The cost of healthcare is rising worldwide. While pop culture loves the idea of the greedy corporation, the truth is that healthcare is an exception. At least the hospital is. Most hospitals aren’t even profitable. The average American hospital is barely able to recoup its costs!
Inventory management is a major contributing factor to the growing cost of care. A hospital or clinic requires a steady supply of disposables, safety equipment, and supplements to larger surgical machinery to operate.
New medical equipment maintenance standards add to the cost of maintaining an inventory of medical supplies by requiring hospitals and clinics to invest in solid asset tracking tools and to ensure that their inventory management system is both up-to-date and regulation-compliant.
This is why putting medical inventory management on the cloud can be so beneficial for hospitals, as it checks all these boxes and more. It not only has advantages over manual data management, but also over on-premise software purporting to manage inventory effectively. Below, we’ll outline some of the major reasons why medical inventory management needs an overhaul in most health-catering corporations today.
Traditional medical inventory management is costly
Your institution’s ability to organize and manage your substantial inventory impacts your ability to control costs. The fact that the medical industry can easily reduce the cost of storing and managing inventory by about $10 billion to $14 billion, according to McKinsey & Company, indicates that the stakes are high when it comes to inventory.
Inventory management, data management, and obsolescence costs amount to billions of dollars.
– McKinsey and Company, Oct 2012
Inventory expenses eat into your medical institution’s profit. Saving money on this sizable chunk of funds frees the money up to go toward improving patient experience, investing in better surgical equipment, and other better uses.
Inventory expenses entail a variety of sub-costs, including the expense of storing inventory, re-stocking sold out or used-up items at a higher cost on short notice, and replacing stolen or expired goods.
Of course, a cloud-based medical inventory management system will lower storage costs by ensuring only needed items are stocked, and will do this without anyone needing to painstakingly input figures and crunch numbers manually. As a result, these are costs that can be greatly reduced or even eliminated with the use of the right tools. In addition, there are great cost savings to be had if the software operates on a subscription basis as opposed to being an on-premise model. This is because the costs are divided up over time, and there is no need to make significant infrastructural investments to ensure the software works on your system.
A weak system can lower accountability
According to the latest research, anywhere between a fifth and a tenth of all hospital inventory is either misplaced or lost each year. Admins often write this cost off as an expected expense. But it doesn’t need to be!
Questions of accountability can make managers extremely uncomfortable, but irresponsibility in a healthcare context needs to be acknowledged as a serious matter. Inventory management not only keeps records of the items you have access to and when you can expect to run out, but also inculcates a sense of accountability among your employees. It makes your workforce take ownership (and therefore responsibility) for the inventory they use. As custodians whose actions are being tracked on the cloud, they are therefore less likely to be careless or dishonest about the way they use company resources.
Transparent records can greatly help lower mistakes relating to the misplacement or mishandling of inventory items. This becomes even more striking when you think not just in terms of the billions of dollars hospitals could be saving annually by enabling the staff to be more conscientious, but also about the very real healthcare impact of the responsible monitoring and tracking of drugs and hospital equipment.
Effective medical inventory management is also risk management
According to a Gartner report on the medical supply chain, up to 10% of inventory expires or becomes obsolete while still in the possession of a medical institution. This is another cost an effective inventory management system can almost entirely recuperate, since you can track expiration or obsolescence dates and set reminders to overturn inventory if it is about to go off In fact, by intelligently tracking your consumption and providing you with rich custom reports, the chances of you being taken by surprise over expired inventory falls significantly, as any software worth its salt can help you predict utilization trends.
If you maintain your records through effective inventory management software, it’ll automate low stock prompts, insights on consumption, and locational usage analysis. An effective system alerts admins that items are expired or obsolete, which gives you the chance to throw them away. This doesn’t just save money and free up storage space, but it’s also a good way to prevent injuring patients with expired or obsolete materials.
Dr. Josh Umbehr, who has been working tirelessly to push for lower-cost healthcare models, says, “A good scalpel makes a better surgeon. Good communication makes a better doctor.” Managing inventory efficiently gives you access to better information, allowing nurses and doctors to communicate much more effectively and make the best decisions they possibly can. Not just this, but as per the WHO, it is particularly important for medical institutions to keep an inventory of safety equipment (for example, eyewashes, sanitizers, and fire safety items) and hazardous material to guarantee all corresponding regulations are complied with and any biohazards are appropriately dispensed with.
Well-organized inventories can ensure that all items are handled
and stored at appropriate temperatures and conditions.
Manual inventory management is extremely time-intensive
Another reason manual inventory amps up both your costs and lowers productivity is that it eats up a lot of time. Constant adjustment, re-ordering, gauging storage space, and accounting for stock-outs requires an entire team of people working tirelessly on the hospital’s inventory management needs.
Of course, managing a hospital’s extensive inventory manually also leaves you vulnerable to grievous errors, which can open you up to serious litigation brought upon by unintended harm or injury to a patient. Think of the damage an expired inventory item could do or the problems caused by improper storage resulting from substantial inventory backlogs! Uploading all of this information to the cloud and allowing use to be logged as it happens can free up a lot of time for your workforce. The best inventory management tools also support QR code and barcode scanning, as well as mobile apps that can immediately scan a piece of inventory and upload it to the system, leading to even greater levels of efficiency!
Poor record-keeping distracts from the job
A study on global healthcare standards found that clinicians can spend up to a quarter of their time finding items on a daily basis. Even the Operation Room is not exempt from these distractions; medical staff can spend about ten percent of their time trying to locate items in the OR! This is why it is extremely important to have an efficient inventory logging and tracking system, so workers can focus on urgent tasks at hand.
This not only saves the hospital or clinic a significant sum of money as a result of less wastage and fewer misplaced items, but also contributes to a virtuous cycle of customer satisfaction. As wait times are reduced and your medical staff is able to provide your patients with their unwavering attention, you will no doubt notice a substantial difference in the way your patients relate to you!
Manual inventory logging and management systems are ineffective and sometimes even counter-productive. Some on-premise software tools can be extremely rigid, as they do not have the capability to cater to industries as complex and rapidly-evolving as the medical sector. It is therefore important to invest in a good cloud-based medical inventory management software, to ensure that you give your business and your patients the best chance possible!
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