The term “supply chain” says it all. The points at which supplies travel from receipt into the hospital through to point of use (POU) represent critical links in that chain.
Most hospitals still struggle with supply chain gaps in key areas, whether it’s from the receiving dock to storage, consignment area to the operating room (OR), movement between departments, or some other point along the continuum.
When there’s a gap in supply visibility at any point, the hospital risks the chance an item is unavailable when needed, becomes lost or expired, or is used on a patient but not documented. Invisible supplies cost hospitals thousands or even millions of dollars annually in waste, inaccurate supply cost billing, and staff efforts aimed at managing them.
Let’s look at common reasons for supply chain gaps, why standalone quick fixes don’t work and how an enterprise-wide approach to inventory management provides a 10,000-foot view of a hospital’s supplies with the ability to gain actionable insights for meaningful change.
Plugging the gaps left by the ERP
Given their name and pervasiveness in healthcare, enterprise resource planning (ERP) systems are believed to be the solution for hospital-wide inventory management. While they play the important role of storing pricing contracts and providing procurement workflows for medical/surgical supplies within the item master, their capabilities end there.
The ERP system only provides visibility into the medical/surgical supplies that were ordered and not what inventory is available or has been consumed in a case. Furthermore, the item master does not contain the costly and critical items most important to manage (e.g., implants, pharmaceuticals, etc.).
To bridge the gaps, many hospitals use disjointed, bolt-on systems for inventory management that lack integration with their ERP and electronic health record (EHR) systems.
On the loading dock
A hospital’s Receiving team is tasked with managing an extremely wide range of items — from run-of-the-mill supplies delivered by a primary distributor to time- and temperature-sensitive drugs and biologics.
Without an SCM system, the Receiving team likely has multiple, standalone systems for documenting the receipt of whatever crosses the dock … and it’s not always clear what item goes into what system. Inaccurate or incomplete documentation at receipt can lead to delays in items arriving where they are needed. It can also jeopardize compliance with track and trace requirements for controlled substances and human tissue products.
In clinical areas
Without an SCM system, hospitals often use multiple POU systems for inventory management in nursing units, perioperative and cath/IR labs. While these tools enable the Supply Chain team to manage replenishment based on par levels for general medical/surgical supplies, they do so in silos.
Because these systems are not integrated with one another, or with the ERP or EHR systems, the Supply Chain team can only see supplies within the confines of that care area. Without visibility of these items throughout the internal supply chain, they can’t easily track product movement and redirect supplies from areas of excess to where they are needed.
Lack of POU system integration with the EHR results means nurses must perform manual, time-consuming product documentation. When they fail to record items used during a case, these items are never charged to the patient and the hospital is never reimbursed for them by the payor.
In the pharmacy
Hospital pharmacies have historically flown under the radar, with pharmacists managing drug products using their own systems and processes outside of centralized supply chain operations. As a result, the Supply Chain team has no way to identify the gaps, let alone address them.
The threat of expiry throughout
A significant area of expense and patient risk is expired products circulating in a hospital’s supply chain because ERP, EHR, and POU systems lack expiry logic to manage them.
There is nothing to alert receiving when products arrive at the dock close to an expiry date, no efficient or effective way for the Supply Chain team to identify these products in the hospital’s inventory and remove them, and nothing to warn a clinician when they attempt to use an expired product on a patient.
How an SCM System Holistically Bridges the Gaps
Healthcare doesn’t need to remain in the dark ages when it comes to inventory management. An end-to-end SCM platform that is integrated with the ERP and EHR systems consolidates oversight of all supplies to the Supply Chain team, automates product tracking and documentation from receipt through usage, and provides leaders with the level of visibility and control they need to mitigate risk and make better decisions for clinicians and patients.
The SCM system connects all the links in the chain, bridging any gaps and eliminating the need for inadequate, cumbersome bolt-on systems. Because the supply chain is in control, and all items in the hospital’s inventory are within their reach, clinicians are alleviated of the burden of supply management, giving back time for patient care. Automated supply documentation in the EHR drives accurate charge capture, case costing, patient billing, and payer reimbursement.
Built-in serial and lot number tracking and expiry logic alert each stakeholder to products set to expire and those that have been recalled, reducing the risk of waste and potential patient harm. It also supports compliance with the Joint Commission and other regulations aimed at product tracking and tracing.
And at a time when healthcare CEOs and CFOs are increasingly looking to the Supply Chain team for performance analytics, the SCM provides a single source of real-time, accurate, and credible data on clinical, operational, and financial outcomes.
With the implementation and integration of three pillars – ERP, EHR, and SCM – a hospital can progress in its supply chain maturity journey from transactional to strategic processes, disjointed to integrated systems, and reactive to proactive decision-making.
It serves as the foundation for supply chain strategies reshaping healthcare today, including clinical integration, value-based purchasing, demand planning and forecasting, and self-distribution. A holistic supply chain strategy aimed at streamlining processes, maximizing resources, and reducing costs pave the way toward more sustainable care delivery.
Cory Turner CMRP leads Healthcare Strategy for Tecsys, one of the largest supply chain IT organizations in the healthcare industry. He has two decades of experience in healthcare supply chain operations and solutioning, having earned his credentials at Greenville Health System, (now PRISMA Health), the largest IDN in South Carolina. He has since built his career with experience with Infor, Omnicell and Workday solutions. Cory’s insights into the healthcare supply chain market are distinctively informed by his tenure as both an operator and provider of SCE software.