It can be easy to blame the health care supply chain for rising costs. Yet when we peel back the layers, the waste often hides in plain sight. Inefficient supply chain operations quietly drain resources.
Lasting savings come from tackling the root causes of supply chain waste. Below are five areas where hospitals typically overspend, along with practical strategies to reclaim those dollars.
1. Inventory mismanagement and overstocking
An alarming portion of hospital budgets gets tied up in supplies. Analysts estimate U.S. hospitals overspend roughly $25 billion per year on supply chain inefficiencies, or about $12 million per hospital. Over one‑third of some operating budgets can be trapped in handling, storage and restocking. Excess stock expires, leading to write‑offs, while lack of visibility leads to panic buying during shortages.
Stop the waste: Implement a disciplined, integrated logistics program. Advantus’s Integrated Logistics & Distribution solution standardizes point‑of‑use capture, centralizes inventory, and provides real‑time visibility into stock levels. By consolidating shipments and using proactive local inventory management teams, health systems can reduce stockouts, avoid over‑buying and cut purchase costs. Advantus also builds centralized stockpiles for critical items and leverages national distribution partnerships to weather disruptions, ensuring supply access without the high carrying costs.
2. Reactive vs. proactive equipment maintenance
Most hospital budgets include a line item for equipment repairs, but what’s often overlooked is the cost of unplanned downtime. Reactive maintenance — waiting for equipment to break — becomes more expensive than proactive planning.
Stop the waste: Adopt a unified health care technology management (HTM) strategy. Advantus, through its partnership with GE HealthCare, offers a comprehensive HTM program that manages imaging, biomedical and laboratory equipment, mobile equipment cleaning, and capital planning. Instead of juggling disparate service contracts, Advantus provides uptime guarantees, a dedicated call center for recalls and repairs, and scalable pricing models that align maintenance spend with actual usage. Hospitals that switched to this program have realized 30%+ reductions in equipment‑related costs while improving clinical uptime.
3. Fragmented service contracts
Purchased services — outsourced functions such as food services, housekeeping, IT support and equipment rentals — represent over 40% of a health system’s non‑labor spend. Yet many organizations manage these agreements piecemeal, with each department negotiating its own contracts. This fragmentation makes it difficult to standardize expectations or track performance.
Stop the waste: Centralize and professionalize purchased services management. Advantus’s Purchased Services solution approaches service contracts holistically. Their team evaluates non‑labor spend across facilities, identifies opportunities for consolidation, and negotiates multi‑year agreements aligned to the hospital’s needs. By replacing siloed teams with cross‑functional roles and leveraging technology to monitor performance, Advantus helps health systems control costs, eliminate unmanaged spending and improve service quality.
4. Poor vendor accountability
Vendor relationships can be a hidden source of waste. Costs from bad contracts, non‑compliance penalties and operational disruptions can quickly add up. Without clear expectations and performance metrics, facilities may over‑stock, accept unreliable deliveries or even expose themselves to regulatory risk. A proliferation of vendors also dilutes volume‑based leverage, leading to higher prices and inconsistent quality.
Stop the waste: Shift from transactional suppliers to strategic partnerships. Advantus’s vendor vetting process favors a narrower base of high‑performing partners who demonstrate deep expertise, cultural alignment and willingness to co‑innovate. Their partner HHS, for example, brought robotic floor cleaning to reduce labor costs, standardized EVS chemicals to improve infection prevention, and repurposed existing staff to swap curtains — saving a hospital hundreds of thousands of dollars. By holding partners accountable to clear performance metrics and collaborating on continuous improvements, health systems reduce risk and unlock new efficiencies.
5. Lack of actionable supply chain data
Most hospitals have robust ERP and EHR systems, but the data often lives in silos. Manual processes create pricing inaccuracies and limit forecasting; without timely, integrated data, supply teams can’t anticipate shortages or benchmark costs. A survey of health care executives found that nearly 70% plan to adopt cloud‑based supply chain platforms by 2026, expecting to cut process costs in half and increase revenue by 20 %.
Stop the waste: Replace spreadsheets with advanced analytics that connect cost, quality and outcomes. Advantus’s Insights solution (and its forthcoming CQO tool) unifies supply chain, clinical and financial data into real‑time dashboards. Their AI‑driven tools provide commodity market analysis, benchmark performance across facilities and physicians, and model the downstream impact of product changes. Users can identify overuse, monitor compliance with preferred products, and forecast savings opportunities. Because the platform surfaces insights at the point of decision, leaders can act fast and align supply decisions with patient outcomes.
Turn waste into value
Hospital finance and operations executives are under relentless pressure to do more with less. Yet the five areas above show that waste can be reclaimed with the right strategies. Advantus Health Partners offers integrated solutions — from logistics and HTM to purchased services, vendor vetting and analytics — that address the underlying causes of overspend. By partnering with a supply chain expert that understands clinical workflows and prioritizes long‑term value, health systems can redirect wasted dollars toward patient care, innovation and resilience.
If you suspect hidden inefficiencies in your supply chain, let’s have a conversation. Advantus Health Partners can perform a savings audit and develop a customized plan to transform your supply chain from a cost center into a competitive advantage. Reach out to learn how to drive cost, quality and outcomes together.
