Evaluation of hospital medication inventory policies

Abstract

As supply chain costs constitute a large portion of hospitals' operating expenses and with $27.7 billion spent by the US hospitals on drugs alone in 2009, improving medication inventory management provides a great opportunity to decrease the cost of healthcare. This study investigates different management approaches for a system consisting of one central storage location, the main pharmacy, and multiple dispensing machines located in each department. Each medication has a specific unit cost, availability from suppliers, criticality level, and expiration date. Event-driven simulation is used to evaluate the performance of several inventory policies based on the total cost and patient safety (service level) under various arrangements of the system defined by the number of drugs and departments, and drugs' criticality, availability, and expiration levels. Our results show that policies that incorporate drug characteristics in ordering decisions can address the tradeoff between patient safety and cost. Indeed, this study shows that such policies can result in higher patient safety and lower overall cost when compared to traditional approaches. Additional insights from this study allow for better understanding of the medication inventory system's dynamics and suggest several directions for future research in this topic. Findings of this study can be applied to help hospital pharmacies with managing their inventory.

Application of Modeling in a Drug Distribution and Dispensing Process Focused on Traceability in a Surgical Center

“…It is known that two variables are directly responsible for the increased cost of drugs: the number of products stored and the length of stay in the stocks, which increases the final cost of stocks. Thus, improvement of the drug distribution system in a restricted area with defined characteristics, such as the operating room, may result in reduced hospital costs because of optimization of the drug catalog and streamlined use of drugs, in addition to increased usability, improved interaction between multidisciplinary teams, and improved quality of care (Gebicki et al ., ).…”

Benchmarking healthcare logistics processes – a comparative case study of Danish and US hospitals

“…The current trend of healthcare supply chains is a move toward global supply chains (Privett & Gonsalvez, 2014). However, this results in complex coordination issues of the many agents in the supply chain with often differing objectives (Gebicki, Mooney, Chen, & Mazur, 2014;Shah, 2004).…”

“…Real-time information enables management and control of processes. Automated dispensing machines for pharmaceuticals products and sterile medical devices provide information on inventory levels at the point of use and can reduce stock-outs and stock levels, improve inventory accuracy and reduce time spent on inventory management (Bourcier et al, 2016;Gebicki et al, 2014;Rosales, Magazine, & Rao, 2014).…”

Numerical Solution of the Inventory Balance Delay Differential Equation

“…A range of studies on inventory management in retail have been carried out, taking into account different aspects (e.g., see [2][3][4][5]). …”