The Real Cost of Medical Supply Spend
A study based on recent AHA data found that U.S. hospitals spent, on average, nearly $4 million annually on medical supply expenses, up to 19 percent of total hospital expenses. For every patient admitted, hospitals spent an average of $4,470 on supply expenses. The accompanying article goes further to say, “Clearly, managing such a large and diverse category of expenses is important for hospitals. The scale of the expenses – and the strong pressure that hospitals face to control costs – underlines the need to seek improvements in managing hospital supply chains. With many hospitals having operating margins in the low single digits, even a 10 percent reduction in hospital supply expense could significantly impact total net revenues.”
Another more recent study of 2,300 hospitals suggests there is a 17.7 percent average total supply expense reduction opportunity, up to $11 million per year per hospital. This is an enormous number with significant impact. Those savings could go towards the average annual salaries of 160 registered nurses, 42 primary care physicians, or the cost of building two outpatient surgery centers.
Hospitals have a choice to make: either ignore the issue and lose precious dollars unnecessarily or face the challenge head-on with a multi-pronged approach. Many hospitals are looking towards not only maximizing volume purchasing and minimizing waste but also making the supplies more convenient to access, even with something as simple as a medical supply storage cabinet. When nurses have to walk to supply rooms to retrieve supplies, for instance, they often take more supplies than what’s actually needed to reduce the number of times they may have to make the trip between patients. It is easier for the nurse to grab what he or she thinks may be needed for the next several patients she sees instead of taking only what is required. Unused supplies are often tossed in the trash instead of being returned to the supply room.
Another area for improvement is security. While most of the medical supplies pose no harm to patients and are, individually, inexpensive, they can be easily taken by patients or their family members at scale. A newborn blanket, extra gauze, or socks surely won’t be missed, right? Perhaps not, but multiply that by every patient and their family members and the problem just got a whole lot bigger.
Hospitals must look at every angle when driving down costs. They must consider every opportunity for improvement. No seemingly small reduction in waste or overspend is too little. It all adds up. By evaluating their current spend, environment, and workflows to determine where adjustments can be made, hospital leaders can take the needed steps forward to make the hospital a leaner, more efficient, and more disciplined organization.
Medical Supply Storage Cabinets vs. Supply Carts vs. Supply Rooms
When it comes to how to store medical supplies, hospitals have three choices: store them in a supply room; store them on mobile supply carts; or store them in medical supply storage cabinets. Of course, many choose to take a hybrid approach and store the bulk of their supplies in a large storage room and stock supplies on patient floors in cabinets or carts. Let’s break down the differences.
Medical Supply Storage Room
While every hospital may uniquely operate, most rely on some sort of medical supply room or warehouse to store their medical supplies, such as first aid products, intravenous solutions and tubings, personal protective supplies, personal care items, orthopedic supplies, and much more. Typically, the various hospital departments will request supplies and those supplies are transferred from the storage room to their specific destination, such as the emergency room, operating room, or intensive care unit.
It’s not efficient to send one item at a time, therefore, most hospitals transfer many items at once to store them in medical supply storage cabinets and carts per department or floor. It’s up to the supply warehouse staff to inventory all supplies, keeping track of which items are delivered to which parts of the hospital and when. They are also responsible for maintaining adequate stock of items in the warehouse, reordering when necessary, so supplies are never running short.
Often adjacent to the storage warehouse is a separate room for storing medical supplies and equipment that require a sterile environment. Surgical instruments are often stocked here to provide another level of safety.
Medical Supply Carts
Medical supply carts store various supplies and equipment from the supply room and are mobile. They offer nurses and technicians the ability to move supplies from room to room on the patient floor or even between floors. This not only reduces the amount of time nurses spend finding supplies but also ensures nurses have supplies with them everywhere they travel.
These carts have increased nurse efficiency in hospitals and health care facilities. The only drawback may be that the carts are somewhat limited in space to what they can carry. Because of this, hospitals often purchase multiple medical supply storage carts specific to a certain area of the hospital, such as emergency rooms, labor and delivery, and trauma centers. By customizing the carts to fit the needs of patients in specific areas, they can optimize cart space for those items most commonly used to treat those patients.
Medical Supply Storage Cabinets
There are different models of medical supply storage cabinets. Some can be placed on patient floors between patient rooms or near a nurse’s station. Others are located inside of each patient room, either free-standing, built into the wall, or pass-through where they can be loaded from outside of the room and accessed by the nurse inside of the patient room.
By placing supplies inside of patient rooms, hospitals drastically reduce the amount of time nurses spend retrieving supplies. However, in-room medical supply cabinets also present a risk for patients and/or their family members accessing the supplies as well. Many supply cabinets, therefore, feature a locking mechanism that can only be accessed by authorized personnel, such as nurses, physicians, and supply room staff.
Training Staff and Other Effective Strategies
There is no one solution to such a big problem as medical supply overspend and waste. Even with efficiently-organized medical supply rooms, carts, and cabinets, there are still opportunities for improvement. One of the biggest issues can be staff awareness. Just like many patients who believe taking a few items from a cart or their room is okay, staff members are often unaware of how every misused, wasted, or taken supply adds up to major deficits in the hospital’s bottom line.
Hospitals must, therefore, take an active role in training all levels of staff to understand the problem and how it quickly snowballs per employee and patient. Supply purchasers should build relationships with suppliers and find discounts or less expensive products of equal quality. Expiration dates must be minded. Hospitals can reduce over-purchasing items with a specific shelf life if they are able to accurately predict future requirements based on historical data, while also keeping tabs on current disposal rates.
Nurses need to take only the supplies they know they will immediately use. It may reduce their workload to take a handful of an item, but the costs associated with wasting those unused items often exceeds any gain in productivity.
Control leaders should also take a look at how the hospital organizes and labels medical supplies. The clearer they are marked, the less likely staff will mistakenly select the wrong supply and subsequently throw it away.
This brings up a final point. Because many unused supplies are disposed of as a means of convenience, hospitals should provide an alternative. A medical supply storage cabinet or cart could be designated as a “return item” storage unit, enabling physicians and nurses to easily put the supplies they did not use into the unit to be restocked on a daily basis.
Reducing spend requires all hands on deck. Every hospital staff member, from the janitor to the Chief of Staff, have a role to play in optimizing budgets. The opportunities to redirect those funds to the people, facilities, and programs that improve patient care are out there. The hospital must discover them to control costs and the supply chain.