Hospitals struggle with supply shortages and higher prices, and it won’t end anytime soon

When hospitals are asking the public to donate crutches, it's clear there are problems with the supply chain.

Last month, the Utah Hospital Association, Intermountain Health and other healthcare organizations made a request for crutches, canes, walkers and wheelchairs. They received thousands of donations. Hospitals in Georgia and West Virginia have sought donations of crutches and other items.

Throughout the COVID-19 pandemic, healthcare organizations have battled supply issues. Early in the pandemic, some hospitals scrambled to obtain personal protective equipment, including masks.

Kaufman Hall, the healthcare consulting company, surveyed hospital leaders in October and found 99% said they have had trouble getting supplies.

“I don’t speak with any client these days that still doesn’t have a significant challenge with sourcing material for patient care,” said Gregg Lambert, senior vice president of Kaufman Hall.

Some hospitals are struggling to find enough masks, gowns and syringes, he said.

This year, even obtaining basic commodities such as toothpaste has been an issue, said Gordon Slade, senior director of supply chain logistics at Intermountain Healthcare. “The breadth of the shortages is staggering,” he said.

Like most hospitals, Intermountain has battled supply challenges. The supply team is working more closely with clinical staff than ever and is finding substitutes whenever possible. However, some items can’t be substituted.

“It’s not like you have a box of Cheerios and you go to the generic brand or buy Fruit Loops,” Slade said. “In healthcare, when certain items are out, you’re out.”

Some drugs continue to be in short supply. In mid-November, the American Society of Health System Pharmacists reported a shortage of 198 different medications.

Hospitals aren’t just dealing with a lack of supplies. They’re also paying more to get them. The Kaufman Hall survey said 86% had seen significant price increases on supplies.

Gregg Lambert, senior vice president of Kaufman Hall

Hospital supplies may be challenging for a while, at least as long as hospitals deal with a high volume of patients due to COVID-19. Hospitals may also be facing higher prices for some time until there’s a sustained drop in COVID-19 cases and the virus is more contained, Lambert said.

Until then, “I don’t think we see a lot of relief,” he said.

Looking ahead, hospital supply managers will need to be nimble and in contact with all facets of their organizations to gauge inventory needs. Experts say hospital leaders are going to have to view their supply chain managers as key partners in controlling costs.

Like so much else in the pandemic, hospitals have had to rethink how they order supplies and manage inventory. Supply chain experts say there are steps hospitals can take to bolster their chances of getting the supplies they need.

Dealing with a shortage of crutches, Intermountain Healthcare, University of Utah Health, Steward Health and the Utah Hospital Association appealed to the public for donations. (Photo courtesy of Intermountain Healthcare)

Why it’s happening

The supply chain crunch isn’t due to a lack of planning. Simply, manufacturers are facing overwhelming demand. Supply challenges are likely to continue, Lambert and others said.

“It’s just the demand, the unprecedented demand and the system wasn’t set up for it,” Lambert said.

More businesses are dealing with higher inventory and Americans are doing more shopping online. It's why Amazon and UPS trucks are constant sights in so many neighborhoods.

Omar Agado, vice president of  3PL business strategy and services for BioCare, Inc., said a host of factors are playing into the supply chain challenges.

“You’ve got labor shortages, the pandemic, all of these things are putting stress on a finite number of shipping channels,” Agado said.

Businesses, including hospitals, are also struggling to get goods from the ports to their facilities. A recent 60 Minutes piece shed light on the backlog at the ports of California, which handles 40% of America’s imported goods.

Some companies have had trouble getting their goods out of the port. “They’re having trouble getting trucks,” Agado said.

With shortages of supplies, larger vendors had to figure out some way of allocating the available supplies, Lambert said. They typically distributed supplies based on historic usage, and larger health systems got larger supplies. But the pandemic prompted some hospitals to need far more supplies than they’d ever imagined.

“It just threw a wrench and exposed some of the problems with flexibility in the supply chain,” Lambert said.

Plus, hospitals are filled with patients. Healthcare systems are seeing more COVID-19 patients. Around the country, hospital officials say they’re also seeing more patients who had been putting off treatment for other health issues during the pandemic and are now very sick.

At Intermountain, Slade notes the system is seeing more people with respiratory viruses or the flu than they did last year. Different types of patients require different drugs and supplies.

“COVID was the watershed moment,” Slade said. “Now, we’re dealing with far more complexity.”

Plan and communicate

Hospital supply managers are still taking many lessons from the pandemic.

Healthcare organizations must do close reviews of their supply consumption so they can anticipate future needs. Managers must understand more than the daily patient count. They need to know what kind of patients are in the hospital to determine what supplies they’re going to need, Lambert said.

Hospitals also need to communicate very openly with service providers and give them as much advance notice of supply needs as possible. If a hospital typically only orders 50 of Item X but needs to bump it up to 500, supply managers should talk with vendors a month in advance as opposed to giving a day’s notice.

“That type of surprise conversation with the vendors is what we really need to avoid in the future,” Lambert said.

On the flip side, vendors should be talking with hospitals and saying if they foresee issues in their supplies, Lambert said.

Managers need to have back-up plans to deal with supply disruptions, Agado said.

Manufacturers can get creative in how they get goods to their customers. It could be using local couriers to get supplies to hospitals, Agado said. Some may also consider splitting up shipments to ensure some supplies get to their customers faster.

Getting and vetting vendors

The pandemic has shown the need for hospitals to get supplies from more vendors, Lambert said. The Kaufman Hall survey found 78% of respondents said they found new vendors.

Historically, hospitals would get many of their goods from a couple of suppliers. By being larger customers of those vendors, hospitals could typically get better prices and better service.

Given the unpredictability in the supply chain, hospitals need a more diverse pool of vendors, Lambert said.

Hospital supply leaders should vet vendors carefully and ask important questions.

“You get to know their products and contracting philosophy,” he said. “Take it a step further. Where are they sourcing products? Where will I be on allocation should there be disruption? What will you do with disruption?”

Find acceptable substitutes

Granted, some drugs and devices don’t really have alternatives. But there may be acceptable substitutes for some supplies.

Supply managers should talk with various departments to find alternatives if needed. If nurses would prefer a certain product but are satisfied with another option, that’s valuable information for supply managers.

“Having that known substitution list is a good way to help with supply availability,” Lambert said.

Working smarter

Hospital supply leaders should understand that it’s probably not a good idea to expect a return to the ways of doing business in the world before the pandemic.

“The path to success moving forward is not to try to get back to where we were,” he said. “Where we were isn't going to be the same again.

“We can’t go back to old operations. We need to be smarter and learn from this experience.”

Hospital administrators need better mining of data, more communication with vendors and more collaboration with caregivers, Lambert said.

Lambert, Slade and others said hospital systems need to see their supply chain teams as essential in managing costs. Supply chain managers also must continue to think ahead and talk with as many people in the hospital as possible to understand their needs.

“It’s also customer service,” Lambert said. “They’ve got to be on the floors, working with the clinical staff, working with the operational staff and asking, what are they seeing?”