- by Nidhi Jain
Hospitals often come under reduced margins for inefficiently managing their medical and consumable supplies and spending too much on inventory. Typically, a hospital spends 30% of its cost on various supplies, drugs, consumables, injectables, implants, films, and reagents. This is primarily due to the hospital clinical order system, inventory system, and supply chain system working as disjoined systems, resulting in a mismatch of supply and demand. This could even be fatal to the quality of care to the patients.
Many hospitals manually enter the inventory data, generating purchase orders with no EMR/EHR running into hospitals. In the rest of the hospitals where automation is available, 3 different products are not integrated, resulting in a mismatch of supply and demand. Hospitals have a major challenge of cash flow issues due to this problem, and the vast majority of their cash is represented by their inventory every month. Without an integrated clinical inventory and supply chain system, operating a hospital can feel like fighting fire everyday and spending too much on suppliers. It is also excruciating to write it off as a loss for expired goods.
To bring operational efficiency to the hospitals, digital healthcare platforms need to have integrated ERP (inventory & supply chain management) and EMR/EHR (clinical order system) as a single platform rather than two integrated products. The AI-led data models defining auto-indenting and auto-order (ROL, ROQ) are needed to solve 30% of hospitals’ costs. Hospital CEO, CIOs need to implement such healthcare platforms in their medical facilities where the following ERP and EMR modules are pre-integrated in a single platform rather than two disjointed products. This can result in better cash flow, better quality of care to patients, negotiated best prices from suppliers, and just-in-time hospital inventory.
- EMR/EHR based Clinical Order (medicine as well as investigations, CPOE)
- Clinical order connected to Inventory Management System
- Connected workflows for inventory issuance and receive by care staff
- Easy bar code for easy check-in, check-out, and better consumption Mgmt
- Based on inventory levels (ROL, ROQ) based purchase requests and purchase orders
- GRN based inventory addition and managing stocks across multiple stores
- AI/ML-based forecasting for the consumption, rate negotiation, and ordering
- Continuous enhancement of AI data models using MLOps
Following modules are required to achieve supply chain modernization in the true sense:
Inventory management
Whenever there is a requirement in hospitals, a ‘challan’ is issued based on internal factors like consumption and stock levels. Quite often, doctors have zero to negligible visibility of stock availability. They might prescribe medicines that are not a part of the stock available, delaying diagnosis and treatment. Also, there are cases where staff may hoard the medication and then later buy at higher prices externally, leading to the issue of stock variance (difference in the cost of goods sold and the cost goods are purchased). Hence, internal mismanagement is a real issue that needs a quick solution by placing a digital system for stock management, physical stock verification, indent workflow, item consumption list, and real-time stock updates. All this will streamline the inventory process of the hospitals, leading to transparency between all health stakeholders.
Demand and Supply Chain Management with AI/ML forecast analysis
The purchases need to be made according to the demand to reduce the carrying costs of supply, which is relatively high, especially in the case of critical supplies. The major challenges faced while purchasing are incompetence in comparing the different quotations offered by the various vendors and lead time to buy any medicine, and buying an expensive inventory. The manual comparison could be time-consuming and inefficient. Also, purchasing slow-moving stock instead of a fast-moving stock can cause loss. There could even be seasonal variance in the demand and supply of different medicines. Therefore, there must be an AI/ML-based platform, which can predict the need for drugs depending on the season or slow-moving stocks. However, to achieve an accurate forecast, a proper digital inventory management system needs to be in place to train the machine for accurate machine forecasting properly. With the help of machine learning algorithms, a system can be introduced that auto-generates previous records of medicines consumed in the past years to predict this year’s requirements.
Good Received (GRN) Consignment Workflow Management
This is a record of goods received from the supplier, often shown as proof that an order item has been received. This record is used to compare the number of goods delivered and the number of items that are delivered. This is often done manually and has space for errors. Instead, there can be an integrated digital system for the creation, verification, and return process, with automated management for returning expired medicines and updating the free item inventory.
Until the GRN is signed, it should be traceable at all levels from the challan. Most discrepancies arise during this transit. Hence, there is a need for a system that can trace and track the updates in real-time.
Supply Accounting Information System
Medicines and consumables are taxable under the GST. Integration of GST invoicing, payments, and availing input tax credit at each point of sale can be automated; tax payments and claiming credit becomes easier.
Supplier Contract Rate Management
To avoid any preferential item rates that can result in hoarding, an automated system should be in place for easy tracking of various vendors’ rates. This process needs to be free of manual dependency and system-led process.
Summing up
As technology can significantly change the ins and outs of hospitals, it is high time for them to take every opportunity to implement the latest technologies to improve internal processes and bring operational efficiencies for quality care. Among them, an integrated inventory management system will ensure that the supply chain and logistics inefficiencies can be addressed. It can also mean that the cost of carrying and holding inventory would be reduced drastically, along with managing any chances of wasting precious medicines and vaccines.
Nidhi Jain, Founder & CEO, KareXpert
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