5 Healthcare Supply Chain Cost Reduction Strategies for Annual Inventory

Healthcare supply costs are skyrocketing. Since 2017, hospitals have watched their medical supply expenses nearly double to over $57 billion, with most facilities now operating in the red. Yet every day, valuable inventory expires on shelves, gets lost in the system, or sits unused while other departments reorder the same items. That annual inventory count you're already doing? It's not just a compliance checkbox—it's your untapped opportunity to recover significant dollars that are slipping through the cracks.

The Hidden Cost of Inventory Inefficiency

For many healthcare facilities, the numbers are sobering:

• 8% of disposable medical products expire unused annually, with 24% of providers acknowledging expired items have been inadvertently used in patient care

• U.S. hospitals overspend by approximately $25.7 billion annually on supply-related inefficiencies

• The average hospital could reduce supply expenses by 17.4%—translating to approximately $12 million annually—simply through improved inventory practices

These inefficiencies are particularly acute in high-value areas where expensive implantable devices—accounting for 40-60% of a health system's supply spend—are often managed through manual processes that create significant data gaps.

Limitations of Traditional Annual Counting

Annual inventory counts are typically labor-intensive and disruptive—requiring operations to pause while staff members count supplies manually. Traditional methods often miss critical data points like expiration dates and lot numbers, limiting their strategic value.

UDI Technology: The Foundation for Cost Recovery

Hospitals can enhance existing annual inventory practices with UDI scanning technologies like SxanPro that work within current workflows. SxanPro's approach instantly captures:

• On-Hand inventory valuation

• Expiration dates and lot numbers

• Manufacturer and recall information

• Location information without needing Facilitiy IDs

"SxanPro's approach is designed to enhance processes hospitals are already performing," explains Katie White from SxanPro. "We meet hospitals where they are, making spend optimization accessible regardless of budget constraints or technological readiness."  

When combined with SPS's expertise in recovering costs from surplus inventory, this technology creates a powerful end-to-end solution. "Our partnership with SxanPro enables hospitals to identify and recapture dollars from surplus inventory before significant depreciation occurs," explains Jamie Gutermuth from SPS.  

5 Steps to Optimize Spend and Recover Costs Through Inventory Management

For hospitals looking to transform inventory practices from a compliance exercise into a strategic cost recovery opportunity, SxanPro recommends these five practical steps:

Step 1: Upgrade Your Annual Count with UDI Technology

Use SxanPro's mobile UDI scanning technology for your next scheduled inventory to capture comprehensive data on quantities, expiration dates, lot numbers, pricing and locations. This enhanced data creates a foundation for immediate action and ongoing improvement. ‍

Step 2: Analyze and Act Within 48 Hours

Use SxanPro's intuitive dashboards to quickly identify expired products, short-dated items, and surplus inventory. The sooner you act on this information, the greater your potential cost recovery. ‍

Step 3: Find a Disposition Partner to Recapture Spent Dollars

Leverage a disposition partner like SPS's specialized expertise to quickly convert identified surplus into recovered costs before depreciation occurs. "Surplus medical supplies lose value rapidly as they approach expiration," explains Jamie Gutermuth from SPS. "Our partnership with SxanPro enables hospitals to maximize the recovery of dollars already spent before value diminishes completely." ‍

Step 4: Target High-Value Departments First

Post baseline, SxanPro gives you insights on where to focus your optimization efforts. Typically this means focusing efforts on departments like the OR and Cath Lab where expensive items drive the highest potential cost recovery. One surgical department reduced expiration-related waste by 30% within months using this targeted approach. ‍

Step 5: Build Toward Continuous Improvement

Use your enhanced annual count data as a foundation for cycle counting, ERP implementations, standardization efforts, and other supply chain initiatives. The comprehensive data captured through SxanPro supports long-term spend optimization while delivering immediate cost recovery.

Results You Can Expect

Hospitals implementing a data-first approach to annual inventory typically achieve:

• Reduction in expired and surplus inventory by up to 50% annually

• Immediate ROI on cost recovery efforts, often exceeding 100% within the first 30 days

• A foundation of accurate inventory data for broader supply chain initiatives

SxanPro demonstrates that meaningful inventory optimization doesn't require massive infrastructure investments or complete process overhauls. By enhancing your existing annual inventory process with UDI technology and expert disposition services, you can convert a compliance exercise into a significant cost recovery opportunity—making inventory optimization accessible for hospitals of all sizes and budgets.