Massachusetts healthcare providers, like those across the nation, faced a supply crisis that was quick in the making as COVID-19 caseloads surged while the global healthcare supply chain crashed. Healthcare organizations found themselves competing for the same limited resources. But provider organizations put aside competition and began collaborating with each other to share solutions and supplies. Small facilities and independent community hospitals were particularly hard hit and relied on larger organizations and hospital systems for help. Many hospitals relied on outside organizations to identify clinically-acceptable alternatives from legitimate vendors and create third-party stockpiles.
Survey Insight: While most respondents feel their organization’s response to the COVID-19 pandemic was effective, 75% of respondents feel resource limitations stand in the way of a successful response to the next public health emergency.
KEY FINDINGS
Overreliance on foreign or limited manufacturers creates vulnerability.
While this topic wasn’t new to supply chain leaders, a crisis of this magnitude and duration was not something they were likely to anticipate. Although the longstanding practice of product standardization was efficient and made it easier to ensure quality, it left many organizations vulnerable. Simply put, COVID-19 exposed the fragility of the supply chain.
Just-in-time inventory poses challenges in a crisis.
Slim margins mean healthcare organizations have turned to lean or just-in-time inventory to avoid waste and minimize storage costs. Additionally, hospitals are required to have plans for 96 hours worth of supplies on hand for emergencies. Healthcare organizations quickly burned through essential supplies and equipment and couldn’t replace them as the pandemic disrupted the supply chain for everything from medication and PPE to medical equipment like beds and ventilators. The sparse availability of this equipment also required providers to closely monitor supply levels and lean heavily on burn rate calculators.
Guidelines and approval for PPE changed frequently.
Organizations’ efforts to acquire adequate PPE supplies were complicated by shifting and difficult-to-manage guidelines. Sourcing goods with long lead times became risky because standards could change before the supplies arrived and render them unusable.
Counterfeits and donated supplies can present risks in times of crisis.
Opportunistic new vendors entered the market, hoping to capitalize on the acute needs of healthcare organizations. While many organizations stepped in to successfully donate in-demand supplies, this environment also incentivized the sale of lower-quality and counterfeit products, making it difficult for providers to trust vendors without proper vetting.
Donations also posed challenges. Some donations were expired, some were low quality, and others were counterfeit themselves. Channels of usable donations were often short-lived. Community groups and non-healthcare companies, while eager to help in the pandemic’s early stages, were understandably unable to maintain that level of support throughout the ongoing crisis.
RECOMMENDATIONS
Develop a statewide emergency supply chain infrastructure.
Healthcare providers, MHA, group purchasing organizations, distributors, manufacturers, and the state government need to collaborate to develop a comprehensive approach to ensuring needed supplies are available during public health crises. Even as the immediate crisis has dissipated, instability remains for healthcare providers in the medical and pharmaceutical supply chain. Relationships with local manufacturers and suppliers should be strengthened to develop more reliable contingency plans that consider a full range of supplies.
Challenges to be addressed include: securing funding to build regional stockpiles, establishing a shared statewide warehouse, ensuring an adequate rotation of expiration-sensitive supplies, mitigating an overreliance on single or overseas manufacturers, and alleviating difficulties that small facilities and independent community hospitals experienced accessing critical supplies. The system must provide accurate data on supply chain capacity and stockpile status, and include a centralized vendor verification system that determines the legitimacy of non-traditional vendors.
Ensure the financial stability of healthcare organizations.
Providers incurred billions in financial losses due to service closures and new expenses, such as equipment and staffing. While healthcare organizations must be more proactive by building emergency funds into their individual budgets, government should also anticipate the need for relief dollars in order to ensure the sustainability of the workforce and clinical operations.
Establish new models for purchasing and quality assurance.
Healthcare providers faced price mark-ups and demands by vendors for cash or other upfront payment, which many providers were uncomfortable with and couldn’t afford. Much of the government relief funding for supplies was retroactive, so it wasn’t available at the point of purchase. To address concerns about the quality of vendors and supplies, MHA created a list of validated vendors. Supply chain leaders offered possible solutions, including an escrow service offering for unvetted vendors and blockchain-enabled vendor identification and product tracking. But a faster, more organized approach is necessary for future emergencies.
Act more nimbly at the federal level.
Despite the massive nationwide supply chain disruption, the federal government was too slow in issuing contracts to increase PPE supplies under the Defense Production Act of 1950. The law should be leveraged more quickly for national public health emergencies. Additionally, federal, state, and local regulations that inhibit the flexible use and storage of supplies should be eased during crises as appropriate.