Hospitals double-down on supply chain technology to cut costs

Hospitals are taking a page from retail and other industries by expanding use of technology to cut costs in their supply chains, according to an article in The Wall Street Journal.

In retail, for instance, once a customer scans an item at checkout, the supply chain system automatically tracks that change in inventory. In contrast, hospitals have often relied on counting or guessing estimates for their inventory levels with a range of employees handling products, according to the article.

At BJC HealthCare, which operates a network of 12 hospitals in Illinois and Missouri, expanded use of radio frequency identification (RFID) tags helps hospitals track medical devices and new orders, and lend supplies to other facilities. Those tags send information to a main database that can track if items expire. The system has helped the organization reduce the required stock kept on hand by 23 percent in tests, according to the health system.

Meanwhile, Ascension Health, which operates 131 hospitals nationwide, is moving them all to a central inventory-management system that uses scannable barcodes used to update inventory each time a product is taken off the shelf, according to the WSJ. The system allows staff members in one unit to locate supplies anywhere in the hospital.

Intermountain Healthcare recently reported that a blood-tracking initiative, which set a consistent threshold for ordering transfusions, helped the 22-hospital system cut costs by $2.5 million over two years.

Appropriate ordering isn't the only supply-chain challenge hospitals face, however. Between 10 percent and 15 percent of all hospital supplies wind up expiring before they are used, leading to waste-related losses of about $5 billion a year, Jean-Claude Saghbini, of supply chain firm Cardinal Health, said in an interview with FierceHealthFinance.

Hospitals have been increasingly using RFID tags, he added, noting they can help alert surgeons if any sponges or other medical instruments have been left inside a patient before wrapping up a procedure. They've also been used to combat hospital-acquired infections.

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