The Cost of Fragmented Cold Storage: Why Standardization is Needed

In the complex world of integrated health networks, cold storage is a critical yet often overlooked component of IHN operations. 

Without proper and consistent temperature management, daily operations of system pharmacies, laboratories, and blood banks would grind to a halt amid regulatory failures, penalties, wasted inventory, and patient samples.

Despite the importance of cold storage to IHN operations, many systems operate with a fragmented fleet of cold storage, a patchwork assortment of brands, models, and service agreements accumulated during years of decentralized decision-making.

While this process is manageable at the department level, it is far from efficient. For executives tasked with overseeing system-wide efficiency, compliance, and financial stewardship, standardization is an executive priority.

In this blog, we will examine the hidden costs of a fragmented cold storage fleet and how standardization can drive measurable benefits in efficiency, cost savings, and risk reduction.

The Hidden Costs of a Fragmented Cold Storage Fleet

For most IHNs, the accumulation of cold storage equipment is itself a fragmented, decentralized, reactive process that, outside of new construction, occurs primarily only immediately following equipment failure.

These decisions are made primarily at the department level, where directors choose whichever brand of cold storage they most prefer. This level of fragmentation in cold storage may seem like a minor operational detail, but it creates costly inefficiencies that compound across a health system.

1. Operational Inefficiencies

A fragmented cold storage fleet forces healthcare staff to navigate a maze of equipment types with unique controls, alarm settings, and maintenance processes, which can lead to downstream costs such as:

• Increased training burdens: Pharmacy, lab, facilities, and biomed teams must learn, manage, and maintain multiple systems, increasing time needed for onboarding training and risk of user error.
• Delayed response to alarms and failures: Staff unfamiliar with a specific brand or unit may struggle to troubleshoot or respond quickly to temperature excursions or identify the cause of alarm.
• Workflow disruption: Differences in quality of unit or unit performance cause inconsistencies and even failures that disrupt daily operations.

2. Higher Total Cost of Ownership (TCO)

Total cost of ownership can be a tricky metric to truly understand. There are several complex processes and hypothetical scenarios that can be difficult to quantify when calculating the total cost of ownership of a cold storage unit. However, given the variables, there is a strong case to be made in favor of standardization of cold storage equipment. Fragmented cold storage solutions can result in:

• Higher service and maintenance costs: Different brands require different service agreements, a wider variety of on-hand spare parts, and a greater breadth of technical knowledge and expertise to maintain.
• Unpredictable procurement expenses: Inconsistent purchasing leads to varied pricing, lack of centralized information leads to difficulty in forecasting replacement needs for end-of-life equipment, and inconsistent quality can lead to unforeseen early failures that require immediate and unplanned replacement expenses.
• Energy efficiencies: Aging and low-quality units consume more power, leading to higher utility costs across the system.

3. Compliance and Risk Exposure

Standardization is not merely a financial decision, it is a risk management imperative. A fragmented cold storage fleet leads to inconsistent performance that can have a direct impact on patient outcomes, audit performance, and operational continuity.

Here are a few ways a non-standardized cold storage fleet creates vulnerabilities in health system operations:

• Inconsistent temperature control: Variability in equipment quality means variability in performance and monitoring capabilities, increasing the risk of temperature excursions that compromise inventory and patient safety.
• Regulatory challenges: Not all “medical-grade” cold storage units are created equal. Some are designed to meet specific requirements such as AABB Standards, NSF/ANSI 456 Vaccine Storage Standard, and CAP standards. Units and brands that do not meet these standards can increase the risk of audit failure when used in locations that require adherence to specific guidelines.
• Increased risk of product loss: Lack of uniform reliability and quality means lower quality units will be more prone to failure, leading to expensive product spoilage and potential safety risks for patients.

The Strategic Benefits of Standardization

Cold storage standardization is more than simply cost mitigation; it is a strategic business decision to actively manage a critical component of system operations to increase operating margin and profitability. Let’s look at the strategic benefits of standardization at the health system level.

1. Streamlined Operations and Staff Efficiency

Where fragmented cold storage fleets increase the need for onboarding training and staff technical knowledge, standardization helps create a uniform experience that can be replicated across labs, pharmacies, blood banks, and other facilities across the system, allowing staff to be moved interchangeably across sites of care. Other staff and operational benefits include:

• Simplified training: Standardized equipment reduces training required for end users and maintenance staff, requiring staff to each learn maintenance and operation of only a handful of models instead of dozens of different permutations of brand, size, age, and configuration.
• Faster troubleshooting and response times: Since staff will be more intimately familiar with the equipment and systems in use, they will be able to identify causes for alarm, take corrective action, and resolve issues quicker.
• Consistent performance across departments: Uniform cold storage means consistent quality across departments within the health system, which means fewer unexpected failures and incidents.

2. Cost Savings and Procurement Optimization

Standardization can help IHNs secure the best pricing, even if they already purchase through a group purchasing organization (GPO) and can incentivize vendors to provide value-added services and other benefits due to purchasing volume.

• Bulk purchasing power: Though most health systems already purchase through GPOs, many GPOs offer the opportunity for health systems to broker deals with suppliers to secure more favorable terms such as even lower prices, value-added services, warranty extensions, and more.
• Predictable maintenance costs: Once standardized, all equipment will be purchased through the same vendor, making it easier to track equipment age and performance and forecast repairs and replacements.
• Reduced emergency repairs and downtime: Consistently high-quality cold storage units with proactive maintenance (another potential benefit from standardization) lead to fewer unexpected failures.

3. Improved Compliance and Risk Management

Streamline regulatory compliance and reduce the risks associated with audit failure by standardizing to cold storage units certified to meet specific regulatory standards:

• Consistent temperature control: Reliable medical-grade cold storage ensures medications, blood products, lab samples, and reagents remain within required temperature ranges.
• Simplified audit preparation: Standardized reporting and performance capabilities make it easier to compile and provide data to regulators.
• Enhanced reliability and patient safety: Fewer failures means fewer instances of compromised medications, blood products, and reagents, resulting in fewer patient safety incidents and incorrect lab test results.

The Business Case for Standardization

For executives overseeing large, intricate health system operations, standardization is a business imperative. Standardization eliminates variables that introduce risk into system operations.

Uniform cold storage reduces variations in quality that increase risk of temperature excursions, variations in technical expertise that slow down troubleshooting and maintenance, variations in performance that create inconsistent regulatory compliance across sites of care, variations in pricing that reduce budget efficiency, and variations in lifecycle that obscure fleet management and capital planning.

For IHN executives, more control equals less risk, and less risk equals better outcomes for patients and the business.

OTHER BLOGS YOU MAY BE INTERESTED IN...

• A Case Study in Hospital Cold Storage Planning
• Strategic Benefits of Standardization in the IHN
• Hospital Equipment Planning
• Operational Benefits of Walk-In Cold Storage

Standardize with Life Science Solutions

Life Science Solutions offers a comprehensive suite of cold storage solutions for integrated health networks. From 5 cubic feet undercounter refrigerators and freezers for nursing floors to football-field-sized walk-in and drive-in units for consolidated pharmacy service centers and specialty pharmacy distribution sites, Life Science Solutions has everything your IHN needs to protect valuable inventory and maintain compliance in key clinical departments like pharmacy and laboratory.

All Life Science Solutions equipment is backed by competitive warranties with available flexible service programs to ensure your cold storage stands the test of time and operates at peak performance for the entire service life of the equipment.

With three available brands, including reputable Helmer Scientific, and more than 120 years of combined experience, Life Science Solutions has the portfolio and expertise to support all your IHN’s cold storage needs.

For more information, contact your Life Science Solutions representative for Helmer Scientific equipment or submit the quote request form and include the word “standardization” in the comment field.