Hospitals Desperately Need to De-Risk Their Supply Chains

Hospitals face a challenging situation when it comes to managing their supply chain. In many cases, they are caught between using complex and expensive inventory systems that are not designed to identify expired and recalled items and a manual inventory count process that is outdated, time consuming, and prone to errors. Unfortunately, this has resulted in an alarming number of expired and recalled items being found in hospital supply rooms, which can have serious consequences.

Recall events in the U.S. medical device industry increased by 8.8 percent in 2022, up from 837 events in 2021 to 911 in 2022. On average, 1 percent of items currently in hospital supply rooms have been recalled—many of those items are implants at high risk of being used in a patient procedure.

Meanwhile, a Cardinal Health study found that nearly a quarter (24 percent) of healthcare providers say they have seen or heard of an expired product being used on a patient. What is shocking is that it has become accepted by the industry that 8 to 10 percent of all disposables expire on hospital shelves annually. The reason is understandable: Resources are tight, and freeing up the time and effort needed to stay on top of recalls and inventory means losing those resources elsewhere. However, with recalls on the rise and more single-use devices on the shelves, hospitals have to look at new ways to manage these processes.

The Toll of a Manual Inventory

Although hospitals have processes to look for expired and recalled products, they are challenged by the fact that these are often manual processes. Most hospitals rely on the supply chain team or clinicians to physically look at every item in the hospital—every month—to remove products that have expired. 

The same Cardinal Health study cited above found that nearly 20 percent of clinicians' work weeks are spent on supply chain management tasks and that 66 percent of respondents wished they did not have to perform supply, inventory, and administrative tasks. Likewise, 78 percent of respondents still manually count inventory in some areas of their supply chain.

Nearly one-third of respondents said it's been six years or more since their hospital has implemented a new inventory management system. Another 25 percent of respondents did not know if an inventory management system had ever been implemented or updated.

Manual inventory counts can take one or two staff members up to two days a month to complete, and one operating room acknowledged that this manual method was not efficient, as the OR area suffered from $80,000 a year in wastage costs due to expired products. Keep in mind that is just what was recorded. 

Again, this isn’t the reality that hospitals desire. They’re simply handcuffed by legacy processes and a lack of appropriate systems. 

Insufficient Inventory Management Systems

Many hospitals have advanced inventory management systems. These are very expensive, complex systems for tracking devices and instruments in a digital system. Theoretically, with an inventory management system, the hospital knows what’s on its shelves in the supply rooms. However, the information is incomplete and doesn’t include important information like expiration dates and lot numbers.

Neither inventory management systems nor manual counts create the levels of inventory control needed to eliminate the use of expired or recalled products. Meanwhile, devices are expiring on the shelves, recalled products aren’t being removed, and PAR [“periodic automatic replenishment] levels are driving excessive numbers of unused devices. 

Inventory management systems provide on-hand inventory levels; they don’t provide inventory control. Control looks like having visibility into expiration dates and lot numbers in a cloud-based system. It would empower the clinician looking for the recalled or expired products to do a query to confirm the lot numbers are on the shelf and, more importantly, where those items are—even when there is not a PAR location.  

Hospitals need to move beyond standard inventory management systems to employ technologies that can help them truly understand the supplies they have on hand, where they are, and whether they’re still safe to use on patients. One such solution comes in the form of unique device identifier (UDI) scanning. Since 2017, all manufacturers have been required to use standardized barcodes, or UDIs, which contain information about expiration dates, lot numbers, and more. With the right scanning technology, capturing this additional data can be done in both PAR and non-PAR locations. 

The consequences of not getting a better handle on hospitals’ inventories are critical, as this need goes straight to the heart of patient safety. Today’s hospitals must take the steps necessary to de-risk their supply chains, and that begins with exploring the latest advances in UDI scanning. In the process, they’ll unlock much more than greater financial sustainability; they’ll unlock the ability to better care for their patients. 

We can all agree that expired and recalled items should never be found in a hospital supply room. When they are, there is a good chance they will be used on a patient. As an industry, we must take concrete steps to de-risk the healthcare supply chain for the benefit of patients and hospitals alike.