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How Healthcare Providers Set Themselves Up To Fail

ideas are crumpled up and tossed in the trash in this illustration of failed innovation

So you tried to improve your healthcare supply chain. How did that go?

The pressure is on to improve healthcare, particularly in terms of expenses. This story of state-enforced cost reduction is only the latest to get wide attention, but trying to find new savings opportunities is a phenomenon that every provider has encountered. But not every cost-saving initiative will result in actual savings. 

At some point, every healthcare provider is going to get bad results out of an initiative, process, or product. Hopefully when this has happened to you, the worst result was not getting as much improvement as you wanted. Hopefully implementing a new software saved you just ten minutes a day instead of the hour you hoped. Hopefully you haven't been involved in a decision that cost your system to waste millions of dollars

Not that you would happily admit that you have. 

Failure isn't a topic that providers want to discuss. Which makes sense, because it's an industry ultimately run by a bunch of human beings. Sure, the healthcare industry has unique terms for failure - "suboptimal outcomes" on the clinical side and "inefficiencies" on the supply chain side - but they all come from a common, human desire to avoid thinking about all the times you (and we and everybody else) messed up. 

But we need to talk about it, or else we cannot learn from it. So let's do just that this week by analyzing the issues baked into healthcare's industry and culture that prevent a new initiative from succeeding. 

(If it helps, you can pretend that we're talking about other people here. You can learn from their mistakes. You're perfect, and we love that about you.) 

Estimate Your Expiration Risk


"I'll never get everyone to agree to this." 

Look at this list of things that supply chain leaders would fix overnight. What should stand out about it most is that almost none of the suggestions offered are pie-in-the-sky ideas. These healthcare inventory experts could have said: "I want immediate, exact visibility into the past and present of every medical supply - from the source of all the materials that went into it all the way up to where it is stored in my facility right now." Heck, they could have said: "I want to name my own price on every product I buy." They were supposed to dream big! 

Instead they named their biggest problem right now (most of them said backorders, which isn't terribly surprising) and explained why that problem wasn't immediately solvable.

Part of the problem here is that those of us trying to untangle the supply chain on a daily basis tend to be a little more pragmatic than the average healthcare administrator. But part of the problem is undeniably that healthcare as a business is extremely slow to adopt new technologies and innovative practices

Conversely medicine is relatively quick to try out new things. You'll see new supplies stocking an O.R. core long before you'll see unified branding across all those supplies. 

This is a problem more of consensus than priority. Everyone understands the necessity of providing the best possible care to patients. That's the most talked-about part of the healthcare business, because that's the end goal toward which everyone is constantly pointed. The utility of a happy clinician seems obvious; the utility of an efficient supply chain pro is less so. 

See How Z5 Saved $16 Million From Expiration

Everyone understands that, without clinicians, there's no healthcare. 

But here's another thing that's equally true: without supplies, there's no healthcare. 

Hopefully it doesn't become as dire as convincing the other decision-makers in your organization that the organization itself cannot survive if you don't get what you need. It may be true, but it doesn't usually help you ingratiate yourself to the people who work with you every day if you constantly remind them of it. 

At the very least, you - as someone with a professional knowledge of healthcare's supply chain and the finances associated with it - have to make clear what is possible. A complete mismatch of perception and reality where sourcing and supply chain management technology are concerned will sink a project before it has the chance to launch. 

You can use some of the communication strategies we've shared previously to build consensus within your organization for the improvement you're trying to make. You'll need to get everyone who needs to participate on board, because there's no better way to see an initiative fail than telling someone that they need to do it and hearing them say... 


"I don't have the resources for this." 

This is a totally reasonable objection. If we've said it once, we've said it more times than we can count because we don't want to waste the people or time: you can't spare any resources on improvement if you don't have any resources to spare. You can't invest a dollar to make ten (or a hundred or a billion) if you don't have a dollar. 

Of course, the people who have the least are the ones who need the biggest ROI. In healthcare, the operating margins are tighter than almost any other successful industry, so any win goes further. 

But laying the groundwork for an initiative requires at least some of your staff's time. And - as we so recently discussed in our rebalancing inventory series - every hour of a specialist's time is costly. Gaining consensus will also be important here as you require others to agree how much time they and you should be spending on your cost-saving project. 

Get A Free Inventory Analysis

Let's look at a typical excess inventory reallocation project. The specifics of the project will vary greatly depending on the facilities and the supplies that need to be moved between them, but the first step on our end is always to analyze your inventory data. That means several steps have already taken place on your end, though. You get your data ready for analysis by: 

  • collecting existing documents (like PO histories, item masters, etc.) 
  • verifying the accuracy of existing documents  
  • correcting mistakes and standardizing across all documents 

And that takes time! But it's time you need to spend! 

If time simply isn't available, providers will need to outsource these steps of the inventory optimization process as well. The benefit of working with a solution provider like Z5 Inventory is that we can help with your data cleanup. We save our partner hospitals time by standardizing their data for them by comparing their inventory against a comprehensive, industrywide database. 

If the budget simply isn't available, insist that solution providers be paid according to your results. Z5 Inventory does not get paid for a reallocation project if we do not save you money. We go beyond that and guarantee that our Z5 Count software will identify a savings opportunity greater than the cost of your inventory count, or else that count will be for free. That's what happens when a partner is truly dedicated to your savings. 

According to a recent industry report, poor data quality and lack of digital capabilities are holding healthcare providers back. Hospitals are stuck in place, making the same mistakes, while other industries advance past them. You can't afford to wait to start that savings project that's been bouncing around in the back of your head for a while. 

If you don't have the resources to get started right away, find a partner who can help fill in your gaps. If you need resources to convince your organization of how valuable expiration avoidance can be, start with our series on rebalancing inventory after COVID-19 disruption. If you need someone to take care of all your inventory optimization needs, start with Z5 Inventory

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