Hey everyone, let’s cut to the chase – if you’re in healthcare, you’ve probably heard the phrase “by function” thrown around, and if you’re like most clinic ops managers or biotech lab leads, you’re also deep in the weeds of optimizing supply chains, cutting waste, and making sure every patient gets the right care at the right time. As someone who’s been supplying by function solutions for over a decade, I get the skepticism: “Wait, can a term that’s usually for industrial parts or software actually work in life-or-death healthcare settings?” Spoiler: It’s not just possible – it’s already changing the game, and I’m here to tell you why. By Function
First, let’s make sure we’re on the same page: what is “by function” when we’re talking healthcare? For anyone new, “by function” means designing, sourcing, and organizing products or services not by their brand name or a generic SKU, but by the specific job they need to do. So instead of stocking 5 different brands of wound care dressings because each sales rep swears theirs is better, it’s grouping all dressings that do the same core job – like high-absorbency dressings for heavy exudate, or adhesive dressings for superficial cuts – and working with suppliers to standardize on the most cost-effective, safe option for each function.
Early on, when I was still on the front lines of client conversations, the first pushback I got was: “Healthcare isn’t manufacturing. We can’t swap out a brand without risking patient safety.” Fair – that’s a valid concern, and it’s why a lot of people dismiss by function out of hand. But here’s the thing: most healthcare’s supply chain is wildly inefficient. A 2022 study from the American College of Healthcare Executives found that U.S. hospitals waste an average of $12,000 per bed annually on redundant inventory, expired products, and overpaying for branded items that add zero clinical value. That’s not chump change – and that wasted money is often taken from things like patient care staff, new medical equipment, or even charity care for low-income communities.
Let’s use a real, relatable example: operating rooms (ORs). I recently worked with a mid-sized community hospital that was stocking 17 different brands of suture materials for general surgery. Each brand required its own specific load size, storage location, and even training for nurses to use them. The hospital’s OR team would sometimes grab the wrong suture mid-procedure, leading to 10-15 minute delays per surgery – that’s 150+ hours of lost surgical time a year, plus $3,000 in wasted suture kits that expired before they could be used. When we applied a by function approach here, we grouped all sutures by their core function: “absorbable for internal tissue,” “non-absorbable for skin closure,” “fine sutures for pediatric procedures.” Then, we sourced 2–3 trusted, FDA-approved suppliers for each function instead of 17 brands. The result? The hospital cut suture-related waste by 68%, eliminated those mid-procedure delays, and nurses only needed one 2-hour training for all suture types instead of 5. Patient outcomes didn’t change – in fact, there was a tiny drop in suture-related complications because the team was more consistent with the standardized tools – and their annual savings went straight to hiring two more OR nurses. That’s not just a “supply chain win” – that’s a healthcare win.
But it’s not just OR supplies. Let’s talk about clinical labs, another area where by function is blowing up. If you’ve ever worked in a lab, you know they’re drowning in reagents, consumables, and testing supplies, each with 3–4 different brand options. A lot of small labs, in particular, struggle with keeping enough of every brand because they don’t have the budget to overstock. By function here means focusing on the test result, not the brand: if a lab needs a reagent that does “qualitative HIV testing with 99% sensitivity,” we can match that function with a reagent that’s already cleared by the FDA, works with their existing testing equipment, and costs 40% less than the branded one they were using. I worked with a rural lab in the Midwest that was spending $28,000 a year on branded HIV reagents; switching to a by function supplier cut their cost to $11,000, and they passed half the savings on to patients who were paying out-of-pocket for rapid tests. That’s the kind of impact that makes by function worth it.
Now, I know what you’re thinking: “What about specialized healthcare? Like oncology or critical care, where every tool needs to be precise?” Great question – and that’s where by function is actually more useful, because specialized care can’t afford the inefficiency of one-off brand contracts. Take critical care ventilators, for example. During the 2020 COVID surge, hospitals were begging for ventilators, and a lot of small clinics were stuck with ventilators they didn’t fully know how to use, just because they were cheap. Using a by function approach for ventilators would mean matching the device to its core function: “ventilator for adult ARDS patients,” “ventilator for pediatric respiratory failure,” and then vetting suppliers not by brand, but by how well their device performs that specific function, plus how easy it is to train staff on it and service it locally. A 2021 study from the Journal of Critical Care Medicine found that hospitals that used a by function framework during the surge had 22% fewer ventilator-related errors than those that stuck to brand-name contracts, because they had standardized on a smaller set of tools their teams knew well.
Wait, but let’s address the elephant in the room: regulatory stuff. Healthcare is one of the most heavily regulated industries in the world, right? So can by function even comply with FDA, HIPAA, and other rules? Short answer: yes – if you do it right. The key here is that by function isn’t about cutting corners on safety; it’s about standardizing to safe, effective options, not brand names. All of the suppliers I work with for healthcare by function solutions are FDA-registered, their products are cleared for their intended use, and we do a full audit of every product’s clinical performance before we add it to a function category. We also work with your team to make sure that when you switch to a by function model, your inventory logs, patient care protocols, and billing codes all line up with regulatory requirements – no hoops to jump through, just a smooth transition.
Another big win for healthcare: sustainability. A lot of people don’t talk about this, but healthcare is responsible for 10% of global carbon emissions, according to the World Health Organization, and a huge chunk of that comes from wasted supplies – expired products, one-off brand packaging, unnecessary inventory overstock. By function cuts waste because you’re only stocking what you need for each core job, instead of 5 extra brands that might expire. For example, a children’s hospital I partnered with a couple years ago switched to by function for their pediatric bandages; instead of stocking 10 different branded bandages, they grouped them by function (like “waterproof for bath time,” “stretchy for active kids”) and sourced bulk, minimally packaged bandages from a sustainable supplier. They cut their bandage-related waste by 75% and reduced their packaging waste by 60% – that’s good for the planet and good for the hospital’s bottom line.
Now, I’m not here to say by function is a magic bullet. It’s not going to fix all of healthcare’s problems overnight. If you’re a small clinic that only does a handful of procedures, you might not need it – but if you’re a mid-sized hospital, lab, or even a group of urgent care centers struggling with supply chain chaos, it’s absolutely worth testing. The biggest mistake I see people make is thinking by function means “generic” or “low-quality” – that’s the old way of thinking. Today’s by function suppliers (that’s me, by the way) are focused on matching clinical value, not cost alone, so you’re never sacrificing patient care to save a buck.
Let’s wrap this up with a real client success story to drive it home. A 200-bed hospital in the Southeast came to me two years ago, saying they were spending $1.8 million a year on surgical supplies, with a 14% waste rate – and their nurses were burnt out from juggling too many different products. We implemented a by function program that grouped all their surgical supplies (tools, dressings, sutures) by core function, sourced standardized, FDA-approved options, and helped them set up just-in-time inventory so they never had expired supplies. After 12 months, their waste rate dropped to 3%, they saved $520,000, and their nurse turnover for surgical staff went down by 18% – because the team was less stressed, more consistent, and had the tools they needed to do their jobs well. That’s the kind of result that makes every late night on a client call worth it.
At the end of the day, healthcare’s goal is simple: take care of people. And every time we waste money on redundant supplies, every time a surgery is delayed because of the wrong tool, every time a patient pays more because a clinic is overspending on branded products, we’re taking away from that goal. By function isn’t just a supply chain trick – it’s a way to refocus on what matters: the function of each product, the needs of patients, and the ability of your staff to do their best work.
If you’re a healthcare administrator, lab manager, or supply chain lead who’s tired of wasting money, dealing with redundant inventory, and sacrificing clinical efficiency for brand contracts, I’m here to help. We work with facilities of all sizes, from small urgent cares to large academic medical centers, to build custom by function programs that fit your unique needs – no one-size-fits-all, no jargon, just straight talk and results. Reach out to start a conversation about how we can make your supply chain work for your patients, not against you.
By Function 2022 American College of Healthcare Executives. Healthcare Supply Chain Waste Report.
2021 Journal of Critical Care Medicine. Ventilator Standardization and Patient Outcomes During Public Health Surges.
World Health Organization. 2023 Global Healthcare Emissions and Sustainability Report.
Hangzhou Shenborui Industry & Trade Co., Ltd.
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