Blog Post:

Improving Hospital / Medical Inventory Management

Feb 19, 2020

All C-Level and high-level hospital executives know the significance of effective hospital and pharmacy inventory management practices in the supply chain, yet many of the most experienced and focused managers struggle to get the job done. Perhaps it’s because of the fragmented approach toward medical inventory management using multiple systems, or an adherence to industry or other external standards that don’t deliver expected results. It is easy to head down the wrong road with assumptions about hospital and medical supply chain operations.

Typically, these decision makers rely on two misconceptions:

  1. Better forecasting of patient needs will reduce inventory.
  2. Patient safety requires keeping more medical inventory in stock.


In reality, both of these ideas are nothing more than guesses that can result in excess medical and pharmacy inventory, or inventory shortages. Getting it right is critical to controlling hidden costs, improving patient welfare and a hospital’s financial condition. There are many factors you can use to judge your hospital’s medical inventory management successes. Take a look at a few to determine where you can improve your efforts.

Consider your medical or pharmacy inventory stock levels using these three classifications:

    • Safety – minimum stock levels needed to ensure patient needs are met in emergencies.
    • Replenishment – how is hospital inventory stock replaced and tracked to maintain optimal levels?
    • Excess – removing unnecessary medical stock to free up space and dollars.

Using these three classifications you will ensure that you have the available medical and pharmacy inventory stock levels when you need it without overstocking and risking the cost of expired medical supplies.

Supporting blog post:  Outdated Medical Products – Is Your Facility at Risk?

Executives need to monitor medical inventory for accountability

      • Use available analytics and require justification for excess stock.
      • Establish specific and quantifiable goals for all stakeholders.

By giving executives the tools they need to make informed decisions in terms of medical inventory levels, they are empowered to make real-world decisions that will benefit the bottom line. This allows stakeholders to provide the valuable and necessary feedback that can only come from accurate reporting.

Establish regular reviews of PAR levels to improve efficiency

    • Optimal medical stock levels are adjusted upward when deficiencies are found, but rarely adjusted down when conditions change, resulting in excess stock. Bring in experts to help evaluate and implement a Par Optimization plan which can drill down to labor and medical inventory levels based on your caseloads compared to like hospitals across the nation.
    • Optimizing stock levels is a major part of successful medical inventory management and requires constant attention, detailed record keeping, full use of all available systems and services, and the analytics that they provide.

Determine what constitutes excess hospital, medical, and pharmacy stock

    • Develop a plan to identify and remove excess stock.
    • Selling excess stock, or write-offs, can be beneficial to the overall financial health of an organization.

By knowing what the excess medical stock levels are, you can improve the financial bottom line as well as your daily operating costs. How much is needed at any given time?  Do you have enough of every item or do you need to place an order? Having proper tracking and action plans in place will allow you to make informed decisions that will have a positive impact on the overall success of your hospital, clinic, or pharmacy.


Look at all of your inventory when formulating a medical inventory management plan

    • MEASURE: Conduct a baseline of your medical inventory to establish a valid starting point.
    • MONITOR: Track at regular intervals by using proper cycle counts to identify fluctuations. Use available analytics to match your actual needs to stock levels. Compare the results of regular physical inventory counts to your medical inventory needs over time to test for available improvement  opportunities
    • ADJUST: Make adjustments to your medical inventory strategy as conditions change. Seasonal changes can impact your short-term needs. Supply chain disruptions may impact product availability and lead to hoarding.  Flag these items for frequent review so that appropriate actions can be made in a timely manner.

Find out what you really have in Consigned and Owned Implants

    • Bring in experts to review your consignment agreements against what the vendors state. You may be surprised at the pickup you will find in the high dollar medical inventory items you have in these areas. DSC found a 27% pickup for one customer, which translated to almost $900k in inventory!
    • Using a third party to analyze and monitor your consignment contracts will provide a buffer between you and your consignment vendors, allowing for more standardization, easier access to contracts, and improved compliance.
Clinical Inventory
Physical Data Capture of Inventory Supplies

For more details, click here.

Perpetual System Inventory Updating

DSC will perform a real time inventory count of perpetual supply areas while transactions are frozen. Once the counts are audited and verified, they are posted in the system.

For more details, click here.

Cycle Count Program

Cycle Counts may be performed on any number of product types such as consignment, perpetual, implants.

For more details, click here.

Pharmacy Inventory Services

Custom designed to your specific accounting requirements.

For more details, click here.

Laboratory Data Capture & Inventory

We will conduct a physical count of your laboratory supplies using proper Units of Measure based on item master criteria.

For more details, click here.

Comparative Analysis

Detailed report showing changes over time so that you can evaluate progress.

For more details, click here.

Consignment Verification Program

We will schedule meetings with the manufacturer representatives and vendors of the consignment products to collect, review, and update contracts. When completed, DSC will conduct the initial consignment inventory.

For more details, click here.

Surgical Tray Audits

Surgical trays are normally included in a standard physical inventory, however, this can be offered as a stand-alone service.

For more details, click here.

Pre-Inventory Training

DSC can train your department heads so that all departments are conducting inventory operations consistently and in compliance with corporate directives.

For more details, click here.

Special Projects

DSC can provide fully credentialed on-site resources for support of special and/or short-term needs.

For more details, click here.


Based on observation during an inventory and/or assessment, DSC can help identify which items are counted or not counted at specific locations.

For more details, click here.