People usually associate logistics and inventory with the manufacturing and mass production industry. What many don’t realize is that the medical sector is also heavily reliant on supply chain networks, and that people’s lives depend on it. And for the past 15 years, logistics has gained a strategic place in hospital management.
Supply Chain in Healthcare
Supply chain management in healthcare involves obtaining resources, managing supplies, and delivering services and goods to patients and providers. Physical goods and information about medical services and products normally go through a series of independent stakeholders, including manufacturers, hospitals, insurance companies, healthcare providers, group purchasing organizations (GPOs), and some regulatory agencies.
Employees in healthcare supply chain management are responsible for stocking organizations with the necessary products and tools and for managing inventory. Hospitals and healthcare providers must align their supply chain to the care delivery model. This, however, proves to be challenging, especially since healthcare is not based on the traditional supply and demand that typifies the supply chain networks of a traditional business or company.
In most industries, the business can standardize the product or service to improve quality and efficiency. In healthcare, every patient is emotionally, structurally, and chemically different, so the standardization of products is not applicable. The changing expectations of consumers and patients, and the highly regulated nature of healthcare are driving change and creating challenges unique to the industry. These challenges and changes emphasize the need for an effective and efficient supply chain management, not only in terms of meeting the patients’ demand, but also in providing affordable and quality patient care.
Outdated Manual Processes
Apart from the challenge of meeting patient demands, many healthcare facilities suffer from wasteful and inefficient supply chain systems. The Adventist Health White Memorial and Cardinal Health conducted a time and motion study. The organization found that the medical team is burdened by time-consuming, manual processes of replenishing, ordering, and storing an inventory of 1,700 stock keeping units (SKUs). The team also suffered from inconsistent workflows, little supply chain visibility, and had no easy and quick method of tracking products. Many hospitals also fall behind in terms of utilizing technology to optimize their medical supply chains.
Numerous studies show the benefits of incorporating technology in healthcare supply chain management. Innovations, such as cloud computing, order and inventory management system software, and radio frequency identification (RFID) technology can achieve significant time savings versus manual processes.
After hurricanes Maria and Irma hit Puerto Rico in the fall of 2017, 80 of the island’s medical device and pharmaceutical manufacturing facilities temporarily closed. This caused a medical supply shortage in several U.S. hospitals, posing a threat to public health. A 2015 study by Cardinal Health reveals 18 percent of the respondents had heard of a patient suffering due to a lack of medical supplies.
The government’s efforts to fight the opioid crisis by reducing its availability have also hindered the ability of hospitals to procure necessary painkillers. Production delays at manufacturing plants and setbacks in acquiring raw materials from suppliers contribute to the shortage as well.
The Food and Drug Administration (FDA) says that it is working with manufacturers to resolve the drug shortage as quickly as possible. FDA also said that it posts updates on its website about drug shortages. But many healthcare providers report that it’s not clear where on the site they can find the data. They also don’t consistently receive information that could help them prepare for shortages.
The government, along with hospitals and independent healthcare providers, must work together and quickly find a way to resolve these issues. Otherwise, the welfare and health of the public will suffer.