Mega-mergers and alignment to homecare and virtual care affect the healthcare supply chain greatly, says Eric O'Daffer, vice president analyst for the healthcare supply chain at Gartner.

Years ago, 6,500 or so regional hospitals across the U.S. began merging into much larger systems. Today, some of these hospital behemoths sprawl across multiple (but not always contiguous) states and are valued at tens of billions of dollars. Not surprisingly, their supply chains have become enormously complex, says O’Daffer. And their governance simply has to improve.

“It means elevating the role and importance of supply chain for most of these health systems,” O’Daffer says. “Everything that you buy from a third party makes up 35% of the budget by our benchmark standards. It's a big part of the operating expense of these health systems. It's got a big impact on care. So they've just got to get better.”

Manufacturers are affected as well as the health systems, he says. “Besides making a great product, what can these manufacturers do to help with the patient outcomes that these systems are trying to drive? It means leaning into some risk-based sharing agreements on how to optimize the supply chain.”

During the pandemic, O’Daffer says, there were many issues around risk and resilience. “When you couldn't produce the product in China because of the pandemic, for example, what does that mean? How do you get product when the ports close? What does that mean? And how are you communicating that and providing better visibility and transparency to that end user customer, the health system?

“That's the kind of things that the leading manufacturers are really working on, coming up with a collaborative response that aligns to the delivery of patient care,” O’Daffer says.