Hospitals supply chain challenges persist but smart planning can meet demand

Hospitals have battled supply chain issues throughout the COVID-19 pandemic, and yes, some challenges are going to continue for some time.

Some hospitals have had to put out public appeals for basic items such as crutches, wheelchairs and walkers. Hospitals have also been dealing with higher prices. A Kaufman Hall survey found 99% of hospital officials said they have had troubles obtaining needed supplies. (Read this Chief Healthcare Executive story for a deeper dive into supply chain issues.)

On the upside, there are some signs of improvement. And hospital systems are devising better strategies to deal with the shortage.

Michael Schiller

Michael Schiller, senior director of supply chain for the Association for Health Care Resource & Materials Management, shared some of his perspectives with Chief Healthcare Executive. He discussed current conditions, projections for the new year and ideas on staying ahead of the game.

Q: Hospitals have been challenged by supply chain issues. Are there signs of relief?

A: “PPE supplies, in general, are meeting existing levels of product demand. Gloves will remain a challenge to source due to a number of factors including the recent ban on glove manufacturers and subsequent manufacturing output negatively impacted by increased COVID cases.”

Q: Are there shortages that are causing problems that haven’t been gaining widespread attention?

A: “The recent shortages have been well-documented. What we are seeing now, however, is shortages in other business sectors that are directly or indirectly impacting the health care supply chain; semi-conductors, aluminum, CO2, blood collection tubes, port congestion, labor shortages, etc.

“Compare this to the start of the pandemic back in March of 2020 when we were dealing strictly with a global demand for PPE and a prominent reduction in output for those very same products. Areas that we are keeping our eyes on included rare earth metals production, testing and lab supplies and energy/electrical shortages in Asia.”

Q: Do you see the supply chain improving in 2022 or do you expect hospitals to continue to be challenged in the new year?

A: “Based on conversations with various agency staff, association and supply chain executives the thinking is we’ll begin to see a move towards equilibrium by the summer of 2022 as consumer spending begins to moderate and vaccination levels increase. That said, we have learned to pivot quickly throughout the course of this pandemic as the situation and circumstances dictate.”

Q: What are some key lessons hospitals should be heeding?

A: “Deepening collaboration and communication with key trading partners and improving supply/inventory planning processes; identifying critical product categories, diversifying vendor portfolios, entering into multi-source contracts for these mission critical supplies, and developing a list of clinically accepted substitutions thereby enabling the health care organization to proactively source alternate products when the primary product is unavailable.

“These initiatives can help to build redundancy, improve the organization’s preparedness response and reduce the level of risk exposure within their supply chain.

Q: Inflation is affecting Americans and business in general. What should hospitals be doing?

A: “We have seen an unfavorable impact for off-contract supply spend, however, supply pricing covered under existing organizational or GPO contracts has remained relatively stable. That said, new supply contracts, multi-source contracts and diversifying vendor portfolios all have the potential to increase an organization’s supply expense.

“Therefore, supply chain leaders and health care organizations should explore other non-labor cost savings opportunities— with a key area for consideration being purchased services.”

Q: Will the hospital supply chain go back to pre-pandemic levels or is that wishful thinking?

A: “Just-In-Time (JIT), Low Unit of Measure (LUM), and Lean principles were accepted inventory management practices that now need to be re-evaluated. We have temporarily moved to a Just in Case (JIC) inventory model, but need to move to a Just Enough (JE) inventory model.

“To move towards this model, hospitals will need more robust analytics, utilization data – the capture of product use at the point of consumption – and moving from par inventories to demand planning to better align on-hand inventory levels with actual use.”