The Healthcare Hub

The Healthcare Hub blog focuses on how greater collaboration and visibility across the supply chain can improve both clinical and financial performance in healthcare. Working with hospitals, manufacturers, distributors and group purchasing organizations (GPOs) in North America and Europe, GHX provides a global perspective on issues such as healthcare reform, standards adoption, automation, e-commerce and demand planning, among others.

Monday, December 20, 2021

Resiliency and the New Normal: How Can Health Care Systems Better Manage the Supply Chain?

The critical PPE shortages that overwhelmed so many hospitals in the early days of the COVID pandemic raised broader issues about supply chain resiliency. Health systems continue to deal with the impacts of shortages and cost overruns and the need to balance a return to “business as normal” with the recognition that COVID-19 rewrote the rules for what “normal” even means.

Now, as health systems look to recoup lost revenue through elective surgeries, a new variation of the resiliency question is being asked: How can the industry better manage the supply chain to both improve patient care and control costs? Healthcare leaders addressed this question from multiple angles during a recent GHX webinar

Lessons Learned from Pandemic-Related Supply Shortages

As the reality of the pandemic set in, many health systems innovated to solve developing supply chain problems. MD Anderson Cancer Center took things into their own hands: they found ways to produce critical supplies and develop key processes themselves.

“We had a team designing and manufacturing face shields, ear protection hooks and disinfectant wipes and sprays,” said Renato Maclan, Program Director of Clinical Value Analysis at MD Anderson. “We even set up our own UV sterile reprocessing of N95s. When other groups were focusing on partnering with other labs, we developed in-house testing capability to do employee and patient testing.” This made it possible for them to turn around test results in 24 hours instead of waiting two or three days for them.

Located on the Gulf Coast where hurricanes have been their normal, MD Anderson is used to being in the line of fire. But during the pandemic, they also treated patients during a city water main break and an unexpected hard freeze, and of course, continued regulatory inspections. They also opted to start a cost of care committee, develop a value analysis program, change distribution partners and bid their GPO in the same year.

Healthcare logistics and supply company Owens & Minor faced a different set of challenges as the pandemic took hold. “The pandemic, for Owens & Minor, was sort of a rebirth,” said Angela McNally, the company’s Vice President Global Provider Solutions.

The company had to figure out how to keep 17,000 employees safe while increasing output of PPE. “That meant bringing up new lines at two of our U.S. facilities. It was a monumental task,” she said. “Many of our teammates had to continue showing up day in and day out. Some of them work side-by-side in the hospitals themselves to support facilities and they showed up every day. Others were transitioned to work from home, so they could still support our customers when they could no longer meet face-to-face. It meant broadening our communication tools while we were ramping up production. But we did it. When we look at what we did with N95 respirators, for example, our output increased over 1,000% in those facilities.”

Chicago surgeon John Cherf, MD, MPH, MBA, provided a clinical perspective. “People pivoted really quickly to get things done,” he said. “During quarantine when we couldn't do elective procedures, we were forced to adopt other technologies, like telehealth. Virtual medicine has been a great unharvested opportunity for decades, but the pandemic forced us to do it. And we got up the learning curve very quickly and it's here to stay.”

Why the Return to Normalcy Requires an All-New Strategic Approach 

Health care system administrators, practitioners and suppliers alike say the pandemic taught them lessons about metrics and supply chain management — even though it’s still harder to predict when shortages will occur in health care than in some other industries. Dr. Cherf explained that as the industry gets better at predicting supply needs, patients can be more effectively cared for with fewer cost overruns.

“The pandemic offered the world a master's level course about supply chain,” he said. “It used to be a boring topic. Getting docs to talk about it was like pulling teeth. Then all of a sudden supply chain is in the news every day for about a year. It increased the transparency of what was going on, particularly upstream.”

MD Anderson developed a dashboard to strategically forecast a range of factors, from a real-time patient census to data from screening units to inventory to shipment status, domestic and off-shore.

 “We got burned in a couple of instances on purchases, and we knew we had to have a really good vetting team looking at this ’gray market’ of alternative suppliers,” Maclan said. We had to have that open dialogue with our distributor partners and maintain that sense of urgency that still continues — I don't think it's going to disappear or wane anytime soon.”

How Providers and Suppliers Can Collaborate to Anticipate Upcoming Shortages

Today, health systems face pressures to stockpile inventory against the possibility of renewed shortages. But they also face opportunities for collaboration at new levels thanks to technological advances accelerated because of the pandemic.

McNally said it’s important for supply chain teams to understand their suppliers’ allocation methodologies and to use usage data to smooth out the processes.

“It’s about taking the time to dig in and get processes in place to make sure you have what’s needed before the next event happens,” She said. “So, you think you've got this allocation but if you don't buy all of it you lose it, which leads to hoarding, as we've seen throughout the pandemic. And the methodology varies from one partner to another. So, I think it's important that as providers, you work transparently with your distributors, with your supplier partners.”

According to Dr. Cherf, it’s time for people like himself to become more involved in supply chain processes. “We are also going to be held more accountable for costs: are you a high-cost provider or a low-cost provider?” he said. “I think health care is going to change a ton over the next 10 years, and I'm excited to be alive and working in healthcare. It's provocative, it's disruptive and it's going to be an interesting ride.”

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