For home health, hospice and home medical equipment (HME) providers, inventory management is a crucial yet complex task that directly affects operational efficiency, financial stability, patient care and service levels. Many are local and family-owned, making it even more challenging to balance costs, logistics and accessibility. Every aspect, from stock levels to delivery methods, must be optimized to ensure resources are used efficiently without sacrificing care quality.
One of the biggest challenges HME providers face is high storage and overhead costs. Maintaining bulk inventory requires warehouse space, additional staff and increased expenses for utilities, labor and equipment. Rising freight and delivery expenses add to the burden, especially as providers navigate inflation and logistical delays. Additionally, capital tied up in excess stock limits financial flexibility, preventing providers from reinvesting in critical aspects of their business. As a result, many feel the pressure to operate with minimal on-hand inventory, which introduces risks when back orders or supply chain disruptions occur.
Home health and hospice agencies face unique logistical challenges, including nurses commuting to pick up supplies before visiting patients. Excess inventory is often stored in offices or as trunk stock, creating inefficiencies that do not maximize their clinical capacity. Furthermore, long shipping times due to lack of local stock and fragmented shipments cause delays, leaving providers struggling to get essential supplies to patients when they need them. These delays can have a direct impact on patient health and care quality.
Inventory management also ties into broader industry concerns, including labor shortages, freight costs and supply chain disruptions. Without efficient strategies in place, providers may face rising costs that further squeeze already-thin margins. As the industry evolves, finding streamlined, cost-effective solutions will be the key to ensuring providers can continue delivering high-quality care without financial strain.
Effective inventory management is critical for providers striving to balance cost efficiency with high-quality care. There are several strategies agencies and providers can adopt to streamline their supply chain and help reduce waste.
1. Simplify the ordering workflow.
A seamless ordering process begins with integrating patient data into procurement systems. Agencies and providers should prioritize platforms that support e-ordering and integrate with electronic medical records and enterprise resource planning (ERPs). For HME providers, ERPs support patient intake and eligibility, billing and order management. This integration makes it easier to select the right products quickly and accurately by creating customized formularies and shopping lists. Real-time inventory visibility is also essential—knowing what’s in stock locally and what’s available at contracted pricing helps avoid delays and overspending.
2. Create a preferred item formulary.
Creating a preferred item formulary in collaboration with a supplier ensures consistency and availability. Suppliers like Medline can stock or reroute these items to local warehouses, guaranteeing timely delivery. Implementing oversight rules, such as order frequency, value thresholds and non-formulary restrictions, can prevent unnecessary or excessive purchases.
3. Embrace low unit of measure ordering.
Ordering in the lowest unit of measure ensures agencies and providers are only purchasing what each patient needs. This approach reduces waste, prevents product expiration (especially for items like wound care dressings) and frees up cash that would otherwise be tied up in excess inventory.
4. Leverage purchasing data.
Modern inventory systems offer intuitive search functions, real-time availability and substitution tools. Talk with suppliers to make sure they are providing easy-to-digest information on purchasing decisions and side-by-side product comparisons. This helps staff find suitable alternatives quickly during shortages or back orders.
5. Have strategic conversations with suppliers.
Engage regularly with suppliers to discuss operational goals. Business reviews can uncover patterns of overspending or non-compliance and lead to targeted improvements. It’s also important to understand the supplier’s distribution network; having access to multiple warehouses ensures continuity even when local stock runs low.
Whether engaging with a current supplier or vetting a new one, here are a few key initiatives to ask them about that can help lead to effective inventory management:
- Can the supplier fulfill patient specific orders and deliver directly to a patient’s home? This allows home health, hospice and HME providers to focus on their business while leaving the fulfillment and shipping details to their supplier.
- Can the supplier store the inventory? With agencies and providers already navigating through product waste, a supplier with a solid distribution network can hold the inventory until it is needed and then pick, pack and
ship it from their own warehouse directly to the patient. This helps reduce the capital investment of inventory on hand for the provider while maintaining timely delivery to the patient. - What are the supplier’s automation capabilities? Suppliers are leveraging automation throughout their distribution network to help enhance workflows and improve supply chain efficiency. It is important to ask suppliers about their processes that ultimately help the customer enhance operational efficiencies.
Inventory management plays an essential role in supporting patient care. Ensuring timely access to supplies will help providers maintain patient health and satisfaction. With an organized inventory management plan, they can focus on delivering quality care, leading to improved patient outcomes. By adopting these practices, home health, hospice and HME providers can maintain lean inventories and reduce costs.