Ghost Inventory

Ghost inventory is the term for assets that exist on paper — in the inventory count, on the balance sheet — but cannot be physically found. In the DME world, ghost inventory typically arises when returned units aren't logged, when units are informally moved between locations without a record, when theft or loss goes unreported, or when assets are retired from service without being removed from the system.

Ghost inventory is endemic in DME businesses that rely on spreadsheets or manual records. A supplier with 50 concentrators on the books may physically be able to locate only 38. The other 12 could be at patient homes that were never discharged from the system, at a branch location that stopped updating the central record, written off informally by a warehouse manager, or simply lost.

The financial impact of ghost inventory is substantial. At $800–$1,200 per concentrator, 12 ghost units represent $10,000–$14,400 in lost capital. Multiply this across a full fleet of wheelchairs, beds, and ventilators, and ghost inventory routinely costs mid-size suppliers tens of thousands of dollars per year in unexplained write-offs and emergency repurchases.

The cure for ghost inventory is consistent scan discipline at every handoff. Units that are scanned in and out at every transition — delivery, return, reprocessing, maintenance, branch transfer — cannot disappear without creating a visible gap in the record. Cycle counts catch any residual discrepancies before they compound.