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Abstract
While consignment in the health care industry has become more popular in recent years, confusion exists as to when and why consignment is effective. Despite the advantages of consignment, many buyers do not use the concept due to the size of the organization or lack of familiarity with the concept. The 2 basic ways to determine when and why consignment should be used in health care are: 1. examining the costs and benefits that affect the purchaser, and 2. evaluating whether or not consignment can achieve overall savings or economies of scale on a long-term basis. An alternative to a consignment arrangement called ''stockless'' involves inventory being kept at a minimum and goods being delivered as needed. Stockless is only practical for hospitals that have supply firms within at least a one- or 2-hour drive, and it requires a sophisticated online data processing system to support it. Consignment is easier to administer, is more widely available, and is a good middle ground between the stockless approach and the traditional, expensive approach of taking title to purchased goods.