COVID-19 and Healthcare Supply Chains: 5 Lessons Learned
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Kara L. Nadeau, Healthcare Industry Contributor
Three years on from the pandemic that shook the industry to its core, we take a look at the impact on healthcare supply chains and the lessons learned the pandemic. From skyrocketing prices to the challenges faced by healthcare professionals, discover the five lessons from COVID-19 for supply chain leaders.
When the pandemic hit, hospitals suddenly found themselves running out of critical supplies, all eyes turned to healthcare supply chain management teams. They were tasked with a momentous challenge in their procurement processes:
Find the needed products while ensuring the ones they procured were safe and effective.
The COVID-19 pandemic shook the foundations of healthcare supply chain management, forcing needed change to build resilient supply chains. Here are some key takeaways from these experiences.
Table of contents
- Healthcare supply chain vulnerabilities
- Disrupted supply and evolving strategies
- Growing supply chain management responsibilities
- The limitations of manual and outdated processes
- Procurement processes and supplier relationships
1. Healthcare supply chain vulnerabilities
98% of hospital leaders said the pandemic exposed significant supply chain vulnerabilities in their hospitals.
Supply shortages were the most visible impact of the pandemic on healthcare supply chain management with healthcare organizations everywhere struggling to find personal protective equipment (PPE). This surge in demand drove skyrocketing prices.
Between March and April 2020, prices for isolation gowns had spiked by 2,000%, and N95 masks by 6,136%. Even seven months into the pandemic, a survey found 70% of facilities were still unable to secure PPE. And the lingering effects of supply disruption are still being felt to this day.
💡 Read more: 4 Best Practices for Healthcare Supply Chains
2. Disrupted supply and evolving strategies
9 out of 10 hospital purchasing leaders reported their strategy for managing and procuring supplies has changed in the past two years.
Supply chain leaders turned to inventory management systems and processes within their health systems to find out what they had on hand. Those with integrated, electronic and automated inventory management solutions could quickly determine what they had in stock.
But those that still operated with disjointed systems and manual processes faced a much more difficult challenge finding supplies and getting them to where they were most needed. Even if they had supplies on hand, most healthcare organizations quickly depleted their inventories as demand exceeded supply.
The healthcare supply chain management trend over the past two decades leaned toward keeping supply inventories low to support a just-in-time (JIT) methodology, but soon realized the benefits of having just-in-case stock even if that meant greater supply expense.
Challenges driven by COVID-19 put hospital supply chain performance and industry partners in the spotlight like never before. It prompted many organizations to prioritize healthcare supply chain optimization throughout all medical supply chain processes.
3. Growing supply chain management responsibilities
COVID-19 also changed the scope of healthcare supply chain management responsibilities.
More teams reported they were supporting procurement and inventory management to clinical departments within their hospitals and out to non-acute settings, such as clinics and physician offices.
This broadening of responsibility continues to grow, as evidenced by the results of the 2022 Healthcare Purchasing News Supply Chain Compensation Survey. When comparing survey results from 2021 to 2022, a higher percentage of healthcare supply chain professionals said they were handling inventory management for:
- diagnostic imaging centers (up nearly 15%)
- radiology departments (up 9%)
- diagnostic imaging centers (up 5%)
- laboratory (up 5%)
- physician practices (up nearly 3%)
4. The limitations of manual and outdated processes
About two-thirds of U.S. health system executives and supply chain executives said the “pandemic has improved their perception of the supply chain function’s impact within their health system.”
Early in the pandemic, when hospitals had restrictions on non-essential workers entering their doors, healthcare supply chain management teams faced challenges in maintaining their procurement processes as some personnel were forced to stay home.
Procurement teams with manual, paper-based P2P processes and on-site, legacy ERP systems could not access the technology they needed to process POs and invoices when working remotely. These supply chain issues highlighted the need for P2P system and process modernization.
5. Procurement processes and supplier relationships
Post-COVID, the top priorities among healthcare providers are mitigating supply chain risk (75%), forming strategic partnerships with suppliers (38%), and streamlining logistics (34%).
With the entire U.S. healthcare delivery network reaching out to distributors and suppliers to procure the same items to both deliver patient care and protect staff members from infection, there simply wasn’t enough to go around. Healthcare supply chain management teams were forced to get creative with their procurement processes and expand their supplier relationships across broader distribution networks.
The drive to improve quality control and patient safety with procurement processes led to close collaboration between supply chain and clinical teams. Together, they vetted products coming from new sources to identify items clinically equivalent to what they had been using, while keeping in mind the need for cost optimization.
The pandemic also heightened appreciation among healthcare supply chain management teams for reliable supplier relationships and relationships with other business partners across their distribution networks.
The COVID-19 pandemic has significantly impacted healthcare supply chains, revealing significant vulnerabilities and challenges. The pandemic led to skyrocketing prices, supply shortages and disrupted supply chains, forcing healthcare organizations to change their supply chain management strategies.
Supply chain leaders also had to broaden their responsibilities, prioritize healthcare supply chain optimization and modernize their procurement processes to meet the demands of the pandemic.
The pandemic also prompted healthcare organizations to form strategic partnerships with suppliers, mitigate supply chain risk, and streamline logistics to improve patient safety and quality control.
While the impact of COVID-19 on healthcare supply chains still lingers, the lessons learned are helping to build more resilient supply chains for the future.
💡 Read more: Future of Healthcare Supply Chains: an In-Depth Analysis
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Disclaimer: The third-party contributor of this piece is solely responsible for its content and accuracy, and the views expressed do not necessarily reflect the opinion of GHX.
Kara L. Nadeau
Healthcare Industry Contributor
Kara L. Nadeau has more than 20 years of experience as a writer for the healthcare industry, working for clients in fields including medical device/supply manufacturers and distributors; software, solution and service providers; hospitals and health systems; and industry associations.