The Role of Supply Chain in Healthcare

Supply chains are frequently discussed, but what is their role in delivering safe and effective care across hospitals, aging care services, and ambulatory care facilities? Awareness of supply chains increased during the COVID-19 pandemic due to the fact that lockdowns were being implemented globally, slowing down the manufacturing of new products, and interrupting the import and export of goods. Supply chains play a role in every industry, but those in healthcare might not have the in-depth understanding of supply chains that they should. No matter what type of health facilities you operate or healthcare services you offer, let's take a closer look at what roles the healthcare supply chain plays in your organization.

What is a healthcare supply chain?

A healthcare supply chain refers to the network of systems, companies, and individuals involved in the healthcare industry and health services. From the raw production of ingredients necessary to make medications to the prescription drugs actually given to patients, everyone plays a role in the healthcare supply chain. Supply chains feature a range of global players, and planning plays a major role in ensuring that everything is operating smoothly. This is why, when faced with a serious illness like COVID-19 that prevented healthcare products from being produced or delivered, the supply chain was able to be impacted so easily. Without the supply chain, the healthcare industry would simply not function.

Who are the different players in the healthcare supply chain?

As we stated above, there are several different links that all play a role in the larger healthcare supply chain. But who are these players, and how do they ensure that healthcare providers are able to successfully do their jobs? Here's a breakdown of some of the most important links in the healthcare supply chain:

• Manufacturers: There are countless different types of products that healthcare manufacturers produce. From medical devices used in different procedures to medical supplies such as bandages, surgical equipment, and diagnostic tools, the manufacturing process is a vital step in the healthcare supply chain. PPE products are also made by healthcare manufacturers with the most common being gloves, gowns, and masks. Healthcare manufacturers have to follow rigorous processes and meet performance standards to ensure patient health and safety. 
• Distributors: Distributor is a term that covers wholesale distributors as well as logistics providers. Distributors are responsible for making sure medications get to providers and healthcare facilities, monitoring deliveries to ensure that everything is operating smoothly, and selling well over 90 percent of all prescription drugs.
• Third-Party Logistics Providers: Third-party logistics providers are still distributors, but they play a unique role for certain organizations. These smaller logistics providers are often more knowledgeable about a certain area. The fact that they are local, cost less, and can deliver more is a selling point for many healthcare providers.
• Providers: Providers refer to any organization that provides some type of healthcare service. This includes hospitals, pharmacies, and assisted living facilities, just to name a few. In the supply chain, providers are tasked with receiving medication to disperse to patients, refilling prescriptions, and monitoring inventory to ensure that they have enough supplies to care for their patient population.
• Patients: While many might not think patients are a link in the supply chain, they do play a role. Patients provide the demand for goods and services, influencing what types of products are being sold and the quantities of those items.

Of course, the supply chain also supports the needs of healthcare providers beyond just medications. Personal protective equipment, cleaning products, and similar hospital devices or tools all move through the supply chain. When any of these links are interrupted, it can slow things down and cause issues for those at the top of the supply chain.

What are some common issues that supply chains face?

Supply chains are very delicate networks. When one part is thrown off, it can cause ripples throughout the entire supply chain. Fortunately, most parties in each link have been navigating this chain for an extensive period of time. Applying current best practices makes it easier to ensure that everything moves smoothly. However, there may be certain things outside of your control that can have an impact on your position within this chain. Some of the common issues that supply chains face and what you can expect to navigate as you operate healthcare facilities are:

• Different objectives for different links in the chain: Not every link in the chain has the same objective. For example, certain providers may be looking to use certain products in their healthcare practices while hospital managers want to eliminate these products in lieu of something more affordable. This can create friction and cause issues in the supply chain, which will ultimately affect patients. Making sure that you understand the goals of each link and how you can navigate that is key to keeping the supply chain operational and stable.
• Sudden and impactful developments: While unprecedented, the COVID-19 pandemic is an excellent example of how healthcare supply chains can be impacted by external forces outside of their control. In these situations, unfortunately, there's little that can be done when certain links are shut down and unable to offer the same level of service they usually do. However, risk management can help healthcare organizations prepare for the future and ensure they have what they need ahead of time.
• Insufficient labor: The workforce is what drives the supply chain. Without labor, none of the links are able to achieve their desired goals. The shortage of labor that we're experiencing right now shows just how much a worker shortage can impact every level of the supply chain.

How can you navigate changes to the supply chain with ECRI?

The healthcare supply chain is complex and easily disturbed, so preparing for the future is critical to navigating unforeseen issues that develop over time. Here at ECRI, we're dedicated to providing your organization with the support it needs to deliver more effective healthcare. From reports that will help you master your supply chain disruptions to a predictive placement plan for creating a better capital replacement, ECRI is here for you.

Learn how to build a more resilient supply chain process today: ecri.org/solutions/hospital-consumables-supplies