In late 2019, hospital operator Steward Health Care embarked on a project to save $16.3 million by preventing the expiration of medical products.
“We’re extremely proud of this significant savings that we can transform into better, more cost-effective care for our communities,” said Michael Prokopis, senior vice president of supply chain at Steward Health Care.
The initiative was made possible through an expansion of Steward Health Care’s existing partnership with health care supply chain company Z5 Inventory. The two Texas-based organizations collaborated to identify excess inventory likely to expire and redistribute it between Steward Health Care’s hospitals according to their need.
Ultimately it was determined that $10.2 million in cost avoidance could be achieved by reallocating products between Steward Health Care facilities; $2.9 million in product was sold to other health care providers; and $2.9 million worth of medical and surgical supplies were donated to international aid organization Project C.U.R.E.
“We developed the Z5 Reallocate solution for hospital networks just like Steward,” explained Carl Natenstedt, CEO and co-founder of Z5 Inventory. “The bigger and better organized they are, the more likely they are to be able to move a product from a shelf where it’ll expire to one where it’ll be used.”
Over the course of six months, Z5 Inventory’s teams deployed to 36 Steward Health Care facilities across 10 states. Medical and surgical supplies worth over $16.3 million were prevented from expiration, including nearly $3 million worth – around twenty percent of the total collected – being shipped directly to Project C.U.R.E., a nonprofit dedicated to distributing medical supplies to those in need around the world.
Taking advantage of Z5 Inventory’s third-party logistics (3PL) capabilities, Steward Health Care shipped excess product to a central warehouse where products were stored until needed by hospitals in the network.
This reallocation initiative was an improvement on a 2017 pilot project that prevented over $600,000 worth of product from expiring by moving it between eight hospitals in New England.
“Over the years, our partnership with Z5 Inventory has only grown stronger and more beneficial for both organizations,” Prokopis said. “We have no doubt that the savings opportunities will continue to improve as the partnership goes forward.”
“We’re already working on ways that we can improve the savings result for Steward and our other customers,” Natenstedt added, “because the more we increase our efficiency, the more efficient we can help our partner hospitals to become.”