The Executive Suite: What the pandemic has taught us about the healthcare supply chain

Reports in September 2021 of dozens of cargo ships anchored off the coast of California, unable to deliver their goods to the Port of Los Angeles and Port of Long Beach, again underscored the fragility of supply chains.

Indeed it has been an issue throughout the pandemic, but it took a turn for the worse when COVID-19 variants emerged and workers were found to be in short supply at these ports, at least in part out of fear of infection. So the ships continued to bob in the Pacific Ocean, and industries continued to be without vital supplies.

No sector has been affected quite so much by fissures in the supply chain as healthcare. And as Cindy Juhas, chief strategy officer for the medical-equipment distributor CME, told the website KSL.com, the problem goes far deeper than delivery.

"A lot of the stuff we sell is not sitting in a warehouse where you just call and say send it over,” she said. “It needs to be built."

The end result, according to KSL, was that healthcare facilities had to wait as long as five months for certain types of exam tables, something that used to take no more than six weeks. Even the portable plastic toilets that are prevalent in patients’ hospital rooms, which Juhas said used to be immediately available, are taking three to four months to arrive at their intended destinations.

There are those, like Erik Anderson, president of the medical technology company Hologic, who believe shortages will persist until the midpoint of 2023. Still others wonder how the sector might fare when the next pandemic occurs (and experts seem to agree that that’s a matter of when, not if). In a piece that appeared on the site Politco.com, Michael Osterholm, director of the Center for Disease Research and Policy at the University of Minnesota, cited “an unsustainable reliance on China and India for our lifesaving generic drugs” as being one of the primary issues going forward.

It was that dependence on China that disrupted the supply chain very early in the pandemic. That nation produces a lion’s share of the world’s personal protective equipment (PPE) -- whether gowns, goggles or masks -- and when it became the epicenter of the outbreak late in 2019, the export of such equipment came to an abrupt halt.

That led to calls for more domestic PPE production, calls that were largely heeded by “nontraditional manufacturers and suppliers,” as Mike Schiller, senior director of supply chain for the American Hospital Association’s Association for Health Care Resources and Materials, put it in an interview that appeared on AHA.org in May 2021. Schiller nonetheless said that increasing the number of domestic PPE manufacturers will “take some time” and noted that even at that point, there was a shortage of gloves, not to mention syringes, sharps containers and sterilization wrap.

Still, he lauded the vendor-vetting program initiated by the Association for Healthcare Resource & Materials Management (AHRMM), which enabled healthcare organizations to weed out bad actors and identify legitimate manufacturers. And finally, he pointed out how valuable public-private partnerships have been in dealing with the crisis, and believes that while people tend to have short memories, “everybody is still very focused on the post-COVID-19 efforts needed to build a more resilient health care supply chain.”

He is, however, realistic about the challenges that lie ahead:
“I've been involved in a number of roundtable discussions with various organizations represented where COVID-19 health care supply chain resiliency is being addressed. The optimist in me hopes that these conversations not only continue, but that they result in a true environment of change; that the lessons we've learned and the partnerships that have been forged over the course of the last year remain in effect; that we do not settle back into our individual environments.”

Certainly there are other reasons healthcare organizations will continue to look for ways to improve supply-chain management, not the least of which is the pivot toward value-based care. Currently supply costs account for 40 to 45 percent of an organization’s operating budget, according to Gartner Research, though a post on Supplychainbrain.com noted that such costs have often been “a blind spot” for healthcare organizations. Understanding them -- and understanding how to control them -- is crucial to getting a handle on the total cost of care. Gartner projects that they can be reduced by as much as 15 percent through astute oversight.

That means melding proven approaches with new technologies, which besides resulting in improved overall cost-effectiveness and efficiency, can lead to physicians receiving their preferred products and nurses seeing their loads lightened. Fully 86 percent of them responding to one survey cited supply-chain workflows as a stressor, and 85 percent of them saw documenting supplies as a challenge.

But the ultimate goal is improved outcomes. That’s the bottom line, the Holy Grail. And never has that been clearer than it is now, as the pandemic rages on and ships continue to bob in the Pacific.