The Healthcare Supply Chain & Implantable Devices: An Opportunity Awaits

Published on November 8, 2017

Implantable devices are a headache for many supply chain executives, but due to high manufacturer margins and sloppy logistics, they remain one of the greatest opportunities for hospitals to reduce the cost of care

A headache. Our Achilles’ heel. A wasted opportunity. These aren’t words you would normally equate with a portion of an industry worth billions of dollars; yet implantable devices cost supply chain executives time and money. Despite the enormous amount of money spent in this sector each year—more than $40 billion (including physician preference items), according to Becker’s Hospital Review1–implantable devices are more than likely one of a hospital or health system’s greatest opportunities to reduce costs.

The reality of implantables for the supply chain

According to Jay Istvan, CEO of Suture Express, medical implants consume twice the amount of spend as all med/surg products, yet the supply chain is inefficient based on product loss, expiration, freight expediting, and inventory turns. The amount of inventory used is often much more than necessary in order to support a relatively small amount of product usage. In addition, inventory is turned over far less than other supply categories, leading to high expiration rates, plus the cost of related supplies that sit on shelves.

Inventory is often poorly tracked, which also leads to high rates of product loss, expiration, and damage. Istvan tell us that loss damage and expiration can total eight to 12 percent of a manufacturer’s sales! And despite this excess inventory, shipping and emergency expediting costs are extensive in most implant categories.

Lack of visibility into the supply chain in general is a commonly reported problem, and one that runs rampant through implantables management. A clear understanding of usage is critical, and a lack of visibility and coordination between manufacturers and hospitals can obscure demand indicators. At Suture Express, we strive to address the unmet needs of our customers, and believe that reducing the cost of implant distribution is one of today’s biggest unmet needs.

Persistent problems

The processes used to document products and the pricing for a purchase order, invoice, and other transactions are often manual. On the other end, med-tech reps earning six figures can spend 15 to 25 percent of his or her time managing product logistics. An effective supply chain, Istvan says, can minimize the amount of rep time consumed by logistics, and enable reps to focus where they can add the most value to the healthcare system – providing clinical support and training. Other problems that commonly plague this area of the supply chain include a lack of communication with physicians, especially regarding cost of physician preference items.

From the manufacturers point of view, high margins mean they focus efforts on getting the next sale rather than on improving the efficiency of business systems and operating processes. This leads to over-utilization and higher costs. Data synchronization, process automation, case preparation, product documentation, and demand planning are critical ways you can improve management of implantable devices.

Rising to the challenge

In order to meet this challenge head-on, Suture Express created a program called S|Implant.  Our CEO Jay Istvan describes the seven components that make up this program:

  • Suture Express manages on-site inventory at each participating hospital. (Inventory can be owned by the manufacturer, Suture Express or the hospital/IDN.) We track every SKU with a lot and serial number, to minimize the risk of expiration and to provide instant identification in the event of a recall or an FDA audit.
  • We get an automated feed from either the surgical monitoring system or the facility’s inventory system, which provides a real-time usage signal (by lot and serial number). Technically, this is easy to do. Sometimes the provider’s IT firewall policies require special integration.
  • We replenish the hospital with overnight delivery of new product (usually in the same shipment as its surgical supplies).
  • The manufacturer replenishes the Suture Express distribution center once per week – usually by ground. (Inventory at the Suture Express distribution center may be owned by the manufacturer, Suture Express or hospital/IDN.)
  • If product fails to move in one hospital but does move in other hospitals within the IDN, we can redistribute SKUs to increase inventory turns and reduce expiration.
  • We provide reliable, real-time reporting by manufacturer, product, hospital, cath lab, and even clinician, if so desired. Some IDNs make this reporting available to their manufacturing suppliers as well.
  • We apply rigorous analytics to forecast demand at each facility, optimizing inventory levels.

To learn more about how Suture Express may be able to help you rise to the challenge of synchronization, automation, preparation, documentation, and demand planning, visit us at https://sutureexpress.com.

 

  1. https://www.beckershospitalreview.com/hospital-management-administration/6-best-practices-to-improve-implantable-device-supply-chain-management.html

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