Healthcare Supply Chain Challenges: Exploring Root Causes and Resolutions

When hospitals don't have access to medical supplies, they can't provide effective medical care to their patients. Medical devices—and quality replacement parts that keep those machines running—are mission-critical supplies for hospitals and health systems. Yet, three years after the onset of the COVID-19 pandemic, the healthcare industry continues to face supply challenges that can result in reduced access to life-saving supplies.

Inflation, transportation shortages, materials scarcity, and logistics problems have also increased costs for global supply networks across industries. Global supply issues have had a significant financial effect on the healthcare industry. The overall cost of supplies per hospital patient rose by 18.5% between 2019 and 2022, while emergency department supplies increased by almost 33%.

Hospital supply chain managers are tasked with curbing the burgeoning cost of supplies while ensuring equipment is always available. They must achieve this without compromising care delivery, care quality, or patient safety. For this reason, the "Big Three" of optimal supply chains must take the lead in the healthcare industry.

The Big Three: Essential Elements of a Healthcare Supply Chain

Designing an efficient, responsive, and compliant supply chain supports a consistently high level of service while lowering costs. A balance between the following three factors is the overarching goal of virtually any US hospital or health system.

1. Healthcare supply chain efficiency

Optimizing the processes involved in each stage of the chain creates supply chain efficiency. Optimization streamlines logistics and reduces costs, and it's also the foundation for an agile, responsive supply chain.

For budget-strapped healthcare organizations, efficiency helps reduce costs while minimizing the unexpected, ensuring that mission-critical supplies and devices are available whenever clinicians need them for patient care.

2. Healthcare supply chain responsiveness

A responsive supply chain can respond to sudden, unexpected events affecting one or more links in the chain. Ideally, a healthy supply chain can respond to virtually anything that interferes with logistics. This would include large-scale external events, such as the COVID-19 pandemic, local or supplier-specific events, or the business's own internal procedures.

A chain designed for responsiveness doesn't rely too heavily on any one supplier. It has backup processes in place, so healthcare providers always have the equipment they need to administer high-quality medical treatment.

3. Healthcare supply chain compliance

If any supplier along the supply chain doesn't meet regulatory requirements, the end-point product or service also risks non-compliance. Investing in securing compliant suppliers helps businesses avoid causing harm to customers, incurring costly fines from regulators, loss of certifications, damage to reputation, and legal consequences.

Supplier regulatory compliance is critical for hospitals and health systems, especially when it involves biomedical devices that keep patients alive.

SEE ALSO: How to Extend Medical Device Lifecycles with High-Quality Replacement Parts

Achieving the Big Three and Vetting Quality Supply Chain Partners

The Big Three are directly connected to keeping patients safe. To achieve compliance, responsiveness, and efficiency, healthcare supply chain managers need as much visibility, control, and communication as possible with every player involved in each stage of the supply chain, from forecasting to transportation to product quality.

Therefore, vetting partners and requalifying suppliers is one of the most critical components of hospital supply chain management. The key is to build out the entire supply flow with trustworthy partners who can offer transparency, clear communication, and consistency.

Vetting International Supply Chain Partners

While it's possible to vet international suppliers, there are some locations where it's more challenging. Procurement agents should make an extra effort when vetting vendors and suppliers of patient-facing supplies, especially products such as after-market replacement parts for medical devices.

When attempting to vet overseas partners, language barriers and differences in regulatory laws can cause confusion or opacity around crucial issues such as manufacturing conditions, shipping procedures, or turnaround times. Without the ability to observe a production run or ask detailed questions, you could compromise on quality without realizing it.

Generally, businesses that comply with the international standards outlined in ISO 13485 are less likely to cut corners on materials or design. But unfortunately, unless you can vet the manufacturer in person, you can't be sure you're getting safe, high-quality products. And, as we saw in 2020, overseas transportation of goods is highly vulnerable to global events and takes significant time to recover.

Vetting Domestic Supply Chain Partners

Working with domestic suppliers increases visibility at every stage. Procurement managers can have extended conversations, conduct onsite visits, and request documentation from potential manufacturing partners. Additionally, they can vet the manufacturer's own supply chain. Responsiveness is easier when you can easily reach someone on the phone and work together to find a solution to a unique problem.

Producing 3rd-party components inside the US allows manufacturers to make targeted choices at each stage of the production cycle. A business that invests in maintaining a domestic supply chain is more likely to select high-quality materials, equipment, and personnel, resulting in a superior product. Better parts, good customer service, and a solid warranty offers more efficiency and supports compliance.

However, not all 3rd-party manufacturers are alike. That's why procurers should still look for ISO-certified businessesand ask to tour the facility, see a quality system demo, or observe a production run. 3rd-party parts that meet or exceed OEM level quality aren't just safe and reliable--they're also the best choice to keep medical equipment compliant and extend device lifespans.

SEE ALSO: What does a robust medical device quality management system look like?

Conclusion

Healthcare procurement leaders need to plan ahead, developing relationships now so those options are in place in the event of disruptions.

While it’s important to diversify your supplier base, don't compromise on vetting or visibility, and keep your eyes on the Big Three with every contract. For more helpful advice, see our free guide to learn more about finding and vetting 3rd-party biomedical equipment partners.