Inventory Management
The purpose of inventory in hospitals is simple – to help make sure necessary supplies are readily available when they are needed to provide patient care or to support business operations. While many hospitals have too much inventory, some have too little, and frequently there may be too much in the wrong places, and too little in others. Inventory management should balance inventory on hand with operational needs to achieve the forgoing objectives.
Once money has been “invested” in inventory, unless items are consumed, seldom can the full value of dollars “invested” can be recovered. As soon as supplies are unloaded on the dock, they are usually removed from shipping cartons. Hospitals often mark date of receipt on boxes and/or they may apply a sticker to boxes each time they are counted in a physical inventory. Dust begins to collect almost immediately. These factors make it less and less likely that items will be returnable to the vendor they were purchased from. Thus it is important to purchase enough of each item, but no more than necessary.
Most hospitals have a primary location for inventory of routine medical/surgical products. This location is usually under the management of the supply chain management or materials management department. This primary location may be called “General Stores,” “Storeroom,” or a variety of other names. As items are “broken down ” (i.e. items are removed from shipping cartons) and maintained in a “clean” environment, the name of the area usually changes to “central distribution,” “supply processing and distribution,” or others.
Depending on size of hospital and array of services offered, there will be many departmental inventory locations which contain supplies specific to the services of each department. These decentralized inventories keep regularly used items close to the point where they will be used. As inventory is decentralized, it is common to see controls to become less and less formal. While the staff managing inventory in the central locations may have experience and/or specialized training, staffs responsible for inventories in decentralized locations are likely to have inventory management as one of many day-to-day responsibilities, and they often have little or no training in inventory management techniques, tools or systems.
Heatlhcare Cost Solutions recognizes the fact that people least skilled in inventory management are often responsible for the most significant inventory locations, in terms of inventory value and criticality. We offer assistance in defining a strategy to correct this imbalance, and bring professional skills and techniques to managing the most significant areas of inventory.
We have done many projects focusing on making sure the right inventories are "official", i.e. on the balance sheet, that they are managed in the most appropriate manner (i.e. perpetual or periodic), and that reorder points and reorder quantities are appropriate to meet patient and opertional business needs while minimizing the dollar investment and potential for obsolescence or outdate. We have many experiences with optimizing management of inventories in highest-cost, highest-intensity areas such as surgical services and cath labs. We also have deep experience in assessing inventory policies, and making recommendations to improve inventory performance and metrics.
See also Inventory Management Tools