25 COOs in Healthcare
    • 100 Top Hospitals
    • ACHE Awards
  • Events
    • Conferences
    • Galas
    • Webinars
    • Kronos webinar logo lockup
      Sponsored Content Provided By Kronos
      Webinar: The Future of Work in Healthcare
    • Leadership Symposium
    • Healthcare Transformation Summit
    • Critical Connections: Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Workplace of the Future Conference
    • Strategic Marketing Conference
    • Health Care Hall of Fame Gala
    • Top 25 Women Leaders Gala
    • Best Places to Work Awards Gala
    • Top 25 Minority Leaders Gala (2020)
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
 
Transformation Hub

Where healthcare challenges find solutions

  • Patients
  • Operations
  • Care Delivery
  • Payment
Operations
July 28, 2018 01:00 AM

Hospital supply inventory management creating a cottage industry for technology

Rachel Z. Arndt
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Supply chain employee Steve Smith makes labels for outgoing supplies.

    Within every hospital, supply problems are likely to lurk. Often, they're problems of too much: too many sutures, too many surgical staplers, too much of too many items. Hospital staff, distrustful that they'll have what they need when they need it, err on the side of excess.

    But that's beginning to change, as hospitals and health systems employ software with predictive analytics for inventory management. That way, they can forecast demand, reaching a Goldilocks level of supplies.

    “The natural tendency is to just buy an entire mountain of inventory,” said Rick Conlin, a partner in the Advisory Board Co.'s spend performance solutions team. “Turning to some of these enterprise research tools gives them the ability to more confidently knock back some of that inventory and supply chain costs.”

    Users of these inventory management tools will have to integrate them into their existing systems, and they'll also have to learn to trust the data. That's beginning to happen more, as ever-mounting costs are putting pressure on providers and health system staff to act.

    The return on investment is fairly straightforward: As health systems use more advanced supply chain software, they free up cash, which they might use to buy new equipment or hire another physician—activities that generate revenue.

    “If you can reduce the inventory you have on hand, it really can have a positive financial impact,” said Rob Austin, associate director at Navigant. And, he added, “if you're managing your inventory more closely, you won't lose it, it won't become obsolete or expired, and you can run a more efficient operation.”

    Supply chain teams are increasingly turning to two-bin systems to store and manage inventory. With some software, a member of the supply chain team uses a key fob to scan bins emptied of medical and surgical supplies, sending the information into a digital system that automatically reorders supplies.

    Because software can track the reorder and empty dates, it can calculate the velocity of the goods—how quickly they're moving off the shelf—and can then forecast when those supplies should be reordered.

    That approach is purposely low-tech because reimbursements for such products are typically low, said John Freund, CEO of Jump Technologies, which makes supply chain management software.

    Simple to complex solutions

    To do that, hospitals are implementing solutions both low- and high-tech. At Spectrum Health, for instance, supply chain staff manage inventory using statistical models in Microsoft Excel and Minitab.

    The physical system for keeping track of some supplies is decidedly simpler: bins with dividers, sitting on a shelf. When half of one bin is empty, supply chain staff flip a sign on it to show that the supplies need to be reordered. They also scan the bin, sending a reorder request.

    Spectrum is moving to this “flipper” for its hospitals from a periodic automatic replenishment process. In doing so, they've gained efficiency, said Bill Selles, director of supply chain at the Grand Rapids, Mich.-based system. They've become more accurate. “There's a sense of relief,” he said, as supply chain staff count many fewer items. “We can basically just handle less product and be much more efficient,” he said.

    Next, Spectrum will implement more efficient inventory management in its central distribution center, which currently relies on a paper-based system. Going digital will help streamline how supply chain staff pick up supplies, routing them in the most efficient path.

    Not only will they more effectively manage supplies, but they'll also get a break from walking; right now, the average supply chain person who picks product walks 10 to 12 miles every day.

    As hospitals increasingly seek ways to better manage their inventory, developers have created software to support their efforts. Jump Technologies' JumpStock, for instance, tracks how quickly providers use supplies, providing the end users with the data to back up the supply chain staff's stocking decisions.

    The tool is designed to address what the company's CEO, John Freund, calls “the data divide.”

    “There's a lack of trust between supply chain staff and clinicians,” he said. The supply chain staff think they know how quickly goods move in and out of the system because they stock those goods, and the clinicians think they know best because they consume those goods. “There is not a good set of data for either party to rely on that would allow them to work together to reduce inventory,” he said.

    To get around that, the software helps manage inventory from the loading dock to the patient, creating a feedback loop.

    A report for clinicians shows the velocity of supplies—how quickly they move off the shelf—so they can see what's being used.

    “Looking at that data, clinicians can agree with supply chain staff on the changes they want to make, because they have data that everyone agrees on,” Freund said.

    In the end, he said, that cuts the amount of supplies on hand, making the entire system more efficient.

    At Chesapeake Regional Healthcare, for example, since putting the JumpStock software in place, the organization has reduced on-hand labor and delivery supplies by 40%. In four months, they also reduced inventory in one nursing unit by 64%.

    “Over time, this approach will free up cash and improve cash flow, and you'll run a more efficient operation,” Austin said. “It's a little less immediate, but that doesn't mean it's not significant.”

    The quality component

    More efficient inventory management means not only cost savings but also better quality care, Spectrum's Selles said. Right now, he said, “we have the approach of more inventory is better, because the risk of running out of a critical supply is harm to a patient.” But because of that, there's a lot of waste.

    What's more, if a hospital doesn't manage its inventory well and a medical device recall is issued, for instance, the supply chain staff might not know if their devices are affected.

    The problem of expiration dates isn't unique to healthcare, Selles said, but its effects are potentially more profound. “If I work for Target and we expire a pallet of yogurt, that's a problem, but it's a wholly different story than if I expire medical devices that end up in point-of-care situations,” he said.

    Even so, getting providers and supply chain staff to use these newfangled systems can be tough.

    “Even within the past five to eight years, I've seen hospitals go out and buy demand and supply planning tools, and they don't trust them,” Conlin said. “Or they'll work back channels and maintain spreadsheets.”

    But things are looking up, albeit not for ideal reasons. “Physicians, just in understanding how dire some of the finances can be, are starting to play nice,” he said. “There's trust in performance.”

    Tags: Operations, Transformation, Operations, Supply Chain, Transformation Hub
    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Get Free Newsletters

    Sign up for free enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today

    The weekly magazine, websites, research and databases provide a powerful and all-encompassing industry presence. We help you make informed business decisions and lead your organizations to success.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS
    • Instagram

    Stay Connected

    Join the conversation with Modern Healthcare through our social media pages

    MDHC_Logotype_white
    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    Modern Healthcare
    Copyright © 1996-2019. Crain Communications, Inc. All Rights Reserved.
    • News
      • This Week's News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition
    • Special Features
      • Best Practices
      • InDepth Special Reports
      • Innovations
    • Transformation
      • Patients
      • Operations
      • Care Delivery
      • Payment
    • Data/Lists
      • Rankings/Lists
      • Data Points
      • Modern Healthcare Metrics
    • Op-Ed
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Awards
      • Nominate
      • Award Programs
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Top 25 Minority Leaders
        • Top 25 Women Leaders
      • Previous Award Programs
        • Excellence in Nursing Awards
        • Design Awards
        • Top 25 COOs in Healthcare
      • Other Award Programs
        • 100 Top Hospitals
        • ACHE Awards
    • Events
      • Conferences
        • Leadership Symposium
        • Healthcare Transformation Summit
        • Critical Connections: Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
        • Workplace of the Future Conference
        • Strategic Marketing Conference
      • Galas
        • Health Care Hall of Fame Gala
        • Top 25 Women Leaders Gala
        • Best Places to Work Awards Gala
        • Top 25 Minority Leaders Gala (2020)
      • Webinars
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing