Supply chain lessons emerging from the coronavirus pandemic

July 15, 2020
Business Affairs Risk Management

What did we learn?
A key lesson from the coronavirus pandemic is that our health system’s financial viability is closely linked with its ability to appropriately address pandemics and other drastic demand shifts. Closing elective procedures probably reduced the spread of the virus to patients and healthcare staff, but it also shattered hospital finances, reducing the hospital’s ability to provide proper care to COVID-19 patients and others. Economics and health: These are not separate issues, but closely interlinked, which you recognize when you look at the situation at a local hospital level.

We also learned that our hospitals did not have sufficient control over their supply chain, and they lacked critical resources to respond appropriately. Many U.S. hospitals are operating financially at a near-loss, and they need to reduce costs to be able to handle crisis situations.

A clear lesson emerging from this pandemic is that control of the supply chain is not just a matter of financial viability; it is also a matter of being able to effectively respond to substantial changes in healthcare demand. Supplier relationships at hospitals are too often characterized by lack of transparency and the dominance of new technology adoption over financial considerations. We have just learned that this is not sustainable. The hospital needs to be able to create financial slack in their supply chain, they need to closely control vendor relationships, and they need to have the ability to shift market share quickly.

We also learned, collectively, that our healthcare system needs to get better at utilizing resources and assets, rather than just throwing away after use. We need to develop a new consciousness around re-use. Reprocessing of single-use devices has been around for more than 20 years now, but an expansion of the practice should be reconsidered as well as the adoption of similar practices to reduce waste and build slack in the supply chain.

What now?
As service lines like cardiology and orthopedics reopen at hospitals, the importance of maximizing the profitability of these procedures as means of helping hospitals rebound cannot be understated. For the most part, these services will be trying to address pent-up demand in coming months. For example, electrophysiology (EP) labs across the country have been closed or restricted to only the most important procedures. Patients who haven’t been treated need to be treated. While atrial fibrillation is not always a life-threatening condition, it will become that over time. Patients who don’t undergo treatment and instead control symptoms with drugs have serious quality-of-life challenges.

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