Hidden Risks of Medical Management

How to Prevent Healthcare Waste from Impacting Patient Care

Many industries experience waste and inefficiency, but in healthcare, the stakes are different. Waste is measured not only in dollars or operational drag but in the very real impact on patient well-being. When any part of the healthcare chain wastes money, resources, or time, the entire system becomes less resilient, and ultimately, care can be compromised.      

We saw the impact of how inventory can interrupt care during the COVID-19 pandemic and its disruptions to the global supply chain. This has caused provider organizations to move away from Just-in-time (JIT) best practices seen in other industry supply chains. Rather, to mitigate supply disruption risk, hospitals are shifting back towards a “Just-in-case” approach, stockpiling critical supplies to meet a wide variety of patient care needs and to hedge against the chance they will be unavailable to order when needed. 

On the supplier side, many manufacturers carry large inventories to ensure the necessary products are on hand when providers need them. This is primarily driven by a focus on customer service and patient care, but it is expensive and complicated to manage.

As a result, all of these small decisions to prioritize supply availability become magnified across the entire supply chain, leading to significant cost, inefficiency and waste. 

The Shape of Healthcare Waste

Healthcare waste shows up in a few consistent ways: 

• Time: Highly skilled hospital teams still spend too much of their day on rote administrative work. It’s inefficient, and it contributes to burnout and morale drag.
• Costs: Weak demand planning, manual order management and misalignment between suppliers and providers can create avoidable waste and friction across the supply chain. 
• Procurement and Inventory Management: As the complexity of managing supply chains increases, many hospitals struggle to keep inventories accurate and compliant, creating real safety risk that can ultimately impact patient care.

Taken together, these forms of waste slow the care journey, strain staff and can weaken compliance.

Inefficient Resource Management

Administrative costs make up the single largest source of waste in the U.S. hospital system, accounting for roughly $266 billion in waste each year. When staff hours are not used effectively, critical tasks like inventory monitoring and rotation are often neglected, leading to expired medical supplies and overstocked inventory that tie up capital and storage space. 

One hospital system recently discovered almost $400 million in estimated overstocked inventory across its health system, which is significantly higher than the industry average. This provider is now dealing with inventory reduction efforts by returning truckloads of supplies to their suppliers or donating them. Some items they uncovered had expired more than six years ago and were still on the provider’s shelves.

Misalignment of Data

A “Perfect Order” happens when the provider and supplier share matching data to create a touchless transaction from order to acknowledgment to fulfillment to invoice to payment.      Non-perfect orders are the opposite. They create friction and necessitate manual intervention, costing everyone time and money. 

When orders for critical supplies are inaccurate, it triggers a cascade of problems. Staff at both ends of the chain must dedicate valuable time to correcting errors, processing returns, and tracking down missing items, diverting their focus from patient care. This friction often leads to poor resource management, where hospitals either overstock to buffer against uncertainty or face stockouts of clinically essential items. Overstocking results in expired products and increased holding costs, while stockouts can delay procedures and compromise patient safety.     

One example of how suppliers and providers can collaborate to reduce waste and improve patient care is our Collaboration and Partnership Award-winning partnership between Medline and Chicago’s Northwestern Medicine. Since 2021, the two organizations have met regularly to translate and sync their data sources so they’re effectively speaking the same language across their systems. This led to price accuracy between 97-99%, and “almost flawless” monthly reconciliations.

Underestimating the Value of Inventory

Lack of data and visibility leads to hospitals underestimating the true value of their on-hand inventory. Suppliers play a part, too. Manufacturers, specifically for implantable supplies, often carry large inventories and deal with associated costs in order to mitigate patient care impacts due to a lack of visibility. 

One cause of this lack of visibility is manual processes that don’t keep up with the pace of operations and can be prone to error. Another is waste introduced by clinicians and end users who don’t trust the supply chain for various reasons. Incomplete documentation or a failure to accurately record when supplies are used or moved also contributes.

Misjudging inventory leads to poor financial stewardship. Capital becomes unnecessarily tied up in overstocked supplies that risk expiration, leading to costly write-offs. This overstocking also has a substantial environmental impact, contributing to landfill waste when unused products are discarded. Operationally, this mismanagement disrupts efficiency; clinical staff may struggle to locate needed items or, worse, be forced to leave sterile fields to hunt for supplies, introducing risk to infection and patient care impacts. 

Visibility & Collaboration

Ultimately, everyone in the chain is responsible for helping to reduce friction, reduce costs and improve focus on patient care. Here are some ways we can address these challenges:

• End-to-End Supply Chain Suites: These can reduce emergency buys, eliminate critical stock-outs, and save providers money that would otherwise be lost to inefficiency.
• Embrace Automation: Invest in process change. Leveraging technology to eliminate manual processes can maximize staff utilization and help gain near real-time visibility.
• Standardize Preference Cards: Especially for expensive OR supplies. This both streamlines inventory and is a critical step in creating an accurate demand signal
• Data-Driven Decisions: Accurate data allows for demand forecasting, partnership with manufacturers, setting optimal reorder points, and reducing overstock.
• Standardize and Centralize: Drive value analysis best practices to standardize products, reduce overstocking, simplify purchasing, and improve patient outcomes.
• Data Sharing: Allows for better demand forecasting.
• Foster a Culture of Accountability: Train staff on new processes and show them how waste reduction benefits everyone, from the staff at the loading dock all the way to the clinician in the treatment room.

By leveraging technology and adopting data-driven strategies, providers & suppliers can help streamline their processes, reduce waste, and ensure the availability of critical supplies. These efforts not only enhance operational efficiency and supply chain resiliency but also support efforts to improve health outcomes and increase financial sustainability.