The State of Healthcare Supply Chains
A recent article from Becker’s Hospital Review puts it simply: “Supply chain issues are here to stay.” As healthcare organizations begin to recognize the risk in single-source supply chains, they’re now diversifying to deliver more consistency. However, this multimodal approach increases complexity for both hospitals and suppliers, in turn creating long-term challenges.
According to Michael Palazzini, executive vice president of operations at healthcare logistics management firm TRIOSE, there’s not a lot of slack in the system.
“Historically, healthcare supply chains have operated on very thin margins — around 2 percent — and there’s not a lot of extra capital,” he says. “Organizations want to invest in robotic processes or build new operating rooms. They don’t invest heavily in the supply chain.”
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The result is a system that lacks excess capacity. Even small changes to the supply chain are quickly felt by organizations, and the pandemic came with changes of unprecedented scale.
Adam Coppin, program architect with Salesforce consulting and application development firm Traction on Demand, says that in his experience with healthcare agency supply chains, these issues aren’t new.
“The pandemic has put it into focus that agencies can suddenly run of out critical supplies,” he says. “It’s brought a push for healthcare agencies to not just focus on their supply chains but their overall operations to improve efficiency.”
Using Group Purchasing Organizations to Reduce Complexity
Group purchasing organizations (GPOs) offer a way for small and midsize healthcare providers to reduce complexity and streamline supply chain management.
“If you think about hospital systems, they tend to prefer to point resources at direct patient care rather than infrastructure,” says Palazzini. “GPOs, meanwhile, are centralized aggregators of supply chain knowledge. They understand how the system works and offer a centralized gateway to match customers with vendors. For example, they might negotiate a contract and then make it available to 1,000 health systems, letting smaller supply teams focus on distribution rather than searching for best-fit vendors.”
On the vendor side, being part of a GPO makes it possible to connect with new clients and expand business opportunities, creating a win-win for both suppliers and healthcare agencies.
“The supply chain is very complex, from pharmaceuticals to equipment and smaller supplies,” says Palazzini. “GPOs provide value to industry with efficient matchmaking.”
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Strengthening the Chain with Supply Technology
While GPOs offer a solid starting point for healthcare organizations looking to bolster their supply chains, evolving technologies also offer an opportunity to stabilize supply over time.
Coppin notes, however, that effective use of these technologies requires a firm foundation. “Organizations need solid, unified data around the use of current supplies to make predictive analytics possible,” he says. “Consolidation is key.”
While the public focus is often on frontline healthcare technology such as robotic surgeries or telehealth, Palazzini says supply chain solutions focus on areas such as real-time tracking and GPS technology.