Materials Management in Healthcare
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Last year, hospitals in American spent over 300 billion dollars on outside materials and services. During the current period of financial crisis, there is an overwhelming impetus to reduce costs as much as possible without reducing the overall quality of hospital services provided. Reducing the amount of inventory that a hospital is carrying on a daily basis reduces the out-of-pocket expense for that financial period. While some traditional methods of inventory reduction, such as forecasting, don’t function optimally in an industry as unpredictable as healthcare, viable options do exist.
Bi-monthly or even weekly purchase orders are a realistic option for many hospitals. This reduces the need to predict material needs, therefore reducing the amount of inventory that sits idly on the shelves for an extended period of time. While some industries require unique goods, materials management in healthcare is about dealing with generic goods. This means that manufacturers often have huge amounts of stock waiting to be delivered.
Lowering the overall service level is also a potentially cost saving measure, though it does come with a fair amount of volatility. Reducing the amount of unnecessary procedures will reduce the inventory requirements for a specific facility. While what constitutes an unnecessary procedure is a touchy subject for most doctors and administrators, if it can be properly executed, it has the doubled benefit of reducing inventory and labor costs.
Most hospital inventory managers would prefer to err on the side of caution when it comes to inventory levels, in order to avoid potential situations in which patients are unable to receive the materials that they need in a timely manner. However, this unfounded fear has lead to inventory stagnation and waste. It has also lead to stagnation in management practices and techniques. In order to reduce costs and provide optimal customer service, new ideas and new techniques must be explored.
A healthy combination of technology, human ingenuity, and basic managerial techniques are required for successful inventory management.