Hospital Supply Chain Stress Continues: What to Know

A lesson from the COVID-19 pandemic was a wake-up call about the healthcare supply chain. This failure matters because it negatively impacted patient morbidity and mortality, according to a 2022 study. The pandemic didn't just disrupt the supply chain; it broke it with the worst hospital disruptions in 50 years.?

As one pediatric nurse said:

It's hard to pick which was more dreadful, hearing the number of COVID patients in the Children's Hospital go up or hearing that we might run out of essential supplies that day. Pre-shift huddle started our day with dread and disappointment. Each day we learned about a new CLABSIs or HAPI that occurred or realized that we had three sets of blood tubing left. It got to the point that we were hoarding supplies and even trading supplies between units.

A key duty of the healthcare C-suite is to make sure that hands-on caregivers every day have what they need to care for patients. If we suits in the front office can't figure that out, what good are we?

Why the Supply Chain is Still Stressed

A year ago, 93 percent of "provider executives" reported product shortages, according to The American Hospital Association (AHA). A January survey found some improvement, with 71% of hospital executives reporting distribution delays. AHA cites shortages of raw materials such as resins, precious metals, and gases as one cause of supply chain shortages. Also, a major pharmaceutical production facility closed in February of 2023 due to financial and regulatory challenges, contributing to drug shortages.

Pre-pandemic, most hospitals, backed by distributors, relied on just-in-time delivery to avoid maintaining the expense of on-site inventory storage. A 2022 study concluded that:

Throughout the three waves of infection, there were glaring deficiencies in the domestic manufacturing ability to provide necessary supplies. Moreover, states and federal reliance on large manufacturers with established procurement relationships with the government led to serious failure to address shortages. Had they found a way to expand existing supply chain networks to include small and medium American manufacturing firms and (utilize) their productive capacity, more PPE and testing materials could have been produced domestically."?

Other factors that continue to stress the supply chain include natural disasters (and manmade disasters, such as wars), transportation failures and delays (e.g., Houthi rebel attacks on shipping through the Suez Canal), price fluctuations, and cyberattacks, such as the 2020 attack on Pfizer/Biotech and AstraZeneca.

Four Action Steps

The Health Industry Distributors Association suggests the following actions:

· Integrate inventory management. This would allow distributors to help providers take a more holistic approach to optimizing inventory management.

· Redefine visibility and transparency. Improvements in supply chain visibility — both upstream and downstream — can unlock opportunities to reduce waste and increase flexibility. This requires firm commitments with distributors to share data among trusted trading partners.

· Plan proactively. Demand planning needs to be more proactive, future-focused, and less dependent on old algorithms and historical data that the pandemic has rendered obsolete.

· Collaborate freely. Integrate product demand planning with clinical planning to optimize purchasing and product use. A recent McKinsey & Company survey of 149 health system executives found that 54% do not have dedicated personnel to engage with front-line clinical staff around supply chain.

When advocating that hospitals share data with distributors, ensure that such partners have proper cyber security in their systems to prevent cyberattacks.

Finally, remember – do no harm. During the pandemic, one of my site colleagues shared a story he heard from a nurse about the conflict that was created by the C-suite at his hospital. The nurse would check the on-hand stock of personal protective gear inventory frequently to make sure they were protected when caring for patients ill with COVID-19. One day, when checking stock, the nurse found that much of their inventory was gone. The hospital CEO had ordered the missing inventory sent to another hospital. This decision created tension between the nursing staff and C-suite that persists to this day.?- John W. Mitchell, MS blogs at https://healthcarecsuite.com/