4 ways hospitals can alleviate 'supply shocks': McKinsey

Health systems that are not prepared for "supply shocks" can face reputational and financial losses and quality care issues, according to a July 11 article from McKinsey. 

Most systems have between 30,000 and 60,000 clinical supply SKUs, according to the consulting firm, and shortages of any of these can add stress among healthcare workers and hurt employee engagement, mental health and job satisfaction. 

McKinsey has four tips for health systems looking to strengthen their supply chain: 

1. Attain a clear picture of the supply chain

It may not be cost-effective to implement inventory-tracking systems for all supplies, but it could be smart to consolidate inventory data and invest in an analytics dashboard that shows the quantity and location of products system-wide. 

Some health system and supplier contracts require group purchasing organizations and distributors to provide daily updates on inventory levels and expected resupply dates. A strong relationship with GPOs also lends itself to early insight into potential disruptions. 

Another tip is forming an alliance with other systems and hospitals to share metrics on critical supplies in shortage.

2. Create a web of collaboration to determine most critical items

To proactively avoid shocks, hospital supply leaders should work with clinicians, an emergency preparedness team, GPOs and distributors to identify the most critical items. After devising a list of key products, protocols can be made and refined in case an item falls into shortage.

3. Form a resilience team

It could be helpful to assemble a small, centralized team to handle scenarios of various supply disruptions. These teams should include experts from multiple teams and departments, McKinsey said, plus demand "clear processes, decision rights and escalation protocols" for time-sensitive supply issues. 

4. Invest in supply resilience

Supply disruptions can be costly to healthcare organizations, and allocating funds for "a sufficient financial cushion" can help systems "withstand future shocks."

"No amount of preparation can fully insulate a system from risk," the firm said, "so creating a healthy, lean cost base prior to a shock can further help drive resilience."

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