Revenue is at risk due to new forms of payment under the Affordable Care Act and hospitals are looking to their supply chains to make up for the loss, reported The Wall Street Journal. Hospitals are a bit behind in their adoption of supply chain technologies but these new waves of decreased revenue are prompting a shift.
Historically, many hospitals have relied on manually counting inventory or eyeballing their stock. This method proved inefficient as many hospitals order too many of some instruments and too few of others, noted the source. There was also a lack of communication between partner hospitals. So, while one facility may have had a surplus of surgical sponges, and another may have had a deficit, there was no system in place to share resources.
RFID technology will help with supply chain management
While not all hospitals are making moves towards supply chain technology, health care networks such as BJC are switching their hospitals' over to radio frequency identification tags, otherwise known as RFID tags.
According to WSJ, these tags track medical devices and can store information regarding new orders and order surpluses. All the information stored in these RFID tags is sent over to a main database that helps organize inventory information.
The source noted that the use of this supply chain technology has resulted in a 23 percent decrease in surplus stock during tests conducted by health systems.
BJC health care network is spending millions investing in these RFID tags but plans to seen millions of dollars in returned inventory costs and ultimately projects the organization they will make its money back in less than 18 months, explained WSJ.
"When something is purchased [in other industries] the whole supply chain knows," said General Manager of Medical Services and Solutions for Cardinal Health Inc. Tony Vahedian to the WSJ. "They are smart, intelligent supply chains driven by data. You don't have that in healthcare."
Inventory ordering is not the only sector of the supply chain where the health care industry faces problems. Expiration is a serious problem with medical supplies.
FierceHealthIT reported that anywhere between 10 and 15 percent of all inventory ends up expiring before use. This totals out to around $5 billion a year in losses for hospitals. RFID tags can help remedy this problem as well, the information transmitted to the tags includes expiration dates and can help health care leaders manage supply waste in this area.