Did you know up to 15 percent of the money spent on operating room surgical supplies is wasted because they are never used?
We're talking about a large number of high-end surgical supplies and implants that go unopened, become obsolete, expire and are blended in to the "cost of doing business". How is this acceptable in our age of fiscal and environmental sustainability?
Facilities across the nation are looking for an alternative to avoid this wasteful practice by monetizing these abandoned surgical supplies. Newly formed "Sustainability Teams" have joined the ranks of hospital system leadership, and they are seeking service partners to efficiently liquidate surplus surgical disposables to maintain fiscal responsibility, reduce waste and become socially "green" in the communities they serve.
Excess happens for the following common reasons:
• Technology advances and changes/platform conversions/competition
• Surgeon preference changes/leaving your facility/changing techniques
• Mismanagement of inventory/employee ineffectiveness/turnover/understaffing
• Sales rep turnover/overstocked shelves/sales promotions
Too many organizations are struggling to manage excess inventory and are afraid to ask for help, despite full knowledge that one facility's unneeded inventory is useful to another.
Today, service providers that buy and sell overstock are able to grant ready access to surplus products available at very affordable prices and in smaller, manageable quantities. These partnerships put supplies back into use and out of the landfills, ultimately improving patient care. Affiliations like this offer a logical and responsible best practice in our industry. Here's how:
Don't Let "Own Use" Language in OEM/GPO Contracts Obstruct Environmental and Fiscal Responsibility
"Own Use" language served a purpose when it was added to purchasing contracts in the past. The language exists to allow the OEMs better control of the flow of their products in the marketplace. OEMs were concerned that facilities with profitable pricing contracts might sell inventory to other facilities with less advantageous pricing contracts. This language misleads legal departments and CFOs to believe their organization cannot liquidate their own inventory. There is not a court, judge or jury (of taxpayers) that would enforce "own use" language as it is written and interpreted today.
Resell vs. Liquidate, There is a Difference
It wasn't until the late 1990s and early 2000s when professional services companies emerged to help monetize surplus inventory and keep supplies out of the landfills. These service providers have identified punitive language still used in OEM purchase contracts that mislead. The following is an example of typical contract language:
"IDN/GPO/facility agrees that all products purchased pursuant to this agreement will be used solely by its members for their patients, staff, employees own use and not for sale or transfer to any other third party."
The next time you review an OEM contract with the above language, you have the right to edit it and add the recommended contract language below:
"IDN/GPO/facility agrees that all products purchased pursuant to this agreement will be used solely by its members, their patients, staff, employees own use. IDN/GPO/facility reserves the right to liquidate products in the event IDN/GPO/ facility no longer has a use for them, and after all return and exchange options with the OEM that sold them have been reasonably exhausted."
This edit eliminates the perceived limitation that the OEM language was not originally meant to impose and will allow your facility the flexibility to liquidate overstock.
Own Your Inventory, Own Your Sustainability
It is important to remember, YOU own your inventory. You have the right to find a viable option to liquidate resources that are no longer needed within your facility. Destroying viable inventory violates moral, ethical, environmental and fiscally sound principles.
Philanthropy is important to all of us. Providing support to relief organizations that support underdeveloped countries is very popular and commendable. Some studies reflect that more than 70 percent of all supplies donated to qualified MSROs are destroyed or thrown away. Consider the opportunity to monetize the true value of your surplus inventory and donate those proceeds to the charity of your choice. Everyone wins, at the same time, you are able to satisfy your community outreach commitments and objectives.
Stand up for sustainability. Start by reviewing the "own use" language in your OEM contracts with your legal team. It can have a profound impact on your budget, the environment and our nationwide concern: reducing the cost of quality healthcare.
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