You don’t actually know what’s on your shelf until you take a look at it.
Especially in a period where every healthcare facility stocked up in a panic, and now they’re panicking because they have large amounts of excess (yes, we do mean every healthcare facility - it’s not just you), providers have a formidable challenge to overcome.
You need to rebalance. You need to get back to normal (or if “normal” is too outlandish, “manageable”).
This is Part 1 of a three-part series. Part 2 offers solutions to the obstacles providers face when getting rid of their excess. Part 3 offers resources so providers can start breaking their bad buying habits. And Part 1? Well, read on for the difficulty of identifying what's currently on hospital shelves.
A handful of analogies come to mind - Lucy at the chocolate factory, if you’re feeling charitable, or a dumpster fire, if you’re feeling pessimistic - but one is perfect for the constant flux on healthcare supply shelves. And that same perfect analogy provides the perfect solution.
Healthcare inventory is Schrödinger’s cat.
What is Schrödinger's cat?
If you’re not familiar with the concept, bear with us for a second as we try to simplify quantum mechanics.
This concept comes out of a letter written between the scientists Erwin Schrödinger and Albert Einstein (maybe you’ve heard of him). If you take it too literally, it might seem a little depressing. But don’t worry! It’s just a thought experiment! (We hope.)
The simplest version is this: if a cat inside a box might inhale some poison or might not, the cat is both alive and dead until someone opens up the box to see.
The important aspect of this – the reason that it was groundbreaking at the time and is relevant to our discussion of medical supplies today – is that the situation isn’t an “either/or.” While the cat remains unobserved, the cat is not either alive or dead. The cat is both alive and dead. What decides the cat’s state is the observation. By taking a look, we are committing to one outcome and eliminating the possibility of any others. We decide the cat’s fate.
(And, because it’s a thought experiment, we can decide that the sweet little kitty is okay and take it out of the box to give it a treat. See? Everything’s fine!)
What the heck does a cat have to do with healthcare inventory?
Let us answer that question with another question: do you know what’s on your shelves right now?
Can anyone involved in the medical and surgical supply chain with 100% certainty name every product they currently have and exactly where each is stored? Based on our experience helping hundreds of healthcare provider facilities manage millions of items, we would say: “No.”
Part of that can be attributed to the fact that - generally speaking - hospital inventory management is set up differently from any other industry.
Look at periodic inventory areas. Speaking generally again, if cath lab needs more catheters, they submit the request to supply chain; supply chain handles ordering, receiving, and internal distribution; then supply chain expenses the catheters to cath lab and washes their hands of those supplies. Until the annual inventory valuation comes around, they know that the supplies went into the storage areas, because they have the purchase order history, but they don’t know whether that catheter - or any other product - is still on the shelf. In other words…
Your supplies both are and aren’t on the shelf until you check.
See how that works? Between this uncertainty and the fact that supply chain management professionals are often not the actual professionals managing the actual supplies, the way that the healthcare industry has set up its inventory management could at best be called “challenging.”
But just because this setup would blow the mind of someone working in the retail supply chain, for example, doesn’t mean it’s the wrong way to do things. Even if you personally think it’s the wrong way to do things (you know who you are, and we know, too, because we’ve probably talked to you), the reality is that this is the industry standard.
So unless we want the whole industry to collapse, we have to improve the practices currently in place. Sure, we’ve probably all wanted to set our computer on fire when a spreadsheet is corrupted, but we typically do not because we need that computer, even if it’s not at peak efficiency currently. We can probably all agree that our communities should continue being able to access healthcare, even if it’s not at peak efficiency currently.
What inventory data can you trust?
The first step to improving any system is understanding how it is currently functioning. How convenient for healthcare inventory management that we currently have an industry-standard practice in place for this: the annual valuation.
On a regular basis, you spend some time (probably too much time) going through every supply storage area and counting what’s there. If you’re frustrated, thinking that we’re confused – we obviously meant to say “through every periodic supply storage area” – you’re about to be even more frustrated. We meant what we said, and we said what we meant: you should be counting 100%.
Count every periodic area. Count every perpetual area. Count every PAR area. Count every consignment area. Count everything.
The answer to the question that heads this section is embedded in Schrödinger’s thought experiment. The cat isn’t dead because an automated report says it is. It isn’t alive because Thomas told you he saw it walking around once (or twice). You not only find out - you determine - what you’re looking at by looking at it.
Now, before we send you into an even faster panic spiral than the words “count everything” already started, take a deep breath. You don’t personally have to count every product across an entire health system. That’s not any one person’s job. (We would argue it’s kind of everyone’s job, but that’s another discussion for another time.)
Using your current supply count best practices, each product must be counted by an actual human being at least once a year. And if you have a system that’s quick and accurate enough, you can count more often than that - as often as you want - in any given area.
What about automated inventory data?
Most of the time, the systems set up in perpetual, PAR, and consignment supply storage areas will report data that’s enough to keep you afloat. That data is designed to keep your facilities functional, but that can’t be your one source of truth.
Why?
Consignment is counted by an outside organization, and you don’t want them to be wholly responsible for product stored in your facilities, especially if they have a financial interest in the quantities reported. We work with lots of medical supply and device distributors, and we don’t want to throw any suspicion on them, because they’re all lovely people. But we’re not talking about being friends here. We’re talking about conducting business.
It’s perfectly reasonable to check on the numbers in your consignment areas. It’s actually extremely unreasonable if you don’t verify your consignment accuracy on a regular basis.
PAR areas are often less well maintained and actively managed than you’d like. You pretend that all the quantities are perfect and never outside the recommended parameters for the sake of your own sanity, and we can’t blame you. But even if that’s true (and you will need to count them at least once to determine the state of that cat), when was the last time your PAR numbers were refreshed?
PARs grow stale. We all know this. It’s a pain to adjust them, so we pretend they’re fresh, but without occasional checking, they’re both fresh and stale.
And perpetual areas? Well. The layout and inventory data that are constantly reported should be right. The keyword there being: “should.” But - as with consignment and PARs - that’s often not the case. The rigidity of most perpetual setups is what hinders it from extreme accuracy. In a period where PPE in particular has been overstocked to a staggering degree - which is the exact problem we’re trying to help you solve, ultimately - a lot of it is stored wherever it can be.
So the warehouse and other perpetual areas have become something like the drawer in a kitchen that has scissors, koozies, hot sauce packets, and rubber bands. Until you take a look, anything could be in there. (Hopefully there aren’t loose hot sauce packets in your warehouse. Never know until you check, though, do you?)
Without an inventory count system that’s flexible enough to look at what’s not technically in a bin but is temporarily stored right next to one, that wild inventory both does and doesn’t exist, too.
You have to determine what you have before you can determine what you can do with it.
What about count sheets?
Don’t use them. They focus the counter’s eyes to seek what’s on the sheet, rather than see what’s actually on the shelf. They also take too long to make, which takes resources away from the highly technical (or more valuable) tasks where everyone ought to be focusing their time.
That’s it. Don’t use them. Next.
What’s next?
So you’ve cleared out all the cats in each of their quantum states across your entire healthcare system. You’ve gone through every single item on every shelf. Wow! That’s no small feat, especially if you’ve never done it this exhaustively before. Take a moment to pat yourself (plus the rest of your expansive team of diverse experts) on the back.
But just a moment! Because - and we really hate to say this - you don’t actually know what’s on your shelves yet.
What? Why? How?
If those questions are running through your mind (along with “How dare you?!”), here’s what we mean: your inventory quantity is the cat, not the state it’s in.
You don’t know yet whether your lone catheter is an asset. You don’t know whether it’s a loss or a savings opportunity. You have the opportunity not just to find out, but to determine what your inventory is. But you’ll need what we talk about in...
Part 2: More Than Assets and Liabilities
and Part 3: Suppliers On Life Support.
To rebalance your medical and surgical supplies, you need analysis.
