Currently the health care industry isn’t headed for a cliff. It’s hanging over the edge by a single finger.
As we transition from the last emergency, where providers were focusing nearly entirely on procurement—stocking up on PPE and staying stocked on everything else despite supply chain disruptions—to the next phase, where elective procedures will once again become the cornerstone of the hospital’s financial future, physical assets need to be rebalanced accordingly. Without close attention, medical and surgical supplies can become a significant loss.
The average annual waste at medical facilities due to product expiration tops $5 billion. That number will no doubt increase significantly for the years 2020 and 2021.
Hastily bought products are headed for expiration because they were supposed to fill a need that never arose. Standard order products are headed for expiration because elective procedure volume dropped for an extended period. Soon-to-expire inventory will be disposed of by the tons.
The coronavirus crisis has revealed an exaggerated version of the reactive-proactive problem that has plagued health care’s supply chain for decades. Ordering when supply levels are low, allowing supplies to expire on the shelf, and reordering to fill the space left by expired product are all examples of reactive supply chain management.
Proactive supply chain management evaluates the likelihood of product expiration, then finds destinations for that product to mitigate the loss. Sufficiently advanced and connected supply chain management can reallocate product between health care facilities according to their needs and maximizes the amount prevented from expiration.