In the health care industry, it’s paramount to find ways to reduce costs while still providing outstanding care. It is essential to adapt to rising costs and find sustainable ways to manage growth. Ways to do this can include rethinking costs, leasing medical equipment, reducing waste and updating software and equipment.
Here, we’ll take an in-depth look at how much equipment is currently costing hospitals, suggestions for reducing hospital waste and other general ways to cut spending within health care facilities.
Cost of Medical Equipment and Supplies in Hospitals
Supply and equipment expenses are among the most substantial line items in any hospital budget, typically second only to labor and administrative expenses. To emphasize this point, hospital supply chain costs account for roughly one-third of total operating costs within U.S. hospitals.
So how much are hospitals spending? Looking at previous statistics, in 2018, the average hospital in the United States spent $11.9 million on medical and surgical supplies, which account for over half of the total equipment and supply costs in hospitals. Battling these costs is a constant uphill climb as they continue to increase. Between 2014 to 2018, hospital expenses on equipment and supplies increased slightly more than 7% each year.
As you can see from these few statistics, supply and equipment costs take a healthy chunk out of a hospital’s revenue and budget. So how can hospital administrators combat these massive expenses? In the following sections, we will dive into strategies to reduce costs in health care.
Reduce Hospital Waste
Now that we have covered what the cost of medical equipment looks like for hospitals, let’s take a look at one of the most significant factors contributing to higher costs — waste. Hospitals generate substantial amounts of waste that ultimately increase their supply costs due to inefficient practices and supply chain management.
Supply Chain Waste
A successful supply chain management system can save hospitals money and reduce waste. For example, a reliable supply chain management system allows you to track product use and supply levels. You can order supplies only when you need them, and avoid wasting expired products you didn’t use in time. Automating this process can also reduce human error, another factor that leads to waste.
A hospital can save up to 15% in health care supply chain costs by analyzing, planning and controlling the purchase and use of supplies. A successful supply chain management system is an excellent strategy for chipping away at supply costs and using items more effectively.
Reusable vs. Single-Use
The largest waste category within hospitals is single-use items. While some single-use items within hospitals are unavoidable, reusable ones can reduce the cost of medical equipment within hospitals.
Two examples of this are rigid sterile containers and blue wrap. Both of these serve the same purpose, except rigid containers are reusable and blue wrap is single-use, accounting for roughly 19% of surgical waste. Like most reusable items, sterile containers cost more upfront but can save hospitals a lot of money in the long run.
Let’s look at some case studies to put perspective behind how much money hospitals can save by using reusable items. MetroWest Medical Center in Massachusetts purchased 211 Jewel Precision rigid containers and achieved a 40% return on its $75,000 investment in one year. Mills-Peninsula Medical Center in California also estimated an additional savings of $26,000 in rewrapping costs for torn blue wrap sets.
Tips for Reducing Costs
So what are some other ways hospitals can reduce the cost of supplies and equipment? Besides reducing waste and increasing supply chain efficiency, there are many different cost reduction ideas for hospitals. In the sections below, we will look at some other practical ways hospitals can increase their savings on medical equipment and supplies.
Group Purchasing Organizations
Group purchasing organizations help health care providers, such as hospitals, increase savings and efficiencies by aggregating purchasing volume and using the leverage to arrange discount agreements with manufacturers, distributors and vendors. These organizations negotiate lower costs, including discounts on bulk purchases. They also provide healthy competition and various product options that decrease costs. Studies have shown that these organizations can generate cost savings of up to 18% for hospitals and their supply chains.
In a constantly evolving industry, the equipment can rapidly become outdated. Purchasing a new piece of equipment comes with a lot of upfront costs. Leasing can save you from those significant upfront costs and prevent you from getting stuck with a piece of equipment that quickly becomes outdated. Being on the cutting edge of technology lets you be more efficient and provide better service to your customers. Leasing expensive equipment gives you that flexibility and saves you a lot of money.
Properly Maintain Equipment
Sometimes, you’ll need to buy equipment instead of leasing it. To save money and realize a maximum return on investment, you’ll have to extend the equipment’s lifespan. Frequently used imaging equipment is an outstanding example of this. You’ll need to be proactive about maintaining it, since it’s so critical to your operations. On top of this, software tends to need more frequent updates than hardware does. Therefore, hospitals should look to extend their equipment’s lifespan by retrofitting older systems with the newest software.
Looking to Save? Jewel Precision Can Help
If you’re seeking to cut costs within your hospital or are looking for sturdy and efficient equipment you can trust, you are in the right place. With aluminum metal cases from Jewel Precision, you can organize your medical tools and safeguard them against even the harshest conditions. We’ve spent over 35 years perfecting our case-making process, using highly durable materials and advanced designs to produce the most reliable products on the market. Learn more by contacting us today to find the perfect solution for you!