Inventory Count Uncovers $46 Million in Hidden Value at One Hospital

• Kara L. Nadeau, Healthcare Industry Contributor

Hospital inventory valuation typically includes supplies that are visible to the supply chain team; and therefore, consistently tracked and documented.

It is the vast number of supplies that fly under the radar, often hiding away in procedural areas (e.g., OR, Cath Lab) and other clinical departments (e.g., ED, L&D), that fall outside supply chain’s valuation.

Hospital inventory counts often uncover medical/surgical supply assets with value well beyond what supply chain leaders expected, particularly when a hospital hasn’t conducted a count in several years or received inaccurate counts.

Here are two examples that underscore the importance of conducting annual inventory reviews—and show just how large a role they play in helping hospitals identify hidden value.

• Leadership for a healthcare facility in the Southeastern U.S. believed they had about $5 million worth of inventory, but a count revealed their actual inventory value was closer to $51 million (a $46M difference).
• At a healthcare facility located in the Northeastern U.S., leadership believed they had only $5 million worth of products in stock, while a count uncovered more than $15 million in inventory (a $10M difference).

Among healthcare professionals surveyed, 90% foresee major disruptions in procurement processes. Without comprehensive visibility and valuation of on-hand inventory, healthcare supply chain and pharmacy leaders struggle to make sound financial, operational and clinical decisions.ⁱ

The root of the problem

Hospitals underestimate the value of their inventory for many reasons, including inefficient and error-prone manual inventory management practices, clinician hoarding of supplies, and incomplete or inaccurate supply documentation.

When hospitals have poorly managed inventory, supply chain leaders are less aware of all the items they have in stock—and where they are located.

For example, in one hospital where an inventory count identified a significant amount of hidden value, the same type of catheter was stored in five different places. It’s no surprise this hospital’s supply chain team was struggling to quantify its supplies on hand.

At a time when healthcare organizations are challenged with ongoing supply chain fragility and rising costs, the importance of having a strong understanding of on-hand inventory has become even more clear.

As researchers on hospital inventory management practices wrote in a recent Health Care Management Science journal article:¹

“Inaccurate inventory records can lead to increased costs, unexpected delays in demand fulfillment and lost revenue. Inventory record inaccuracy is also one of the many sources of unnecessary health care costs across the U.S. and creates the additional risk of delayed patient care.”

Trickle-down effects

Hospitals where supply chain cannot account for a large volume of their medical/surgical supply stock typically have expired products in their inventory.

Those that lack visibility to inventory often fall into the costly cycle of ordering items unnecessarily because they don’t realize they already have them on hand. Overstocking and poor inventory management practices increase the likelihood products will expire before clinicians can use them.

Expired products can present significant safety and compliance risks when a hospital supply chain team cannot identify and remove them from inventory before they reach the patient bedside.

They also impact a hospital’s bottom line. Consider the examples in this post of the two healthcare facilities that could not account for $46M and $10M worth of inventory, respectively. Given the volume of missing supplies in these facilities, it’s likely both had incurred the unnecessary costs of expiry waste.

How GHX Inventory Count Services can uncover hidden value in hospitals

Healthcare supply chain leaders should think of inventory services as an annual check-up that contributes to a healthier bottom line and healthier patients.

GHX Inventory Count Services helps hospitals uncover hidden inventory value by delivering fast, accurate, point-in-time visibility across the supply chain.

Using proprietary tracking software (HITS), handheld scanners and credentialed professionals, GHX captures detailed inventory data from key areas, including supply rooms, pharmacies, ORs and Cath Labs.

The resulting reports—accessible via the GHX Inventory Count Services Customer Portal—offer actionable insights on stock levels, expiring products and inventory valuation.

This enables healthcare leaders to identify inefficiencies, reduce waste and make smarter, data-driven decisions that reveal the true value of on-hand inventory.

1. Neve BV, Schmidt CP. Point-of-use hospital inventory management with inaccurate usage capture. Health Care Manag Sci. 2022 Mar;25(1):126-145. doi: 10.1007/s10729-021-09573-1. Epub 2021 Aug 6. PMID: 34355302; PMCID: PMC8342273.