This is the second article in a series on Supply Chain issues in healthcare.  To see all StaffReady blog posts, click here.  

Container ships are languishing on the West Coast while multi-faceted supply chain problems affect almost every US market. How are health systems being affected, and how are they tackling the issues?

Hospitals are no stranger to supply chain problems. Hurricane Maria struck Puerto Rico in 2018 causing severe damages to manufacturing plants that make plastic bags for IV fluids. This put in motion a shortage that lasted over a year and had far-reaching ripple effects for healthcare systems coping with the worst flu season in several years. Each time an isolated event like this happened, it was an opportunity for organizations to adjust and learn about diversifying supply sources and preparing for the worst.

Pandemic Creates Huge Demand

At the beginning of the pandemic, a sudden demand for enormous amounts of PPE created global supply shortages. While the rest of the world was searching for toilet paper, hospital systems were desperately sourcing gloves and gowns. The PPE shortage seems simple – a predictable result of a demand explosion, however the story goes much deeper. Root causes of the problem certainly include a demand explosion and global supply chain disruptions, however, fingers also point to major flaws in hospital purchasing priorities as well as the lack of government emergency stockpiles.

As the nation closes out its second pandemic year, supply chain problems have spread, affecting every business sector. With lessons learned from the past and especially the past two years, how are health organizations planning to maintain supply and prop up operations throughout this unprecedented time? It is hard to pinpoint what particular supply items will be in danger next – will it be medications, PPE, food service, specialized devices? Best practices for healthcare supply systems are starting to emerge from forward-thinking organizations, some of which were shared recently in an informative Becker’s article.

Best Supply Chain Practices

One common best practice includes forecasting supply levels by developing close relationships with suppliers. NYC Health + Hospitals’ Daniell DiBari, PharmD – Senior Vice President of Business Operations and Chief Pharmacy Officer points to both forecasting and adjusting timeline expectations. She states that products that may have taken a month to source previously, may now take 3 times that – or more. Diversifying suppliers while building close relationships with those suppliers is also an asset that allows NYC H+H to continue to avoid disruptions in care services.

UAB medicine in Birmingham, AL has taken a different approach. Due to their supply pressures, the organization has elected to develop its own internal methods for monitoring global events that may impact the continuity of supply. They attribute problems to an increase in e-commerce over the past few years and major manufacturing disruptions in Asian countries.

Wellstar Health System in Marietta, GA is a self-distributor, operating under a system known as a consolidated service center model (CSC). Instead of going through a middleman distributor, the organization works directly with suppliers. They attribute to the CSC stronger supplier relationships that include better communication regarding delays. Par levels for critical items have been adjusted accordingly to accommodate shipping problems and anticipated disruptions.

Wellstar also offers some insight into how organizations need to look much deeper at the supply chain. For example, a current aluminum shortage is not exactly that – it is really a shortage of magnesium that is used as a hardener in the aluminum production process. Raw materials and inputs into manufacturing processes are critical components of the supply chain. The more knowledge organizations gain about these processes, the better they can anticipate future delays.

No matter what the strategy, many organizations are finding that because of delayed or uncertain delivery dates, warehouse space needs have increased. Accommodating orders from multiple suppliers for the same products in some cases and keeping par levels higher to adjust for turnaround times creates the need to keep more product on hand.

Managing Demand

The Harvard Business Review puts forth two principles that allow health systems to manage the other side of the coin – demand. For healthcare managers, controlling patient flow to reduce demand surges works hand-in-hand with supply to even out the availability of needed products.

The two principles for controlling demand:

1. Awareness of system interdependencies and unintended consequences. As patients move throughout the healthcare system, examining the big picture reveals relationships that affect the entire system. For example, in cases where ICUs reached peak capacity, the response is often to evaluate and shorten the length of stay for some patients. In doing so, an inadvertent result happened – those patients triggered an increase in readmission rates, which effectively further reduced ICU capacity. Organizations must be careful when diverting patients from certain points in the care spectrum in order not to trigger issues later.

A solid emergency strategy includes ranking patients by the risk of postponing care, in order to manage demand and allocate resources in the most effective way.

2. Forecast short-term demand. Just as supply chain managers are busy forecasting future supply, health systems should do their best to predict demand. In some form, this task is done already when scheduling staff. Resources in the form of human capital are allocated according to the predicted patient volumes and acuity. Physical supply resources should be handled in much the same way.

The Harvard Business Review states that in conditions like the COVID-19 pandemic, future patient volume predictions may be short-term, and frequently updated – but are still sufficiently useful to assess the coming impact. Furthermore, the knowledge that has been acquired throughout the pandemic, based on population density, testing rates, testing processing times, and so forth can help inform those predictions.

As healthcare organizations tackle real-time shortages, delayed shipping, and spurts of increased demand, supply chain problems have escalated to the forefront of the C-suite list of issues. Health systems that are successfully navigating these murky waters are employing a multi-pronged approach and attacking problems from both the supply and demand sides. This type of approach requires a team effort, expertise from many key stakeholders – including close relationships with suppliers – and shared responsibility. Supply issues continue, but there is hope in the form of waning COVID-19 cases and resumption of many manufacturing businesses. As health systems clear hurdle after hurdle, important lessons are learned that will be useful in planning for a brighter future in the supply chain realm.

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