How Your Hospital Saves Millions of Dollars Per Year by Improving Sterile Processing Quality

With many hospitals operating in the red, it would seem like no financial losses are going unnoticed. But the truth is that hundreds of thousands — even millions — of dollars are sneaking out through errors in the sterile processing department (SPD) every single year. 

How could these expenses be accruing under the radar? The reality is that they can be tough to track and calculate, especially over time. Now, a recent study has put them out into the open.

Senior level students at the University of Michigan (the Wolverine Consulting Group), under the guidance of two SpecialtyCare professionals, analyzed these costs at an Ohio-based hospital as part of a sponsored study. What they discovered was that $1.5M was draining out of the balance sheet each year due to SPD errors.

Report Findings: $1.5 Million Per Year in Losses from SPD Errors

The Wolverine Consulting Group (WCG) utilized existing data tracked by the Ohio-based hospital, interviews and hospital visits at similar hospitals, and online literature search of similar mid-sized hospitals. They separated SPD-related costs into three categories:

  1. Hard costs, which are associated with time (due to fixing errors like missing instruments, incorrect instrument sets, sterilization failures, etc.).
  2. Instrument costs, the actual expense of replacing instruments.
  3. Soft costs, which include legal costs (related to malpractice suits), customer satisfaction, and morale of hospital staff.

The data gathered by WCG was used to help build a formula that quantified the cost associated with an SPD sterilization error. From this calculation, they were able to determine the approximate costs within all three categories. 

The overall cost from all three categories added up to $1,509,305 in losses per year. 

Click here to download the full report for free.

A Summary of SPD-Related Cost Drains

Hard costs, the loss of time connected to SPD errors, accounted for the second greatest expense — $704,985 annually. Because the OR is a central driver of hospital revenue, instrument delays and errors in the OR can impact a hospital’s bottom line. And, what happens in the SPD affects what happens in the OR.

The largest annual expense came from soft costs, which include legal costs (related to malpractice suits), customer satisfaction, and morale of hospital staff. Unclean or improperly sterilized instruments that reach patients increase the incidence of SSIs and patient injury. Not only that, but bad experiences lead to losses of lifetime customer revenue. And, when errors or inefficiencies cause backlogs in the SPD, it drives staff turnover, leading to recruitment and training costs. These costs topped $802K per year. 

In terms of the study, the cost of replacing single instruments came in last in terms of financial impact; however, instrument losses are not always well tracked, especially when it comes to complex device parts — meaning that these costs may be largely underestimated.

Optimizing Your SPD to Reduce Expenses

The only way to prevent these gradual but significant expenses is to optimize the SPD for greater efficiency and safety. Fewer errors can mean a considerable reduction in time loss, the incidence of SSIs and malpractice suits, customer attrition, and staff turnover. If you invest in your OR, you should invest in your SPD.

At SpecialtyCare, our mission is to make surgery safer, which includes the pursuit of perfection in the SPD. Hospitals are challenged differently than they were 10 years ago due to the complexity of instruments and types of procedures. More money can be saved, more infections can be prevented, and more lives can be saved. If you want your hospital to excel in surgical safety, we are ready to partner with you to overcome the challenges facing the SPD both now and in the future.

Contact our team today to find out more about how we can help you recoup the significant yearly costs related to SPD errors. We would love to tell you more about our expert consultations, training programs, tray optimization services, staff placement strategies, and inventory management services.