The COVID-19 pandemic has shown the world that the healthcare supply chain is broken. As a result, a lack of critical supplies put patients and staff at risk and caused unnecessary deaths; businesses were ruined and trillions of dollars were wasted because we had to shut down our country so that hospitals could prepare; and canceled services cost hospitals millions and compromised patient health.
In the process, we learned the hard way that today's supply chains are not up to the task of managing critical supplies, including personal protective equipment (PPE), in such extraordinary circumstances. As a result, hospitals had to resort to makeshift solutions and community support, which ultimately put hospital staff and patients at greater risk.
This experience has made clear that supply-chain management, despite being one of a hospital’s most significant expenses, does not always get the attention it deserves. For the most part, hospitals have relied on the opinions and institutional knowledge of staff — rather than hard data — to make decisions about inventory. They have lacked insights into what supplies are on hand, who is using them, and how fast they are being consumed. In the best of times, that approach leads to massive waste, hoarding, and inconvenient stockouts. In the worst of times, such as the recent global pandemic, it leads to loss of life and compromised safety for patients and clinicians.
Hospitals are learning that they need supply-chain visibility that allows them to track data beyond the warehouse, identify what they have and who’s using it, and pinpoint potential theft or hoarding. As one supply-chain professional said: Supplies disappeared as fast as they came into the warehouse with no clear indication as to where they had gone.
Here are five lessons hospitals and the healthcare industry should learn from these world events.
1. Strive for visibility. It’s no longer good enough for hospitals to buy a big warehouse and fill it with supplies. A true supply-chain management strategy delivers visibility beyond the warehouse and along the supply-chain continuum, while also providing data about how fast supplies are being consumed and who is using them. This helps hospitals avoid stockouts and gives them tools to combat hoarding and theft, which is a real possibility when departments see a risk of critical supplies drying up. The more visibility hospitals have into their supply chains, the better prepared they will be to deal with extraordinary circumstances.
2. Rely on data, not opinions. Supply-chain decisions are too often based on the knowledge and intuition of supply-chain staff. Not only is that inaccurate, but when those staff members get sick or leave, that knowledge leaves with them. Visibility into real-time data — whether at one hospital or across a health system — empowers hospitals to proactively manage critical supplies by adjusting consumption, shifting to secondary suppliers, and working with manufacturers to locate more supplies.
3. Forget physical counts. PAR replenishment with physical counting has to end. Relying on physical counts leaves too much room for interpretation and opinion. Hospitals should monitor PAR levels regularly and make adjustments based on data about velocity. This data enables demand sensing and supports forecasting that is essential in a pandemic. Many hospitals lacked the velocity data to make those adjustments prior to COVID-19, and many still lack that data today.
4. Collaborate. This pandemic has made it clear that responding to a global health emergency requires a collaborative approach. Hospitals need to be able to share data about supply utilization and availability across their system, across their city and state, and with government agencies. They also need visibility up and down the supply chain with manufacturers and distributors, not to mention a means of tracking donated supplies from community resources.
5. Involve clinicians. The best supply-chain strategy in the world won’t work if clinicians don’t play along. Find a supply-chain solution that integrates seamlessly with your EMR or ERP and that offers a point-of-use interface that is simple, safe, and cost-effective to implement in more than one department or location.
In a post-COVID world, hospitals will have to think hard about what processes they keep and what they change. And now is the time to get in front of the next potential wave that is projected to occur as restrictions on elective surgical procedures are lifted.
John Freund is founder and CEO of Jump Technologies, a software-as-a-service company that reimagines hospital supply chains.
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