How can PAR Levels help clinics save more money and become more sustainable?

PAR (Periodic Automatic Replenishment) levels can be instrumental in helping clinics save money and become more sustainable by optimizing inventory management. In this article, we will explain how.

Reduced Waste

PAR levels ensure clinics maintain a predetermined quantity of essential supplies by preventing overstocking and reducing the chances of supplies expiring before use.

The healthcare industry is one of the largest waste-producing sectors. According to the American Medical Association, hospitals in the United States generate about 33.8 pounds of waste daily, leading to about 6 million tons annually. About 20% to 25% of this waste is plastic, but 9% are recycled. The other 91% ends in landfills or damaging natural environments.

PAR levels represent the minimum quantity of a particular item that should be on hand. Clinics can minimize waste and prevent unnecessary disposal of expired or obsolete items if they regularly monitor usage patterns and adjust PAR levels. Keeping an accurate track of the medical inventory shouldn't be optional since this type of practice affects the clinics and the rest of the planet. 

It has been proven that clinics implementing a PAR-level strategy can reduce their inventory by up to 50%, meaning millions of dollars saved annually. 

Implementing par levels in a hospital to reduce waste involves thoughtful planning and collaboration across various departments. Doctors, nurses, and administrative staff must work closely in decision-making and determine optimal par levels for each item, considering usage patterns, lead times, and criticality.

Investing in an efficient inventory management system to automate tracking processes can help clinics save time and effort, preventing their staff from burnout. Mika Health has developed a unique solution to help clinics implement successfully a PAR Level strategy and for limited time you can test our demo for free. Learn more in this link.

Cost Savings

Efficient inventory management through PAR levels helps clinics minimize carrying costs. Carrying costs include expenses related to excess inventory, such as storage space, security, and insurance.

The United States allocates a staggering USD 83 billion annually to procure essential hospital supplies, including disposable gloves and gowns*. Moreover, a substantial portion of hospital budgets, exceeding one-third, is directed toward inventory-related activities like handling, storage, transporting, and restocking inventories**. In an alarming revelation, U.S. hospitals are found to squander approximately USD 25.4 billion each year due to unnecessary expenditures in the supply chain***.

Clinics can optimize purchasing patterns based on actual usage, avoiding unnecessary spending on surplus supplies. These are some key purchasing patterns that clinics can detect to improve their inventory management:

Seasonal Trends: Observation of seasonal variations in the demand for specific medical supplies allows clinics to adjust their inventory levels accordingly. For example, flu season may require increased stock of flu vaccines and related supplies.

Patient Appointment Schedules: Analyzing patient appointment schedules can help clinics anticipate the demand for certain supplies. For instance, increased appointments for vaccinations or routine check-ups may necessitate higher levels of related inventory.

Historical Data Analysis: Studying purchasing data from the past helps clinics identify trends and patterns over time. This analysis enables them to make informed decisions about reorder points, quantities, and optimal stocking levels.

Supplier Lead Times: Understanding the lead times from different suppliers allows clinics to plan and avoid stockouts. Clinics can adjust their reorder points based on supplier delivery times to ensure a steady supply of essential items.

Minimizing waste and optimizing resources contribute to environmental sustainability. By implementing PAR levels, clinics can play a role in reducing the environmental impact associated with the production, transportation, and disposal of excess supplies. If you are curious about minimizing waste and saving resources in your clinic, visit our website and discover how Mika Health can assist in implementing a thoughtful PAR Level strategy to enhance efficiency and reduce inventory waste.

*(Scanlin, 1997, Kua-Walker, 2010).

**(Dennision et al., 1994, Kua-Walker, 2010)

***(NAVIGANT 2018)