Understanding the ways in which equipment and supplies move through the hospital isn’t exactly the most glamorous aspect of working in healthcare, but it’s increasingly part of the knowledge base every person on the payroll needs to develop.
Increased scrutiny of budget shortfalls has led to a greater understanding of how inefficiencies in the supply chain, from faulty ordering practices to overstocking a surgical case cart, can wreak havoc on a hospital’s bottom line.
Given those challenges, supply chain management has become an area of great innovation in the healthcare industry. Addressing these issues doesn’t only protect the budget. Strides to develop smarter and more frugal practices in maintaining inventory ultimately help patients. Getting it right on the front end ensures surgeons aren’t hampered by compromised materials when it matters most.
To learn more about emerging supply chain management solutions, Surgical Products interviewed Jean-Claude Saghbini, vice president of inventory management solutions at Cardinal Health.
Several recent studies have detailed the ways in which supply chain inefficiencies have been costing healthcare facilities significant amounts of money. What do you think are some of the most significant or most surprising areas where supply chain management is falling short for hospitals and other healthcare facilities?
The industry has seen great strides in technology that address inefficiencies, yet most hospitals and healthcare facilities still use manual approaches to supply chain management. Many require intensive staffing to handle multiple, often redundant systems that lack the data sharing capability and transparency needed to prevent waste.
When looking specifically at supply chain operations, there is an estimated $5 billion of annual waste in high-value medical devices alone. Despite the high cost and urgency of medical devices shipped to facilities every day, inventory and supply chain managers often have limited visibility into their product availability, demand, and utilization, and as such the products continue to expire on shelves and the hospitals are overstocked with inventory while still experiencing out of stock events. Few are confident their institution can even effectively manage the system.
As healthcare shifts from volume to value, we anticipate the efficiency pressures to create a greater demand to integrate data sources, through technologies such as RFID, across the continuum of care. Progressive health systems are investing the necessary resources with the confidence that optimizing their supply chain will have long-term benefits for both patients and the industry.
The financial costs of inefficiencies are probably clear to most, but how do shortcomings in the supply chain management negatively impact patient care?
An optimal healthcare supply chain is proving to be not only a source of savings, but more importantly, a major driver toward supporting better patient care.
The waste from inefficient use of clinician time is difficult to quantify, but the best estimates tell us at least 25 percent of clinical resource time is allocated to supply chain activities instead of direct patient care. A more efficient supply chain better equips hospitals to manage products efficiently, freeing up clinical staff from inventory management activities and allowing them to focus on patient care.
Additionally, the healthcare supply chain loses inventory to shrinkage and expiration every day. In fact, 7-10 percent of products likely expire on hospital shelves, which not only causes financial losses, but also increases the risk of out of stocks or of the use of expired products on patients. This has a direct correlation with patient safety. A more efficient supply chain allows hospitals to reduce product expirations and related patient safety issues, as well as ensure that the product is available at the right time.
What responsibilities do surgeons, nurses, and other direct healthcare providers have in developing supply chain efficiencies?
Clinicians can be partners to supply chain professionals in pushing for and implementing advanced technologies to manage the inventory. RFID-enabled solutions, for example, can manage the inventory all the way to the point of care and usage tracking and documentation, while providing the associated visibility and accuracy. The benefits not only accrue to the supply chain functions, but also to the clinicians, and ultimately to the patients.
Surgeons will have the product they need, when they need it, unexpired, and at the lowest possible true cost because of the elimination of inherent inefficiencies. They will have the accurate data needed to understand utilization and manage toward standardization that reduces the total cost of care delivery.
There has been discussion about the frustration physicians have with electronic record-keeping and other digital tools. How can technology be smartly employed to make healthcare practitioners’ jobs easier?
The best supply chain solutions are intuitive and free up time so healthcare practitioners can focus on patient care. Solutions that are easy to use tend to be accepted quickly, and RFID-enabled supply chain technologies are being developed with minimal need for human intervention.
For example, Cardinal Health’s smart RFID cabinets automatically capture the model, size, lot number, serial number, and expiration date of RFID-tagged medical devices placed in them. There is no need for recording or scanning these products in and out of inventory, or for time consuming barcode-based periodic counts. The inventory profile of the department is always automatically updated with the information from the smart cabinet. In addition, when a product expires or is recalled, the clinician is automatically alerted on the product’s location, down to the exact room and cabinet, in order to remove it from the cabinet.
What kind of feedback loops should be created to make certain surgical teams and value analysis committees are simultaneously working toward fiscal responsibility and patient care without compromising either area?
It’s important that surgical teams and value analysis committees work closely from the beginning to understand the value and agree on a shared goal. We find there is often better success implementing new supply chain technology by starting on a smaller scale, in a single department for example, and then building on that foundation. This can be a very effective way to learn, assess the benefits, and refine before continuing to scale.