Can Hospital Digital Signage heal Inventory Management Problems? | Part 2

Can Hospital Digital Signage heal Inventory Management Problems? | Part 2

In part 1 of our hospital digital signage series, we looked at how digital signage can mitigate communication inefficiencies that cost hospitals over $12 billion every year. This blog, part 2 of the series, will look at the cost-saving potential of digital signage when used for inventory management.

Proper inventory management in healthcare facilities can feel like walking a tightrope. It requires a delicate balance between having enough product to meet the demands of doctors and nurses, but not too much that it negatively impacts hospital budgets and space. With inventory management, hospitals want to have the lowest total cost of ownership while having the highest possible service levels.

Cost is the biggest issue in healthcare, from both a business perspective (how much it costs to run a hospital) and a personal perspective (how much it costs us for our healthcare insurance). Today, hospital inventory costs vary from 25% to 32% of the total revenues. Charles Poirier, author of Diagnosing Greatness: Ten Traits of the Best Supply Chains, wrote in a recent white paper,

“Consider the amount of inventory that exists across the U.S. healthcare supply chain network. If total healthcare costs in the U.S. are around $3 trillion, the system probably requires inventories equaling at least $300 billion. If a conservative 20% could be eliminated through better inventory management, $60 billion could be saved in working capital… That is a lot of new free cash flow.”

For financial decision-makers at healthcare facilities, maximizing such savings is always a point of emphasis.

Challenges with Healthcare Inventory Management 

Technology has improved inventory management significantly, but hospitals still continue to see a widening gap between costs and revenue. Improvements are plenty, but where are the savings?

Let’s look at a few challenges of inventory management in healthcare facilities:

Overstocking

Hospitals suffer financially when inventory is not well managed. Overstocking occurs when there is poor inventory control. If inventory management is unreliable and nurses can’t always find what they’re looking for, the next time they see the item, they’ll take extra and store it in their station. In this scenario, the supply manager reorders more. This is how hospitals end up with higher inventory costs.

The hospital wastes dollars and products. The nurses will probably throw the items away without recording them as waste so they appear to be part of actual inventory which skews inventory numbers, or they’re simply lost from the process.

Also, managing overstock takes more labor, with both nursing and supply chain team members having to deal with tracking and locating what they need.  This drives labor costs, already the highest operational cost for a hospital, and supply costs, the second highest, even higher.

Stockouts

When you don’t have a system that forecasts how long supplies will last, you’re unable to accurately place orders far enough ahead of time to prevent stockouts. Patient care is the first priority in hospitals so a stockout could mean life or death. Stockouts also lead to disharmony between the supply team and clinical team which must work side by side. This builds distrust between the teams and disrupts the work culture.

Working Capital

Supply teams manage the hospital inventory and therefore have a major impact on cash flow. Inventory increases the working capital and depresses cash flow. A CFO annual working capital survey identified inventory as the chief culprit behind excess working capital. It accounts for 43% of excess working capital and is the most difficult to control. Running out of stock means lost revenue and reduced cash flow while too much inventory may trigger a costly write-off.

Can Hospital Digital Signage heal Inventory Management Problems?

When there’s visibility into how the inventory moves and clear communication on where inventory is, operations are smoother and inventory management improves. This is where digital signage excels.

Healthcare digital signage is already being used for wayfinding, staff management, in the cafeteria and to improve patient engagement by displaying health and wellness tips, hospital services, and infotainment. Applying the technology to complement inventory management systems simply improves the ROI of the investment.

Improved Visibility of Inventory

Hospital digital signage is highly visible and disruptive which makes it hard to ignore. The technology is also able to display complex data in a format that is easily digestible and actionable. These two factors have the potential to significantly improve inventory management and hospital operations.

Inventory levels can be displayed on back-of-the-house digital screens so the clinical team is always aware of inventory levels in order to make faster decisions. For example, a digital signage screen in the ER break room can display a color-coded graph showing inventory levels for specific items e.g. red for low, yellow for medium and green for high. When the nurses see that a certain item has low inventory, they’re able to easily plan ahead and quickly make the decision to switch to an alternative item.

To form strong partnerships between the clinical and supply teams, the inventory manager can create leaders within different regions or departments; a member of the clinical team who knows the inventory system and processes. This inventory champion can use the interactive inventory display screens to alert the supply team when inventory starts to get low. This eliminates gaps in inventory management and empowers nurses to improve the environment in which they work to provide better patient care.

Improved Tracking

When used together with radio frequency identification (RFID), digital signage raises the bar on inventory management in healthcare facilities. Active RFID technology uses fixed tag readers assigned throughout a warehouse. RFID systems are typically used in environments that require real-time inventory tracking or where inventory security problems exist.

Digital signage can display the location of inventory once integrated with the inventory management software. So, it’s easier to account for expensive and costly surgical instruments. Tracking and displaying the movement of these instruments provides hospitals with a way to protect their investment. It reduces the opportunity of loss or theft and allows the hospital to more effectively manage the rotation of the instruments between surgery, sterilization, and storage.

Improved Communication

Digital signage can improve communication within the inventory management teams. Displaying information like lead times, demand for different departments, turnover, etc., makes sure the supply team has quick access to data.

The screens can also display team goals and objectives so the entire team is working towards a common goal. Creating an environment that supports performance monitoring reinforces goals. Ultimately, it will streamline operations and improve inventory management in healthcare facilities.

Increased Revenues

The hospital pharmacy can better control their inventory and increase revenues by integrating digital signage with the inventory management system.

When inventory for a specific item is low, the inventory system triggers the signage system to discontinue promos. This avoids customer frustration when they discover an advertised item is out of stock.

The signage system can trigger display ads for items when inventory is unusually high. This helps avoid holding costs. Such automation creates balance in inventory levels.

Endless Aisle

Endless Aisle is a popular concept in retail. It allows customers in a brick-and-mortar store to have access. They can order from the entire brand’s catalog, instead of limiting them to the store’s inventory.

This concept can be applied to hospitals. Interactive screens in certain departments can be programmed to provide access to the inventory of multiple departments. This allows the clinical staff to select items from a wider pool of inventory. In fact, you gain insight into what’s used more.

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So far, we’ve seen how digital signage can drive cost savings of $12 billion in communication efficiencies and $60 billion through better inventory management. Part 3 of our hospital digital signage series will look at what role digital signage plays in patient care, and the long-term revenue bumps it can generate.


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