Optimising inventory management in hospitals
Hospital Inventory management – The cost incurred for running stores and expenditure forms 35 to 40 percent in a hospital. In small and medium-sized hospitals this expenditure is towards the higher side because of the absence of other costs and this forms the major share of costs apart from employee salaries. As we always put emphasis on cost containment, the obvious area to which attention should be drawn is hospital stores inventory management. An effective and efficient approach for material management reduces material costs and expenditure. Three areas where transaction of materials can be monitored and are process-oriented are
– Purchase – Storage – Supply / allocation
Stores and warehouse inventory can be of different types and are supplied by specific vendors. On one hand when the supplying vendors may be limited in number. On the other hand vendor selection based on various criteria is also important. Some organizations do the purchase of materials through different departments whereas others do it under the umbrella of a single store and the whole process is made centralized. Depending on the policy of the hospitals the processes are carried out; however centralized processing of inventory is effective and easy to monitor.
Process of hospital inventory management Often it is noticed that in small hospitals there is no defined process of material procurement. As and when required, the material is ordered and stored. When stored, there is no proper record maintenance or surveillance method to monitor the dispensing of the material. Let’s take a look at how the process can be managed in a simple manner and how the effective use of HIS fits and gives benefit to the users.
Periodic budget planning for materials and forecast of demand (Based on prior information of the usage of material, Use of Data analytic tools are very helpful in this process, regular use of MIS and insight of data of the hospital materials usage helps in taking a calculated decision)
Procurement is the process where the right vendor selection, proper negotiation can save the hospital a good amount of money. Sometimes vendors may look costly, but usage of their material, if they are quality tested, can save the hospital a lot of money in the long run. Negotiation is another aspect where judging the pulse of the vendor and vendor analysis and comparison can build a long-term relationship with the vendor with emphasis on quality materials.
Receipt, an inspection of the material, and payment When materials from the vendor reach the hospital, they should be properly inspected, high-value items and equipment should be checked by skilled and experienced professionals and they should be made the process owners for this and be responsible for the same. The documentation of this process is very much necessary for future tracking and surveillance and action when required. Any material found to be defective has to be replaced soon and proper documentation helps in the same. The payment for the materials procured is done after proper checking documentation and approval and the points of contact for this should act diligently to avoid losses or unnecessary expenditure. When there is a scope of payment in installment or promotional offers are given, situational analysis and cost-benefit analysis should be put into practice.
Storage Proper storage of materials as specified by the vendor and the user requirements are equally important. While storing the hospital should make proper systems and policies in place so that secured storage, easy retrieval of material, and dispensing are ensured. This saves time and restricts a messed-up dispensing counter. Proper labeling of materials, separate storage of hazardous materials helps in quality aspects and safety aspects of users and patients.
Control over the inventory For hospitals, the decision-maker should always have an eye on the inventory, cost of inventory and put control in practice so that money is always mobilized for more important materials and revenue-generating materials used more frequently in the processes. Some of the systems for inventory control are periodic or cyclic system, Two-bin system, lead-time concept, minimum-safety-buffer stock concept, economic order quantity, ABC analysis, turnover inventory, physical inventory, etc. Every hospital is different, so any single method may not be ideal for a particular situation. Hence as and when required the concepts may be applied for a better outcome. Along with the above processes, there should be proper issue and distribution practices, usage policy, disposal, and condemnation methodology.
Pilferage is considered a major hindrance in material cost containment. Often kickbacks or other kinds of cash involvements to purchase personnel can make a hole in the vessel. These fraudulent incidents can be avoided by regular internal audits. Often it is cited as a “lack of time” result, but appointing an external agency at an affordable cost can save the hospital ten times as the cost of the auditor. Regular supplier performance review, supply price comparison, and management audit can help the hospitals better management of the materials.
Predictive analytics – We apply business analytics techniques to forecast the consumption of various supplies in your hospital in order to optimize inventory costs. The deep learning tools are configured to analyst vast data of 4 to 6-year consumption and bring high levels of accuracy to derive accurate purchase order preparation.
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