It is Not Easy to Maximize Savings from A Device Re-Use Program

A View From The Supply Room

Most readers of this blog know that I promote single-use device reprocessing as a leading healthcare re-use solution – and that a successful reprocessing program not only saves hospitals millions of dollars, but also provides significant reduction in the hospitals Scope 3 carbon emissions – carbon emissions associated with the hospital supply chain.

On paper, maximizing savings from reprocessing sounds like an obvious strategic priority, yet overall, US hospitals achieve only a fraction (30-35%) of potential savings from reprocessing.

This is because device re-use is not easy, but requires fundamental changes to the mechanics and the priorities of hospital purchasing staff and financial officers faced with a demand to cut costs. As absurd as it sounds, it is a lot easier to forego an investment in a $10M new parking structure for patients, visitors and staff than it is to increase re-use savings by $100K.

Let’s look at this from the perspective of the hospital supply room. Last week, I had the pleasure of participating in the annual Western States Healthcare Materials Management Association (WSHMMA) conference in Tacoma, Washington – and I had the pleasure of direct dialogue with the folks that have a direct impact on reprocessing and other hospital initiatives in hospitals in the Pacific Northwest.

Virtually all hospital purchasing staff and financial officers need to cut costs, most of them aggressively. So why do they not eagerly promote reprocessing programs and establish criteria of accountability for results achieved?

Virtually all hospital purchasing staff and financial officers need to cut costs, most of them aggressively.

As a starting point, one has to appreciate that single-use device reprocessing is not the only way in which hospitals can reduce costs. Reprocessing is competing with initiatives under consideration that are both easier to take and produce higher dollar impact. They may not be as sound as device reuse from a strategic perspective – they are just easier.

First of all, single-use device reprocessing (and circular solutions in general) is a hospital supply chain step-child. It doesn’t fit into existing purchasing routines where price and availability are key factors in the decision-making. Since reprocessing is a circular solution, the hospital’s own used devices become the raw material for the reprocessor, and collection and protection of used devices becomes a critical factor in ensuring supplies are available. Price negotiations are equally abnormal: The reprocessor charges for the reprocessing of devices, but because they present an alternative to much more expensive new devices, the reprocessor effectively pays the hospital money every month. Finally, backorders are not a supply chain disruption in circular supply solutions: Since a certain percentage of collected devices cannot be re-used, the normal state of product availability is that all product numbers are on backorder. This is not a failure of the reprocessor, but in inherent condition of circular solutions. All of this makes managing and increasing the use of reprocessed devices different from other supply chain management tasks – and therefore more difficult. Changes need to be made in how product numbers are entered into the purchasing system, how orders and backorders are handled, etc.

 Secondly, single-use device reprocessing requires that physicians and technologists are aligned with re-use goals. A physician that doesn’t see the value of re-use from a monetary and environmental perspective, is simply not going to use reprocessed devices. So, a difficult conversation has to take place, and hospital administrators in general want to avoid difficult conversations with physicians more than anything else. In some ways, it is easier to just tell the physician that the hospital can’t afford the new mapping system. The problem here, of course, is that choosing the “easier conversation” ultimately means lesser care for the patient when the physicians can’t access the newest technology.

...single-use device reprocessing requires that physicians and technologists are aligned with re-use goals.

Thirdly, a hospital can’t just buy cheaper, re-used devices and thereby access cost reductions. Reprocessing is not a discount store, but rather a program that requires involvement and effort by hospital staff: Collection kiosks have to be fitted into the soled utility room, staff has to be trained on used device handling, routines have to be established for capturing and storing used devices, and purchasing staff has to learn a new logic behind re-use par levels, ordering, and backorder management. This takes time and is ultimately a disruption of status quo and a time requirement on staff who are usually already over-worked.

 Finally, when it comes to budget cuts, decisions to forego investments in new initiatives are just easier to make for the hospitals – than solutions that involve improved utilization of existing programs and products. You would think that would be easier to ask the physician to use his/her favorite device one more time than to tell him/her s/he can’t have the newest device available in the market. But that is not always the case. Similarly, it is an easier solution to make to forego investment in a new parking structure, to reduce nurses’ access to educational conferences, or even to reduce staffing in the operating room. Since you don’t have the new parking structure, there is no reduction in service, there is just status quo – which is preferred to having to undertake something as demanding as cutting device costs by another $100M through reprocessing. 

These factors are very real barriers in the hospital purchasing staff and financial officers’ handling of their single-use device reprocessing programs. Because re-use programs are relatively new to US healthcare, decisions driving their success – or demise – are not merely based on rational, financial spending and cost management principles. They are, to a very large extent, driven by habitual thinking and a desire to avoid “rocking the boat”. Therefore, it is easier to forego investments in patient care improvement than to maximize reuse programs that could ultimately help the hospital finance these. It’s easier. It’s just not the smartest for the patient or for the hospital.