How To Turn Supply Chain Waste Into A Revenue Opportunity

The healthcare supply chain is increasingly being looked at as a new frontier in hospital cost containment. With the supply chain making up the 2nd largest expense category for healthcare providers, there is ample opportunity to drive costs out of the supply chain to boost profitability at hospitals.

What if there was a way to turn some of the identified supply chain waste in to a revenue opportunity? With the advent of online marketplaces for 2nd hand goods, this is becoming a real possibility for hospitals. As this article by Jacqueline LaPointe at RevCycle Intelligence explains:

“Wasted supplies cost a provider organization. They can increase an organization’s overhead, which ultimately makes all costs at the organization higher.

But what if there was a way to recoup some of that wasteful spending?

Transforming the large cost center into a revenue-generating department may seem like an impossible task to most healthcare executives. But a health system in Colorado is actually seeing some money come in from their supply chain, rather than coming out of it.

The health system started seeing some revenue come in through their supply chain after participating in a web-based marketplace for healthcare supplies and equipment about three years ago.

Since then, the system has sold everything from an excess number of catheters to hospitals beds after the health system upgraded their beds.

“I’m the only one in the supply chain department who makes money,” a Project Coordinator at the health system recently told “In supply chain, we spend money. That’s what we do. At the end of the day, it’s great to actually recoup some of the cost.”

The health system started to bring money in through the supply chain by pursuing her passion for recycling at the health system.

“When I started at the health system I started out as an administrative assistant for the Director of Supply Chain and I was absolutely astounded when I discovered they had absolutely no recycling, particularly with purchasing,” she said. “We would get catalogs upon catalogs. A lot of those just go into the bin.”

Looking for a way to reduce waste at the health system, she created a green team that focused on waste reduction and sustainability improvement in the supply chain department. As those initiatives progressed, the health system realized the potential value in scaling up some of the projects.

“As these clean-outs occurred more often, it became more evident that we needed somebody in there who could come in and help by not just putting everything in the trash and figuring out different ways to either reutilize or donate whatever we can, but to keep it out of the waste stream,” she explained.

That’s when she decided to use H-Source, a web-based marketplace dedicated to helping hospitals across the country connect to sell and purchase supplies and equipment. The no-contract, no-cost platform allowed her to put her health system’s excess or unused supplies up for sale.

“The sky is the limit,” she said in response to what type of items she can sell on the marketplace.

“Typically, we sell items out of the OR. Specifically, sutures, catheters, probes, forceps, and forceps tips. Those are a lot of what we’re able to get rid of in the disposable world,” she added. “As far as equipment, probably the largest thing we’ve done is a bed conversion and we sold 41 beds to a facility in Brooklyn, New York. The beds were about ten years old. We’ve also done a lot of stretchers.”

The health system is currently working on moving ventilators that hospital leaders have retired out of the system.

She emphasized that her health system’s excess supplies and equipment are still in good shape and ready for use elsewhere. The marketplace ensures that hospital buyers can view product expiration dates, model numbers, manufacturer information, and more on every item for sale so hospitals do not purchase low-quality items.

With the aid of the marketplace, hospitals are buying high-quality supplies for a discounted rate compared to the prices set by manufacturers. But that doesn’t mean that the health system isn’t making a profit by selling its excess products for less than they bought them.

The health system makes a profit on every item sold because those were products that “we weren’t getting any benefit from it anyways,” she said. The items would either be thrown away or donated, bringing in zero revenue for the health system.”

Read the entire article here: How Hospitals Bring in Revenue Through the Healthcare Supply Chain

Having the right data can be a powerful tool in optimizing supply chain strategies. As this article shows, your data can tell you what items you no longer need to keep in inventory. This can allow you to turn items that you may have previously kept on the shelf and re-ordered upon expiration into real dollars by selling your current inventory and eliminating any future orders. If your organization lacks the proper tools to provide powerful data around your supply chain spend, consider systems such as iRISupply which can collect real-time data around supply and implant usage using RFID technology and provide actionable insights to help optimize your stocking levels and other powerful recommendations. Data analytics included with the software will give specific recommendations on which items to reduce or eliminate, and which items should be owned vs. consigned, leading to millions of dollars in cost-savings opportunities.