The global health care-services market is expected to grow from $6,872.86 billion in 2021 to $7,548.52 billion in 2022. That’s a compound annual growth rate (CAGR) of 9.8% (ReportLinker). Within this industry, inventory management is a frequently underrated factor.
In 2020, health care spending amounted to 19.7% of the total gross domestic product (GDP) of the United States.This percentage indicates how vital the healthcare industry is to the country. Yet studies have indicated that 30% of this spending might be considered wasteful. What’s more, although the US is one of the countries that spends the most on health care, others are not that far behind. Controlling these high costs is very important, and a robust healthcare inventory management system is a major way of achieving that control. In this article, we will explore the challenges you might face when streamlining your healthcare inventory, and suggest ways to overcome them.
What is healthcare inventory?
Healthcare inventory is the stock of pharmaceuticals and equipment a hospital uses to treat patients. Healthcare inventory management is the administration of these items and includes the purchase, sale, storage, usage, and loss of stock. It also includes processing payments. Patients’ lives and well-being depend on good medical inventory management, and its importance cannot be overstressed.
What are the challenges healthcare inventory management systems face?
The challenges hospitals face when it comes to managing their inventory are unique to them. Let’s look at some of these hurdles.
Every hospital needs a good stock of pharmaceutical products. There are several challenges to ensuring that pharmaceuticals are available in the right quantities at the right time.
Some pharmaceutical drugs are known not just for their health benefits but also for their ability to be misused. For example, painkillers like tramadol can be used to get high. While this pain killer is a morphine derivative considered safe under medical supervision, using it to get high can result in serious health consequences for the user. Tracking the inventory of these products and monitoring who has access to them is a crucial way of making sure they’re not stolen or misused. This is the first challenge of a hospital inventory management system.
Medicines have expiration dates, after which medicines are not safe to use. Hospitals need to keep track of these dates in order to dispose of outdated medications. Additionally, sometimes a hospital might have different batches of a particular medication, each batch having a different expiration date. Imagine, for instance, that the paracetamol a hospital has in stock has come from three separate orders, as shown in the table.
|Order no.||Expiration date||Stock|
|A||12 December 2022||350 strips|
|B||22 June 2023||150 strips|
|C||25 September 2024||200 strips|
If the hospital uses order B first, there’s a risk of order A expiring before it is needed. This would mean having to throw away order A. Having a system in place that can monitor expiration dates and ensure that medicines are used wisely is important to reduce waste in the long run.
Hospitals need to ensure that medicines are available when needed. However, some medicines are used less often, meaning that managers must find ways to ensure their availability in sufficient quantities without over or under stocking them. Adrenaline injections are a good example. This life-saving medication is used in cases of severe allergic reaction or anaphylactic shock, and it has to be administered with speed. Hospitals need to be sure to have enough of this drug available without having too much that might go bad because it is not used very often.
Equipment includes, but is not limited to, oxygen pipes, surgical trays, IV drip setups, vital monitors, and wheelchairs. The maintenance and administration of this equipment is part of healthcare inventory management.
How can automation help you in healthcare inventory management?
If healthcare inventory is not automated, there is an inherent risk of human error, something that could negatively affect the lives of patients. Healthcare inventory software is equipped with state-of-the-art technology designed to track inventory, give reminders when stock reaches minimum levels, track the exact location of the inventory, and even automate inventory reordering. Medicines, for instance, can be tracked from point of order to their use and safe disposal. The software records every movement (or the lack thereof) accurately.
Medical inventory management software can help you save money in the following ways:
- Reducing waste of medicines,
- Reducing administrative expenses for inventory management,
- Controlling overstocking and understocking of pharmaceuticals and equipment, and
- Minimizing transportation costs between locations.
With an inventory management system, you will be able to generate different types of reports quickly, something you will find beneficial when having to make difficult decisions. The reports you should be able to access include:
- Inventory audit report,
- Inventory valuation report by cost,
- Inventory report by warehouse,
- Inventory by batch and expiration report,
- Sales-by-customer report,
- Sales-by-product report,
- Purchase-by-product report, and
- Returns summary report.
You want a system that allows you to schedule your report to be produced periodically, or generate one when you need it.
With an inventory management system, hospitals can easily access medications by their batch numbers and know when expiration dates have been reached. If a medication has expired, the medicine can be disposed of safely. Additionally, if there are some issues with a particular medication after it has been delivered to a hospital, it can quickly be located in the system by its batch number. This way, hospital authorities immediately know where the problem meds are stored and can quickly return them to their manufacturer.
The healthcare industry is frequently attacked by cybercriminals. In fact, it’s one of the most targeted industries. Inventory management software allows you to store your data securely, reducing threats. You can limit access to the system to specific individuals on a need-to-know basis.
Managing inventory in the healthcare industry is complex but carries an importance that surpasses that of any other industry. Reliable inventory management software can help you overcome challenges to provide reliable service crucial to patients’ lives.
Check out DEAR Systems inventory management software for all your healthcare inventory management requirements.