09/05 2013

Reflecting on AHRMM 2013

If you attended the 51st Annual AHRMM Conference in San Diego recently, you might have noticed that vendors representing inventory management solutions were more numerous than in previous years. This was confirmation for me that hospitals as a whole are putting more emphasis than ever on inventory control. Also, it shows that the market is catching on and offering more options to hospitals. This is all good. The more competition there is, the better – it helps bring newer and more sophisticated solutions and technologies to the hospital environment to address the many complex issues associated with managing medical supplies and devices.

Despite an increase in the number of offerings at AHRMM, however, I didn’t see many vendors offering comprehensive solutions that address the variety of needs across the healthcare supply chain. And their lack of emphasis in most cases on the importance of complete and thorough inventory data capture surprised me, especially since hospitals are now demanding more data and analyses to help them gain better control over their inventory-related expenses.

Additionally, one thing that shocked me at the conference was the totally anachronistic approach of some consulting firms to inventory management problems. One firm was actually arguing that in a particular case study where a hospital was losing $4 million per year due to mismanaged inventory and shrinkage, it should add 30 staff people (yes, you read that right) at $50,000 per year per staff ($1.5 million total) in order to manage the inventory; their theory was that this would result in a net savings of $2.5 million per year.

The math sounds pretty attractive, but I seriously doubt that this equation could work in higher end job markets like San Francisco, NYC, Boston, and so on. Also, this solution is just out of touch with hospitals’ current reality. Who in the healthcare supply chain in recent years has been able to hire and sustain more staff? All we have been hearing lately is the mandate to do more with fewer people, not more. And can that consulting firm guarantee that spending $1.5 million on added staff really erases $4 million in shrinkage? Needless to say, this is not a sure thing.  To make matters even more ridiculous, this particular case study had to do with the waste of consigned items which weren’t even owned by the hospital (p.s. – shouldn’t the manufacturers of these products be taking some responsibility for their own inventory?).

Most importantly, we live in the 21st century, and we need to keep encouraging and supporting hospitals to modernize their processes. A much more logical and effective approach for hospitals is to invest in long-term technologies that ensure increased productivity and efficiency. By spending a little money up front on technological solutions that solve such entrenched problems as mismanaged inventory, hospitals see dramatic savings within a few short months.