A case for 'just in time:' could it be right for your hospital, too?

When people complain about the escalating cost of health care, malpractice suits are often blamed. But the reality is that hospitals' biggest problem may lie in the storeroom, rather than the courtroom. According to a recent study, hospitals spend about $83 billion per year on supplies--$11 billion of which could be reduced through more efficient supply chain practices. In fact, one leading consultant was recently quoted as saying the supply chain may be the number one area where hospitals can reduce cost. While these statements may be ambitious, the sad truth is that the healthcare industry has been slower than others to adopt money-saving logistics practices like just-in-time (JIT) and continuous replenishment, as well as supporting technology like bar coding and radio frequency. As a result, it has been missing out on some significant cost advantages. This article takes a look at how St. Luke's-Roosevelt Hospital Center in New York City implemented a customized JIT inventory system, saving more than $3 million per year.