What’s the Real Cost of Outdated Supply Chain Processes? 5 Questions to Ask

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Most hospital operating rooms still rely on manual supply chain processes. And most clinicians and administrators aren’t too happy about it.

In our recent survey of 305 surgeons, OR nurses, OR supply chain decision makers, and hospital supply chain administrators, 51% said there were too many manual inventory solutions in their organization. They’re feeling the consequences, including added workload, not having the right supplies on hand, and trouble identifying expired or recalled products.

Clinical staff and administrators believe automated systems can help to address these challenges. In our survey, they noted key benefits, like reducing costs, enhancing clinician workflow, and giving clinicians more time with patients. Yet, 83% of respondents said their hospitals still rely on manual counting in some part of their supply chain and only 15% were using automated RFID systems.1

Why do so many hospitals stick with manual processes rather than switch to automated solutions? In our survey, respondents said the top barrier was the perceived cost of a new system. But given the inherent, everyday expenses of manual processes, moving to an automated system actually reduces costs. The real question is, what will it cost to stick with the status quo? When you start to investigate, the true picture comes into focus.

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Here are five questions to ask to calculate the real cost of manual supply chain systems:

1. How much time are clinicians spending on manual tasks and paperwork?

Manual inventory tasks can eat up a lot of time, taking clinical staff away from patients. Automated systems give nurses and surgeons this time back — and the savings can really add up. When Adventist Health White Memorial decided to move to an automated system in their cardiovascular department, they tracked time spent on specific tasks before and after making the switch. Annually, they saved 176.8 hours on cycle counts, 200.2 hours on order placement, and 93 hours saved tracking expired products.2 Savings vary from organization to organization. Ask your clinical staff how much time they spend on manual inventory tasks. You might be surprised.

2. What are the costs of burnout and turnover?

Laborious tasks don’t just take up time, they also contribute to stress. When we asked OR surgeons and nurses to tell us the single most stressful part of their job, the number-one reply was too much paperwork (26 percent), followed by too little time for patients (23 percent).1 Stress leads to burnout, which is all-too common — and it’s getting worse. In their 2017 Acute Care Market Report, the Health Industry Distributors Association estimated that over the next five years, the turnover rate would double to 68.7 percent for physicians and 62 percent for nurses.3 When evaluating the costs of manual systems, remember the costs of staff turnover due to burnout.

3. What’s the cost of waste?

When you depend on busy staff to track supply use manually, inaccurate data invariably slips in. People forget to document when they use supplies, they lose track of inventory location, they have trouble tracking product expirations. The result? Waste — and lots of it. In our survey, 72 percent of respondents saw problems with overutilization or wasting of supplies in their organization. In fact, U.S. hospitals see $5 billion in waste each year from the high-value medical device supply chain alone, with most of the waste attributed to poor inventory management4. In their study, Adventist Health White Memorial saw $120,000 in savings annually, just from identifying products before they expire.2

4. What’s the cost of not having the right supplies on hand?

Conversely, understocking supplies is also very costly. In our survey, most respondents had seen serious consequences of not having the right supplies at the right time: 57 percent knew of a time their hospital had to borrow supplies from another hospital, 69 percent knew of a time when their hospital had to delay a case, and 40 percent knew of a time the case had to be cancelled. Delays and cancellations are expensive, as is rushing to get supplies last minute.1 When Adventist Health White Memorial moved to an automated system, they eliminated 100% of their rush shipping costs.2

5. What’s the cost of charge capture issues?

In systems that require time-consuming manual tracking, it’s easy to forget to document supply use. The charge doesn’t get tracked back to the patient. One of the key benefits of automated systems is simplifying supply tracking at the point of use, which improves charge capture. At Adventist Health White Memorial, the automated system’s improved charge capture led to $42,000 in initial savings.2

When you look at the extra work, data limitations, and waste that come with outdated solutions, it’s clear that sticking with the status quo is an expensive proposition. Many hospitals see savings within 12-18 months of switching to an automated system, through efficiency gains and reduced waste alone. And beyond that, they see the long-term benefits of happier surgeons and nurses spending more time with their patients — which is truly immeasurable.

About Cardinal Health Hospital Supply Chain Survey
This study was fielded Nov. 2 - Nov. 15, 2017, using an online survey methodology. The samples were drawn from SERMO’s Online Respondent Panel of Health Care Providers, which includes over 600,000 medical professionals in the United States. The study included 305 respondents total from health care organizations varying in size, specialty and practice area. Respondents included frontline clinicians (n=128), operating room supply chain decision-makers (n=100), and hospital/supply chain administrators (n=77). All survey data is on file at Cardinal Health.

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1Cardinal Health Operating Room Supply Chain Survey Fielded Nov. 2-Nov. 15, 2017
2“Proof Positive.” Cardinal Health, 2017. Data based on time and motion study led by third party research firm, Kaleidoscope. Study conducted at White Memorial Hospital, Los Angeles, CA. 2017
32017 Acute Care Market Report. Health Industry Distributors Association (HIDA), 2017
4PNC Healthcare; GHX quantitative research study, August 2011

 

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