An appetite for inventory innovation in healthcare

Inventory innovation is an attractive option for hospitals seeking ever greater efficiencies.

By Dr. Damien Marmion, CEO, Ingenica Solutions

In the past two years, the Dubai Health Authority (DHA) was the first organisation in the UAE to implement the GS1 barcode standards on all pharmaceutical transactions in its hospitals and health centres. Utilising the world’s most widely used barcode system helps to minimise possible errors when dispensing medication.

Assigning each medicine with a barcode permits the traceability of products at every stage within the healthcare supply chain and helps to eliminate counterfeit medicines, improving patient safety.

Healthcare providers can secure greater benefits through adopting these internationally recognised GS1 barcodes further, and this is certainly the case in hospitals in the UK where it is mandatory to adopt GS1 standards.

Hospitals in the UK are demonstrating enormous success, implementing innovative technology, which is providing significant operational efficiencies at a critical time for healthcare. It is this appetite for inventory management and increased back office efficiency that is experiencing an increase and becoming recognised worldwide.

Ingenica Solutions has been instrumental in reshaping the British National Health Service (NHS) supply chain and procurement landscape, delivering successful projects and brining significant benefits across the NHS; providing solutions to enable track and trace of products, people, and equipment.

The healthcare providers we work with are using our technology to enable the automation of the replenishment process, improve how clinicians, procurement and finance staff work together to choose products and services that are cost effective in the short and long term, and crucially, offer the best outcome for patients. It’s encouraging for those involved in healthcare to realise that these benefits are transferrable and replicable across any healthcare organisation, in any country.

In practice

GS1 data standards are used in healthcare to enable the track and tracing of products, caregivers, locations and patients. The impact of utilising barcoding technology in healthcare is immense, from the clear cost saving and efficiencies, the benefits that are widely recognised, to the lesser talked about but incredibly vital role it plays in supporting better patient safety and saving lives.

Inventory management is one of the pillars of the GS1 programme and really drives change, efficiency and patient safety. So, what’s innovative about inventory management in healthcare?

In the past, the management of inventory in hospitals has been achieved through largely manual processes, which essentially involve checking a shelf to see if more is needed to be ordered, frequently only minutes before a planned operation. Hospitals have been highly reliant on manual input or incumbent knowledge, and are therefore expensive to run. Visibility of supplier performance in this common scenario is largely anecdotal from clinicians and so a procurement officer would have little hope of evaluating a supplier’s performance over a period of time or within a department, let alone across a hospital or groups of complex hospitals. As a result, a range of informal, person reliant processes and systems emerged.

Hospitals often have many different systems managing various functions of the organisation, and often none of these will use the same data structures or integrate fully with each other. This means that usable data to understand what is happening in the organisation is difficult to patch together. Many of these systems are not built with healthcare management as their core purpose. A good inventory management system will help connect and gather data from a multiplicity of sources of validated data – providing a single robust core of management data from which to base decisions.

Real inventory management is indeed a core enabler to change in healthcare, and improvement to management of the supply chain. In healthcare though it is far more than that, it is a core enabler to so much more; including improving patient safety, reducing the running costs of a healthcare organisation, and tracking and tracing products.

The implementation of a robust inventory management solution forces good practice in procurement and the adoption of common standard operating processes across an organisation. This opens up a host of possibilities around how a product is bought, replenished and distributed by the organisation; the internal supply chain.

As an example, we may know what supplies hospitals are buying, but do we know what supplies are actually being used? A large percentage of hospital budgets are spent on non-pay goods, which can equate to tens of millions per hospital on goods ranging from a box of tissues to high value medical implants; therefore, understanding what is actually being used is essential.

Impact of inventory management

Innovative inventory management in healthcare has a huge impact on value, not just costs, which is crucial at a time when healthcare providers across the world must maintain a constant eye on spend. Procurement has been subject to enormous scrutiny and attention, and hence new, better ways of working are now rapidly being adopted.

Overhauling inefficient tools as addressed earlier, and adopting processes used successfully for many years in the commercial sector can and is, enabling the changes healthcare so desperately needs. However, in a multi-faceted, challenging clinical environment, inventory management is more complex than in the commercial world. Standard finance applications have been shown to be too difficult to adapt to the healthcare inventory management environment, hence the development of dedicated systems.

The benefits of an innovative inventory management system extend across an entire hospital, across all departments: clinical, finance, procurement, ICT, and beyond.

Clinical

1. Improves patient safety

– Enables access to reliable and robust data to make informed decisions

– Minimises risk of errors

– Releases clinical time back to patient care

2. Reduces clinical time spent on administrative duties

Finance

1. Enables strategic financial decisions

– Enables access to reliable and robust data to facilitate price comparison

2. Enables greater financial efficiencies

– Enables understanding of the true cost of patient care

– Determines the real cost drivers across the organisation

3. Provides better cost information

– Reduces man hours on reporting

Procurement

1. Improves product visibility and transparency

– Real time access to status of stock, purchase levels, supplier performance, pricing trends

2. Better stock and data management

– Reduces wastage

– Reduces inefficiencies

ICT

1. Supports the use of GS1 data standards

– Enables data to be compared, shared and analysed

2. Flexible, robust, innovative technology

There are still some hospitals that have no reliable electronic inventory management system, relying on clinical and supply chains team local knowledge to manually create orders; an option that simply cannot support the demands and requirements of hospitals in today’s healthcare environment.

The challenges for these organisations are clear; lack of data, lack of visibility and transparency across the supply chain, the cost of over and under-stocking, and wastage. All of which create inefficiencies and have a huge impact on budgets.

Healthcare providers worldwide face the same procurement and supply chain management challenges, and to resolve these common issues, which are often aggravated by inefficient practices, inventory management is core.

For instance, in the UK in recent years, as the benefits are more widely reported, there has been a real change in the value that hospitals place on inventory management. There has been exceptional progress; best practice, which is now actively being shared across the industry, across the world. Greater collaboration is also evident as hospitals work with others to take procurement and supply chain practices to the next level.

There are many well-recognised best examples to cite on inventory management; projects that have saved millions of pounds, projects that have helped return clinical staff to patient care — all projects that are easily replicable by other healthcare providers seeking to reduce spend. The British NHS is certainly a window on the world, and the long-term impact of innovative inventory management is considerable; it delivers value for money across healthcare, worldwide and improves outcomes for patients.

 

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Dr. Damien Marmion