The vision of a more stable and predictable supply chain after peak product and drug shortages during the pandemic is looking more and more like a mirage.
From medical devices to personal protective equipment to essential drugs, scores of items are in short supply. The list of reasons for supply chain disruption are as varied as the product shortages themselves — raw materials shortages, recent COVID-19 outbreaks in China, low margins on some drugs, leading manufacturers to stop or reduce production to focus on newer, more profitable pharmaceuticals.
South Dakota-based Sanford Health has seen the number of items on its backlog triple in recent months — everything from trash liners to intra-aortic balloon pumps to help the heart pump more blood. The health system now manages a list of between six and 16 substitute devices that are different enough from the preferred option that they require training or workflow adjustments, Sanford Health’s Chief Physician Jeremy Caulwels, M.D., told Modern Healthcare.
What’s Behind the Shortages
In its regular calls with supply chain leaders, the AHA’s Association for Health Care Resource & Materials Management (AHRMM) continues to hear about a variety of product shortages, notes Mike Schiller, AHRMM’s senior director for supply chain.
Shortages of raw materials like resins, precious metals and gases are behind some of the product shortages while the closing of Akron Pharmaceuticals in late February due to financial and regulatory problems added to the difficulties hospitals face in sourcing the drugs they need, Schiller says.
Some 93% of provider executives report they are still experiencing product shortages, a recent Health Industry Distributors Association (HIDA) report states. It indicates that shortages are becoming more widespread and harder to predict.
For its part, HIDA suggests the following actions:
- Integrate inventory management. This would allow distributors to help providers take a more holistic approach to optimizing inventory management.
- Redefine visibility and transparency. Improvements in supply chain visibility — both upstream and downstream — can unlock opportunities to reduce waste and increase flexibility. This requires strong commitments with distributors to share data among trusted trading partners.
- Plan proactively. Demand planning needs to be more proactive, future-focused and less dependent on old algorithms and historical data that the pandemic has rendered obsolete.
- Collaborate freely. Integrate product demand planning with clinical planning to optimize purchasing and product use. A recent McKinsey & Company survey of 149 health system executives found that 54% do not have dedicated personnel to engage with front-line clinical staff around supply chain.