The COVID-19 pandemic has redefined healthcare as the industry was forced to adapt digitally at an unprecedented rate. Health systems quickly modernized their practices to keep up with the ongoing pandemic and deliver patient care.
This transformation will only continue at a larger scale in 2021. In the coming months, healthcare providers will begin to see the long-term impact of the pandemic and the broader impacts on their organizations. We identified three major industry trends for 2021, and asked Paul Farnin, director of Supply Chain solutions at Cardinal Health, how these trends will impact healthcare supply chains in the coming year.
The trend: Direct sourcing strategies. Due to product availability challenges, health systems have had to turn to direct sources for product.
The impact:
While it is ideal to work with your primary distributor when sourcing products, the pandemic has shown us that there might be times when a direct sourcing plan is needed in the short term. In the face of this challenge, there are three major elements to adopting a direct sourcing strategy that health systems must consider. First, health systems must take on the responsibility of contracting certain products that were historically contracted externally. Instead of ordering product through a negotiated contract, staff must now come up with terms and negotiations for the first time.
A second important consideration is seeking clinical acceptance prior to sourcing the product. For example, a simple way of achieving clinical acceptance is to ask the manufacturer for a sample of the product for you to review with your clinical teams. This can be done in advance of final decision to help prevent health systems from encountering the issue of products not serving the clinical need.
Finally, health systems must also consider how an item must be received and stored once it is contracted for. Since some emerging suppliers do not have preexisting relationships with distributors, health systems might have to go outside of their network to pick up shipments. For example, a container may need to be picked up at a local port by the health system. Additionally, if this contains larger than normal volumes of product, they will need to be stored somewhere at their facility or on their campus. Many health systems will not have any adequate transportation networks in place to support these logistics.
If you are looking to develop a direct sourcing strategy, reach out to your distributor to see how they might be able to support.
The trend: Virtual care, including telehealth. Although virtual care was an emerging trend before the pandemic, the onset of COVID-19 has caused the number of virtual visits, particularly for minor and routine appointments, to significantly increase. As well as reducing the risk of spreading contagion, remote medicine allows medical professionals to increase their daily capacity and accommodate busy schedules, making this form of healthcare a convenient option for most patients.
The impact:
Historically, hospital supply chains stayed within the four walls of the hospital. With point of care transitioning to the home setting, whether it be through virtual or in person care, the need for products delivered directly to homes is amplified. Hospital supply chains have delivered to homes in the past, but on a much more limited basis. The COVID-19 pandemic has quickly accelerated this industry trend, forcing hospital supply chains to rapidly adapt.
Health systems will need to decide whether they will make these changes in house using commercial carriers, or partner with a supplier with the knowledge and infrastructure to support the home care business. Some hospitals might encounter the added challenge of having to integrate supply chains from their previously separate home healthcare services with other services across the health system. Virtual care will also greatly impact demand planning at facilities, since in-hospital care allows for easier collection of patient data to predict supply chain needs in the future. Updated demand planning techniques will be needed to better support clinical care in other settings.
The trend: Data and analytics, including artificial intelligence (AI) and Internet of Things (IoT), improve our ability to respond to changes in product demand.[i] Growth in data transparency on the manufacturer and distributor side should allow for clearer demand planning to address future population health needs.
The impact:
Although health care has begun to see a shift toward data and analytics, as a direct result of the pandemic all health systems must become more data driven. Specifically, for hospital supply chains, the increasing emphasis on data and analytics will largely impact demand planning. The COVID-19 pandemic has taught the healthcare industry the importance of building up redundancy within supply chains, as well as addressing storage needs to prepare for future crises. The challenge lies in how health systems, manufacturers, and distributors will accurately forecast demand for unpredictable future events. For example, what will be the kinds and volumes of products needed for the next pandemic?
Personal protective equipment will always be needed to protect staff, but the next virus could be passed from person to person differently, causing new demand for other medical supplies. Health systems will also need to forecast for potential storage needs, another area where analytics is critical. More considerations for preparedness storage needs can be found here.
Assessing how these key healthcare trends will impact your healthcare supply chains will allow you to plan for the year and navigate unforeseen challenges. For more supply chain insights, visit cardinalhealth.com/supplychaincenter.
[i] https://www.forbes.com/sites/bernardmarr/2020/11/23/the-5-biggest-healthcare-trends-in-2021-everyone-should-be-ready-for-today/?sh=6e081f4221c0