Supply chain issues are here to stay: Health leaders share predictions, strategies

Supply chain issues have dominated the news for months now as the pandemic slowed international trade and applied pressure for key items. Usually only felt if it goes wrong, supply chain management has become an increasingly important consideration. Hospitals and health systems have faced major issues with their supply chains, from personal protective equipment shortages at the start of the pandemic to a lack of crutches now. Ninety-nine percent of hospitals and health systems report challenges in supply procurement as of October 2021.

Given the elevated importance of supply chain issues and the waning pandemic, Becker's asked healthcare executives to share their concerns, if any, about the supply chain problems. Many were more confident now than at the start of the pandemic, but predicted continued disruption and delays. Executives and supply chain leaders in healthcare have learned lessons throughout the past 18 months, making them more prepared for challenges ahead. 

Danielle DiBari, PharmD. Senior Vice President of Business Operations and Chief Pharmacy Officer for NYC Health + Hospitals (New York City): NYC Health + Hospitals has not been immune to the global supply chain challenges experienced due to the COVID-19 pandemic. A product that would've taken us a month to source previously can now take three or more times that and obviously can strain a healthcare system. However, we wouldn't say supply chain challenges are on our top list of concerns as the country's largest public health system because we've engineered ways to get around such challenges — for the most part. Those strategies include forecasting products and materials and adjusting timelines on our end for delayed shipping, diversifying our suppliers, and building relationships with these suppliers. By planning far enough in the future and addressing anticipated issues early, a health system can get ahead of a challenge and pivot so its patients and overall communities do not experience any disruption in care.

Reid Jones. CEO of UAB Medicine (Birmingham, Ala.): The vitality of the supply chain is certainly among the top concerns facing hospitals and medical providers today. Unfortunately, it's a multifaceted issue with no easy solutions. We are all aware of the backlog of cargo ships waiting to be unloaded on the West Coast. On top of that, we are seeing COVID-19-related manufacturing disruptions in some Asian countries that produce many of the everyday items we use in the healthcare setting. We also have pressure on the trucking industry in this country due to the increase in e-commerce over the past two years. Traditional reliance on industry partners (manufacturers and distributors) for product availability and order fill can no longer be the norm. Our supply chain has been forced to develop our own internal methods for monitoring global events that may impact supply continuity. 

The supply chain started 2020 with a global PPE shortage, and now nearly two years later we are still dealing with shortages in multiple critical medical supply categories due to global logistics, raw material limitations, increased demand and many other pandemic factors. We anticipate supply chain disruptions will continue for many months as we investigate alternative and diversified distribution streams.

Cliff Megerian, MD. CEO of University Hospitals (Cleveland): Shortages of pharmaceuticals and supplies are a serious concern that University Hospitals has been fortunate to navigate successfully to this point in time. We have placed a high priority on managing our inventories, working closely with our suppliers to ensure we can stay ahead of any future shortages, while working to broaden our sourcing of domestic supplies to assure that patients continue to receive the care they need.

Michael McCullough. Senior Vice President of Supply Chain at Wellstar Health System (Marietta, Ga.): We are a self-distributor, often referred to as a CSC model, or consolidated service center model, here at Wellstar. We've done our best to work directly with product manufacturers as opposed to distributors, so we've done our best to try and eliminate the middleman. And by doing so it gives us much stronger relationships with our manufacturers, and it affords us the opportunity to establish our own distribution center. So we have between 20 and 40 days of stock on hand for all of those critical items. So when a disruption occurs in the supply chain, we can see it and we can respond much quicker to it.

Clearly, supply chain has been escalated at the C-suite level with regard to its importance, and its criticality to day-to-day operations. We continue to talk about a lot of looking deeper into the supply chain. For example, the current aluminum shortage is not a shortage of aluminum but the magnesium that is used as a hardener in the production of aluminum. That's an example of looking deeper and deeper down into the supply chain to try and anticipate what's going to come next.

I truly believe that we're probably going to be faced with these challenges for another 12 to 24 months. I would suggest that the trend is that there's going to be price pressures, we're anticipating energy challenges throughout the next six to eight months. Some of those challenges are driven by oil, which is a raw material, and many other products that we use.

Wellstar has just been a great organization, as challenged as we are. I can look in the eyes of some of my colleagues and I can just see that they're tired. But they not only get energized by one another, but they also get energized by the challenge and most importantly, by the mission. Our mission is to provide world-class health care to the patients we serve. I think that's what energizes us and keeps us getting up and going at it every morning.

John Mikesic. Executive Director of Supply Chain for University of Missouri Health Care (Columbia): A year and a half ago it was, "Where am I going to get gloves?" "Where am I going to get gowns?" Now we may not be in that situation anymore; however, we still do communicate with our senior leadership in terms of where we stand. 

The primary concern that we are dealing with is delays. I can place an order for whatever I might need, items as simple as gauze and sponges and tongue depressors all the way up to strategic implants we might use. We may historically have been able to receive those on the receiving docks in one to two days. Now it may be three to four days, six, seven to eight, 10 to 14 days later. So it puts a very tight strain on us in terms of understanding how much we're going to use and or need within a certain timeframe. 

Our organization works with hundreds of different vendors and manufacturers in terms of purchasing their products, to treat the patients across our organization. We have to consider that every single one of those [vendors] might have a different type of strain. Some of the larger, more sophisticated organizations may be able to rapidly scale up and ramp up and provide some normalcy whereas smaller, more unique, niche vendors may struggle and have to deal with the constraints in a different way.

I think the supply chain disruptions will warrant increased time and effort on a daily basis as we move forward. It'll require additional conversations with our primary key vendors and distributors as we move forward, because I don't think anybody wants to have to end up slipping back into a situation where people don't know. But letting fear run amok in a situation like this, I don't think that's good for any organization. 

Christopher O'Connor. President and Incoming CEO of Yale New Haven (Conn.) Health: The supply chain continues to experience an excessive amount of line items every day that are out of stock and many substitutions for critical need items, some of which require a change in clinical practice. These items range from commodities to medical supplies. Oddly, the most stable items today are PPE. In addition, we have a stockpile that addresses any shortages.

Primary challenges exist in raw materials, staff to produce products and logistics to deliver them. Sourcing raw material and produced goods from Asia and India as the primary continents of manufacturing continues to bring issues with transport of shipping containers as well as a shortage of qualified staff to work in the factories. There has been no improvement to any extent within the U.S.market to manufacture items, so we still predominantly rely on international supply. In addition, the distributors are allocating supply by their individual customers, and at times that can lead to other outages. However, our relationship with our distributor, Medline, is strong, and this is minimized for now.

We are ensuring that critical medical supplies have some sort of guaranteed supply or are within an available, owned stockpile. This is challenging from a logistics and cost standpoint, so it is a delicate balance. We are also involved with our group purchasing organization, Vizient, to ensure that vendors are held accountable for sustainability, etc., where possible.

Paul Rothman, MD. Dean and CEO of Johns Hopkins Medicine (Baltimore): Supply chain delays related to the pandemic have been a continuing challenge for hospital systems across the country, including for Johns Hopkins Medicine. We are making the best of a complex and difficult situation, and as always, our focus is on doing everything we can for our patients, our communities and our employees.

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