While there were product shortages, exposed risk, and much “pain” as a result of the COVID-19 pandemic, the spotlight has put the healthcare supply chain at the forefront. Instead of the supply chain being in the basement or a service that people really don’t understand, the importance of supply chain has taken a huge step forward.
Supply chain risk, supplier collaboration, business continuity, global supply chain dependencies, and supply chain strategic plans will no longer be considered insignificant.
What may have first appeared as a “black eye” from product and equipment shortages, our healthcare supply chain professionals utilized their strategic skills to become “superheroes” with their hard work and innovative solutions.
Visibility and opportunity have been friends of supply chain during COVID-19.
The visibility is apparent through the supply chain challenge and what’s at stake for hospitals and the community in the pandemic. It’s huge! The pandemic has created one of the most visible supply chain crises ever. It’s like the national toilet paper shortage, but on steroids.
The opportunity is revealed in how we plan for the future. First, we must help our healthcare systems recover financially as hospital operations and services return to normal. Second, we must come together as a supply chain community to help build the case for investment in supply chain resources—people & technology.
Don’t let hospital executives forget the role of supply chain throughout the COVID-19 pandemic! Communicate to them regularly about what happened and what needs to be done to be prepared for the future. Now is the time to collaborate across the industry and bring forth revised supply chain strategic plans.
My last concern is for those who can’t see how great the future is. It reminds me of the well-known story and play, Annie. This orphan girl made famous the song of “The Sun Will Come Out Tomorrow.” That’s what I say. Supply chain has been hit hard but I believe it’s looking at a “gift horse” in the mouth.
Annie was a positive thinker. Many successful people are. Here are some great quotes on the subject:
I’ve always been a huge advocate of making supply chain more critical to any company or organization. Moreover, I’ve been outspoken that healthcare executives need to elevate the supply chain profession to the C-suite and invest more resources into it. Now is the time to do it. Don’t let the executives forget how important supply chain was during the COVID-19 pandemic.
Ken Murawski | Tuesday, June 30 2020
For over 25 years we have worked with small, innovative, and diverse companies with great ideas, quality products produced in the US, and often touting green value, but it was a hard sell to providers.
The problem? It cost more to produce in the US.
The result? “Yes, we believe in all those things but we won’t pay more.”
Fast forward to March 2020 when PPE took center stage. For decades providers pushed suppliers to save money and the only way was to build plants where labor costs were low: Mexico, Dominican Republic, China, and SE Asia. It took the pandemic to wipe away years of saving pennies to lose millions of dollars in demand pricing escalations, aka price gouging. An N95 mask pre-COVID was $0.50. Hospitals paid $4-6 each—if they could find the product.
Between the increase in supply cost and the loss of revenue from halted elective procedures, the healthcare industry has suffered a tremendous financial blow. Many hospitals were already struggling to get by, even those that were making money were seeing single-digit profits; a few large systems on the cutting edge; many more on the bleeding edge.
The pandemic has put a spotlight on the challenges hospital systems face. Balancing between fee-for-service which can drive up the cost to value-based care has been a challenge; add labor costs that continue to escalate and one can imagine how the pandemic has changed everything. The result: rural hospitals will close or redefine their role in healthcare as nursing homes or urgent care facilities. Mergers and acquisitions will be facilitated by the inevitable bankruptcies of facilities that could not keep up with change; the big will get bigger. Large IDNs will become larger IDNs.
From a supplier perspective, a similar scenario may play out. Buyers will look to the safety of the existing contracts and large supplier relationships. Huckers looking to cash in have bombarded GPOs and IDNs; separating the wheat from the chaff is a major challenge. Unfortunately, the loss of income by many small suppliers may force them to go out of business eliminating competition and opening the door to eventual price increases. It will be frustrating to see this play out when there are so many qualified companies looking to help. There are domestic healthcare companies that can still provide value, not just in PPE but in many areas that will become the future for healthcare systems to carry out their mission: provide the best quality care and outcomes at a fair cost without causing harm.
How can suppliers help?
Quality suppliers with integrity have to distinguish themselves not by e-mail blasts, but by educating the right people on their solution and building relationships with progressive nursing and physician leadership, value analysis professionals and supply chain leaders. With face-to-face meetings canceled for most of this year, we may have to do it virtually; a low-cost efficient way to demonstrate products and solutions to a variety of stakeholders at one time.
How can supply chain leaders help?
By thinking beyond the price of products and presenting the total cost solutions available. Present those solutions to executive nursing and administration; show that you can be part of the solution. Show solutions that help nurses and doctors become more efficient reducing burnout, solutions that improve the patient experience. Solutions that reduce infections, falls, pressure injuries, and back injuries. I’m hoping that the millennials in the supply chain can be part of the solution, not just monitor online RFPs. These solutions are all double-digit savings and yes, some are hard to quantify. But this could be CQO on steroids (in moderation).
This may be a chance to really change the landscape in many ways. The public is now embracing telemedicine. The pandemic may even drive behavioral change as the most at risk are not just elderly, but those with existing conditions caused by lifestyle choices. We can only hope.
Before COVID-19, progressive systems were experimenting with telemedicine, remote monitoring, and meeting the healthcare needs of the communities they serve where the communities live. Just as Netflix, UBER, Tesla, and Amazon have changed us, large market share suppliers will be challenged by small nimble low-cost solutions from a watch to a tablet, to portable ultrasound, wireless monitoring, Software that tracks products and equipment, Careboards to improve efficiency and patient experience, beds that provide hands-free pulmonary therapy. Will systems consider more outsourcing for efficiency like transportation and lab services? Technology exists for reps to remotely “participate” in complex procedures, reducing risk, and saving money.
Let’s make this crisis an opportunity to embrace change in the way providers and suppliers work together. I welcome your comments and suggestions.