How To Best Utilize Your Inventory In The Modern Hospital

Denny_01 croppedBy Patterson Pope

Modern health care facilities are usually designed as sprawling complexes, capable of servicing countless patients on a daily basis. However, it doesn’t take long before all of that space fills. What was once an expansive hospital becomes cramped with:

  • Outdated equipment and supplies.
  • Expired (or unused) pharmaceuticals.
  • Patient records and paper-based documents.

Poor inventory management is costly in any industry. If you stock too little of what you need — or too much of what you don’t — you unnecessarily drain precious resources. The health care industry is no exception to this rule. 

According to research from National Institutes of Health (NIH):

“In most hospitals and medical establishments, about 35 percent of their budgets are spent on supplies and labor to manage the inventories, material, and information flows; typically, these are managed as multiechelon systems.”

Trimming some of this waste can make your facility more profitable. Equally important, better inventory management can also improve your ability to provide life-saving care to patients.

Though with limited time, space and money, how can you best utilize your hospital’s inventory to reduce costs and make health care delivery more effective?

Below are four cost-effective strategies worth considering:

1. Remove Clutter That You Already Have

The simplest place to start is to do a facility-wide purge of all equipment and supplies that are no longer in use. This includes medications that have already expired. Patient records only need to be retained for six years after the most recent visit per the Health Insurance Portability and Accountability Act’s (HIPPA’s) guidelines.

2. Reduce Future Inventory Stockpiles

Once your facility has been swept, it’s important to prevent future stockpiles from taking over. A common strategy is to examine your usage-to-order ratio. If your facility uses 10,000 tongue depressors each quarter, for example, you shouldn’t be purchasing 15,000 units every three months. The closer you can push this ratio to 1-to-1, the more space you’ll have, and the more money you’ll save. 

Two important tips:

  1. Examine this ratio on a periodic basis for all the supplies ordered regularly. 
  1. A 1-to-1 usage-to-order ratio is ideal, but be sure to leave a little extra wiggle room. For example, buy 10 percent more of what you need, just in case.

3. Digitize Records

Paper-based records and invoices consume a tremendous amount of resources. Not only do they require lots of storage space, but each document must be organized, retrieved and processed by hand.

Going paperless can save your hospital tens of millions of dollars over a five-year span. This is because digitizing records:

  • Consumes less real estate (especially if you store documents in the cloud).
  • Offers faster delivery, retrieval and organization.
  • Reduces clerical, billing and diagnostic errors.

However, not every file in your hospital lends itself to digitization. There are some types of documents that are too costly to convert electronically. Many medical supplies (drugs, tongue depressors, etc.) can’t be stored digitally at all.

How do you manage these?

4. Invest in Better Physical Storage

Many facilities still rely on traditional file cabinets to maintain records and static shelves to store medical supplies. These approaches can work — at least in the beginning. Though the more successful your hospital becomes, the more physical items you’ll have to store on site.

Fortunately, there now exists a range of affordable storage solutions that allow your facility’s real estate to be optimized. Some of the more popular approaches include:

  • Mobile storage units that can easily move from one department to another.  These are essentially shelves on wheels that can be relocated based on need. 
  • Retractable shelves that expand outward when you need to retrieve something — and fold into themselves once you’re done. You’ve probably seen these types of “stacks” in museum or library basements.
  • Off-site storage that allows you to free floor space by keeping infrequently used items outside of the facility. There may be a monthly charge for this service, but it’s an investment that often pays for itself if you’re able to open more treatment rooms in your hospital.

Need More Inventory Tips for Your Health Care Facility?

The above are proven tips for reducing costs and making your facility’s inventory easier to manage. However, if you’re looking for even more ways to streamline your hospital’s operations, consider asking your staff for recommendations. Each department faces unique challenges and opportunities. By soliciting employee feedback, you can quickly uncover additional ideas for reducing waste and boosting overall productivity.

With over 25 years of storage industry experience, Denny Hammack is a seasoned CEO of Patterson Pope, an industry-leading supplier of high density shelving products & solutions many of which are utilized in hospitals and healthcare systems.

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