When the COVID-19 pandemic hit, many healthcare organizations, despite an urgency to adapt quickly, began running out of essential items like masks, gloves, gowns, and even medications. These shortages, combined with rising patient volumes and other economic factors, have revealed the importance of having a well-performing healthcare supply chain. Here are some of the most pervasive healthcare supply chain challenges and strategies businesses are using to solve them.
The Healthcare Supply Chain Takes on a Strategic Role
Efficient and effective healthcare supply chain management is critical to improving healthcare outcomes, ensuring patient safety and satisfaction, and reducing waste and costs. The recent pandemic revealed gaps in supply chain management and logistics, from product manufacturing to inventory management.
According to a recent McKinsey survey of U.S. healthcare and supply chain executives, roughly two-thirds of respondents stated that the pandemic improved their perception of the supply chain’s effect on their health system. But almost three-quarters of survey respondents indicated that the supply chain must take a more strategic role going forward.
Most Pressing Healthcare Supply Chain Challenges
Healthcare organizations can divide their spending between external and internal categories. Internal costs include things like labor and facilities. But the supply chain accounts for up to 40 percent of external costs, which includes items like drugs, surgical supplies, equipment, bandages, etc. This area of the business is a clear choice for optimizing performance. But first, we must identify the most pressing challenges facing this industry.
1. Drug and Materials Shortages
Drug shortages have always been a problem in the healthcare industry. But this has never been more severe than in the past several years, thanks to enhanced supply chain disruptions. Shortages of vital drugs and healthcare materials continue due to labor constraints, supply issues, transportation problems, inflation, and much more.
2. Overnight Shipping Requirements
There is an ongoing need for overnight shipping in the healthcare industry. When there is an emergency, lives can depend on the ability of a provider to get the right drugs or materials. While a few overnight orders may not be impactful, a regular occurrence can greatly impact the patient experience and bottom-line results.
3. Hidden Costs
Healthcare providers also face the challenge of hidden costs when obtaining materials. Many buyers will only look at product prices and shipping costs. But there may be other variables, such as inflation, reduced quantities, and quality issues, that could impact outcomes.
4. Lack of Data
One of the biggest struggles facing healthcare leaders is trying to make informed business decisions without recent and useful data. One of the reasons this continues to be a problem is that supply chains remain separated from healthcare organizations. When there is more connectivity, this will allow advanced modeling systems and improved forecasting.
5. Poor Integration
Mergers and acquisitions have become increasingly common in the healthcare industry. While these are meant to improve efficiency and overall results, many of these merged organizations still operate as siloes, resulting in waste and lost profits.
6. Inefficient Workflow
Throughout the healthcare supply chain, there continue to be many inefficient workflows. Some processes are duplicated unnecessarily, and others are rife with errors due to repetitive processes.
7. Poor Inventory Management
One of the biggest problems in managing medical supplies stems from poor inventory management. Even though many healthcare facilities offer state-of-the-art treatment access to the best medical devices and drugs, they don’t manage their inventory efficiently, which can be costly.
8. Lack of Visibility
The lack of visibility across supply chain partners is impacting many healthcare organizations. Specifically, when there isn’t access to real-time, centralized data about product locations and other key information, this makes it challenging to determine what’s in stock, what’s needed, and whether or not performance is living up to expectations.
How Businesses Can Address the Healthcare Supply Chain
Some of the key challenges to the healthcare supply chain can be addressed through better clinical engagement, more investment in planning, and the use of data and analytics.
Better Clinical Engagement
Healthcare supply chains that perform well even in the most challenging conditions have strong engagement with frontline clinicians and executives. When clinicians play a vital role in supply chain decisions, they will give their input on supplier selection and contract terms. They might have better oversight of supply usage due to an understanding of how that contributes to business goals and patient results.
Healthcare organizations can create specialty-focused and cross-functional teams comprised of clinicians and supply chain leaders. Supply chain organizations may also wish to have a person on staff with a clinical background to improve engagement and optimize results.
More Investment in Planning
Most healthcare organizations have overall annual savings targets to improve efficiency. But these targets rarely go deep enough to achieve the desired results and often don’t receive input from clinicians.
Instead, there could be shared savings targets between the supply chain and its partners. At the same time, there should be meaningful incentives for reaching those targets and transparency in reporting.
Use of Data and Analytics
If you want to achieve the greatest gains in healthcare supply chain optimization, you will achieve this by leveraging data and analytics. When you inject more visibility and transparency throughout your supply chain, this gives you the information you need to make more informed business decisions.
Many businesses now use solutions like RFID tags to deliver detailed tracking from supplier to distributor to inventory to patient. Healthcare leaders can view this information in real-time to determine which areas of the supply chain need improvement, forecast demand, and even identify opportunities for savings.
From logistical challenges to product shortages, healthcare organizations must navigate a complex array of regulations, suppliers, distributors, and other challenges to ensure they have the necessary resources to deliver high-quality care. With the right strategies in place, these organizations can identify and address healthcare supply chain challenges to improve the patient experience and overall business results.
