Many hospitals underestimate the value of their inventory—by millions of dollars

3 Minute Read – As part of the inventory services team here at Syft, one of the most rewarding aspects of my job is helping facilities find “hidden value.” In other words, while we are counting inventory, we often find that the value of inventory is much higher than the hospitals anticipated. We identify hidden value during many of our annual inventory reviews, but we find the most hidden value—on average anywhere from two to five times the hospital’s estimated inventory value—when we provide inventory services at facilities that haven’t had annual reviews for a couple of years or longer.

Two recent examples underscore the importance of conducting annual inventory reviews—and show just how large a role they play in helping hospitals identify hidden value. Both of these facilities had not performed annual reviews for many years. At the first facility, located in the Southeast, leadership believed they had about $5 million worth of inventory. When we were done with our count there, we were all shocked to find that they actually had about $51 million. In a less extreme example, in a facility in the Northeast, we uncovered more than $15 million when they thought they had $5 million inventory.

The root of the problem

Hospitals underestimate the value of their inventory for many reasons, including hoarding, poor documentation, and disorganization. For example, in one of the hospitals where we uncovered a significant amount of hidden value, we found the same type of catheter stored in five different places. It’s no surprise that this hospital was struggling to quantify its supplies on hand.

It’s also key to note that when hospitals have disorganized inventory, they are less aware of all the inventory they have—and where it is located. As hospitals face the coronavirus pandemic, the importance of having a strong understanding of the inventory on hand is becoming even more clear. Hospitals must be able to quickly determine how many critical supplies (such as face masks and other protective gear) they have, and where these supplies are located.

Trickle-down effects

When hospitals are sitting on a lot of hidden value, they also tend to be sitting on a lot of expired products. That’s because these hospitals are less likely to regularly track and monitor their inventory. As a result, they tend to order the same items unnecessarily—because they don’t realize they already have them on hand. That increases the likelihood products will expire before they can use them.

Expired products represent a significant safety problem for patients, but they also impact the bottom line at hospitals. Previously, we shared how we found dozens of expired items that amounted to nearly $200,000 worth of inventory at one facility.

To learn how much your hospital could save by optimizing the supply chain, use our calculator.

Hospitals should think of inventory services as an annual check-up that leads to a healthier bottom line and healthier patients. Just how much healthier? Most hospitals could reduce their expenses by more than $12 million annually by improving their supply chain practices, according to recent Guidehouse research.

To those working on the front lines, we applaud you and we will match your efforts

March 23, 2020 As the COVID-19 situation continues to unfold, I want to take a moment to pledge my support to those of you working on the front lines. I’m immensely grateful for the sacrifice you are making by putting your safety at risk to protect us all.

My promise to you is this: Here at Syft, we will match your efforts with our own. While our call to duty is significantly different from yours, we are here to support you. We will do everything in our power to ensure that your hospital supply chain is healthy, and that the right products are moving efficiently through your healthcare system so that patients receive the best possible care.

Right now, our inventory services team is in the field at hospitals across the country, assisting with critical and time-sensitive tasks such as counting inventory and getting PPE and other supplies to clinicians. We will continue to monitor the crisis carefully to find more and different ways to help—and to critically assess what we can learn from it. In the event we are faced with a second surge of coronavirus or other disease outbreak in the coming months or years, we want to ensure that your hospital is ready.

Please be assured that we will work tirelessly until this crisis is behind us. We are your partner, so please reach out if you have questions or need assistance.

In this together,
Todd

Recommended reading

• FierceHealthcare: This article shares hospital preparation tips, including taking stock of supplies such as personal protective equipment, ventilators and beds.Three Steps Hospitals Need to Take Now to Prepare for a Surge of COVID-19 cases
• NPR: This article describes how COVID-19 has accelerated the CDC’s push for data sharing among hospitals to aid in inventory needs. Coronavirus Pushes More Hospitals To Share Data About Inventories Of Protective Gear
• CNN: This article explores how export restrictions in other countries could affect U.S. supply chains. Health Care and Consumer Industry Groups Concerned about Supply Shortages During Coronavirus Pandemic
• Modern Healthcare: This op-ed argues that as Congress and public health officials grapple with COVID-19, they should also begin preparing for future pandemics. Help hospitals prepare for the next pandemic
• Modern Healthcare: This article describes how the shortage of medical supplies across the U.S., including testing swabs, protective masks, surgical gowns and hand sanitizer, can be tied to a sudden drop in imports. Imports of medical supplies plummet as demand in U.S. soars
• The New York Times: This article explores what’s driving the shortage of medical equipment to fight COVID-19. Where Are All the Masks?
• CDC: From the Centers for Disease Control and Prevention, this website provides COVID-19 recommendations and checklists for hospital preparedness. Healthcare Supply of Personal Protection Equipment

Inventory services is about much more than conducting accurate inventory counts

4 Minute Read – A healthy supply chain starts with an accurate inventory. It’s why so many hospitals rely on us to provide point-in-time inventory for year-end, mid-year, and baseline reporting. In the last decade alone, we have conducted nearly 8,000 inventory counts, totaling almost $13 billion in inventory.

Typically, hospitals ask us to conduct counts annually. What many hospitals don’t realize, however, is that we can provide many other valuable services while we are there on-site. Here are just a few examples:

Identifying opportunities to improve efficiency

Since we have conducted thousands of counts at hospitals across the country, we’ve seen the best, and less than the best, when it comes to inventory management. One of our biggest takeaways? Hospitals that have a highly organized inventory operate more efficiently.

When staff members know exactly where a supply is, how much of it they have, and when they need to order more, they don’t waste time searching for supplies or waiting for new supplies to come in.

That’s why, whenever we are counting inventory, we watch closely for organization-related problems. Recently, at one East Coast facility, we noticed that a large amount of inventory had been placed in the wrong area. We carefully logged that product and flagged it with hospital staff members, who quickly retrieved it and brought it to the correct location.

Catching internal errors

Despite hospitals’ best intentions, inventory problems often arise. Our vast experience means that whenever we go into hospitals for inventory services, we know exactly what red flags to watch for that could indicate larger problems.

Recently, at one East Coast facility, we found that some of the RFID tags on products had incorrect expiration dates. Because the RFID tags were incorrect, the expired items remained on the shelf. We notified staff and assisted with pulling the expired products.

Learn how Syft reduces the amount of expired and recalled products by at least 25%

Helping hospitals navigate systemwide changes

We know how challenging it can be for hospitals to keep up with mounting industry demands to improve quality and reduce costs—while at the same time navigating necessary internal changes.

We saw this challenge firsthand at one multi-location healthcare system on the West Coast that was transitioning to a new EHR. To help, while we were counting inventory, we also captured barcode data for all product—including consigned product—at all of their locations in each unit of measure. This highly-detailed and accurate information supported their EHR planning and implementation process.

Benefits Beyond Accurate Counts

The above examples, and others we’ve shared in previous blogs, reveal how inventory services can help reduce supply chain waste, improve patient safety, and lead to significant savings.

Next time you need inventory services, let us know what your biggest pain points are. We’re standing by to help.

Use our calculator to quickly estimate your potential inventory savings based on your annual discharges

Some concerning safety problems we’ve discovered while performing inventories at hospitals.

3 Minute Read – Our team performs nearly 800 inventory counts at healthcare facilities every year. While conducting an accurate count is the primary objective, our work often unearths critical pieces of information for hospitals. In two recent cases, that information related to safety and compliance problems associated with controlled substances.

The Drug Enforcement Administration requires that healthcare practitioners provide effective physical security safeguards for controlled substances, and that they initiate additional safety procedures related to controlled substances. The hope is that these safeguards will reduce access to these drugs by unauthorized persons, therefore minimizing the opportunity for theft or diversion.

Bringing Undetected Problems to Light

In the first recent case where we found a problem related to controlled substances, our team was conducting inventory in a storage area at a 700-bed hospital. There, our counter found a Schedule II drug vial mixed in with the non-controlled products. He immediately brought the vial to a nurse and informed her of the situation.

Though this hospital has a strong safety record and commitment to safety, errors and problems like this can crop up at many—if not all—hospitals, and it’s not the first time our team has experienced this type of scenario.

In this case, the nurse and the hospital responded appropriately, and they immediately implemented steps to ensure nothing like this would happen again. However, not all hospitals (particularly those that aren’t monitoring inventory regularly) have the appropriate measures in place to identify safety and compliance problems like this one—and rectify them—so quickly.

In the second recent case where we encountered a potential safety and compliance problem, we were conducting inventory at an ambulatory surgery center. There, we found discrepancies between the narcotic log and the physical count. We immediately brought the problem to the charge nurse’s attention. In this situation, the nurse found errors in the log and was able to correct them. However, if something more concerning had been going on, the problem may have continued undetected.

Embracing a More Proactive Approach

Data suggest that a growing number of hospital leaders recognize the many benefits of supply chain optimization. Eighty seven percent believe it can improve their hospital margins, and 86% say it can improve care quality, according to a recent survey of 100 hospital and supply chain leaders. The above two cases also underscore the positive effects supply chain optimization can have on hospital safety and compliance.

Use our calculator to quickly estimate your potential inventory savings based on your annual discharges

Hospitals have the best intentions, but it’s nearly impossible to catch every inventory problem that can arise, even the highly critical issues that relate to safety and compliance. Regularly monitoring inventory can help by shining a light on problems that hospitals are unaware of—and by ensuring that these problems are identified before they escalate into more serious issues.