The COVID-19 pandemic exposed flaws in the healthcare supply chain, which continues to be challenged during this once-in-a-century disease outbreak.
With the pandemic straining the resources of healthcare providers, it’s critical that the industry develops and implements sound practices reflecting the new realities of procuring and delivering medical products to healthcare providers.
With the outbreak increasing across the country, availability of medical supplies is still a critical concern. As of early December 2020, published sources reported more than 14.8 million infected patients and nearly 290,000 deaths in the U.S. since the onset of viral spread, with Texas and California showing the highest rates of contagion (1.37 million and 1.34 million, respectively).
Throughout the pandemic, there has been an uneven distribution of PPE supplies (masks, gloves, gowns and face shields), with smaller hospitals often being edged out in fierce competition for limited supplies.
A bill recently introduced in the U.S. Senate aims to allocate billions of dollars of funding for PPE to help alleviate shortages. But, it’s unclear whether this funding will come through and, if it does, the resulting impact is also unclear.
In the meantime, healthcare leaders must quickly adjust to a “new normal” environment.
1. PPE supplies will be multi-sourced to reduce the reliance on China for PPE and other medical products. A supply chain that is proactive and flexible will help hospitals withstand severe supply disruptions.
2. Hospitals are expected to face minimum price hikes of between 5 percent and 10 percent for PPE in the foreseeable future and, perhaps, higher than 20 percent for some products.
3. The industry must be prepared to accept that some suppliers will require that hospitals buy a certain quantity of supplies within a certain period of time to cover the cost of additional production during times of serious supply shortages.
During and in the aftermath of the pandemic, recommended best practices in supply chain management include:
- Optimize Inventory Levels: While it’s always a good practice that the amount of purchased supplies should match volume used and minimize excess inventory, a public health crisis like COVID-19 calls for plentiful safety stock of PPE. Hospitals are adopting a hybrid approach, stockpiling vital pandemic supplies while keeping other supplies on-hand to a safe minimum. This approach is best combined with a multiyear strategic plan to decide which PPE supplies to stockpile and what categories of supplies can be managed by a Low Unit of Measure (LUM) program to avoid negatively impacting various clinical departments.
- Update Safety Stock and Pandemic Response Procedures: Due to hospitals depleting safety stock supplies during COVID-19 spikes, it’s recommended that hospitals with space and resources store PPE in greater amounts. PPE inventory can be stockpiled in off-site warehouses. Policies and procedures to track and rotate stockpiled inventory must be updated to account for changes in regulations due to the pandemic.
- Pool and Coordinate Resources Across Organizations: Amid the pandemic, supplies were not delivered to some hospitals that needed them the most. To help solve this problem, hospitals can work with each other regionally to create and manage their own local stockpiles in a separate or shared centralized location. Sharing information can reduce uncertainty and minimize the urge to exacerbate shortages by triggering “just-in-case” hoarding.
- Leverage Technology: The pandemic emphasized the need for a globally standardized system for healthcare product tracking and traceability—from raw material and manufacture to storage and patient treatment. It’s recommended that hospitals use electronic data interchanges (EDI) as a first step toward automation and Item Master File optimization.
- Build a Diversified Supplier Base: In addition to ensuring their Group Purchasing Organization (GPO) has a diverse product contracting strategy, hospitals need to develop relationships with non-contract and nontraditional suppliers. This will provide additional options to secure supplies in the event of another supply chain disruption. However, hospitals should carefully evaluate vendors and secure and test product samples before placing orders.
- Gain Acceptance from Clinicians: Involving clinicians in the decision-making process will more likely result in them accepting the goals and strategies of the supply chain management team. This can be accomplished through clinical product review and value analysis teams that can quickly convene to make sure alternative products pass muster.
The COVID-induced supply chain disruption deeply underscored the need for greater efficiency and resiliency. To avert further threats to the supply chain, the industry must adopt best practices to better prepare for new challenges, reduce waste and help offset costs related to disease outbreaks and other widespread public health crises.
Jon Pruitt serves as Senior Vice President of CHC Supply Trust. He is responsible for implementing and administrating a quality-based, comprehensive supply chain management strategy for CHC’s supply expenditures and resource utilization. He brings more than 20 years of experience in directing supply chain and support services to CHC.