EXECUTIVE SUMMARY
Surgery centers can survive coming supply chain disruptions if they take proactive measures to improve their supply chain management.
- The supply manager should know their supply chain’s risks and vulnerabilities, including the locations of manufacturers and suppliers.
- With local partners, surgery centers could achieve purchasing power and develop a more resilient supply chain.
- For all essential items, there should be a back-up plan in case one supplier falls through during a crisis.
Even small, independent surgery centers can survive a major supply chain disruption by making important changes now, before a possible resurgence of COVID-19 cases (or other natural disasters) affects the supply chain.
The first step is to expect a disruption. The COVID-19 pandemic will not be the last time there is a supply chain disruption, says Gail Horvath, MSN, RN, CNOR, CRCST, senior patient safety analyst for ECRI.
Supply chains rely so much on national and international transportation that even a major incident on the West Coast can cause a medical supply disruption on the East Coast. For example, Horvath recalls when snow storms prevented planes from taking off with orthopedic supplies, and ground transportation was stalled, too.
“I can remember as an operating room nurse when we’d run out of orthopedic screws, could not replace them in a timely manner, and had to postpone surgeries,” Horvath says.
“The nature of this business is that if another crisis rolls around the country, new items might be threatened or more critical drugs are threatened,” says Bruce Hall, MD, PhD, MBA, FACS, vice president and chief quality officer for BJC HealthCare. “The next time there’s a crisis, it might be different and not be about face masks. Even though we’re in a good place now with face masks, we have to deal with structures to help us deal with the unexpected.”
Every surgery center’s emergency preparedness plans should be updated to include pandemic preparedness, with a section that addresses all critical supplies, and not just personal protective equipment (PPE), says Scott Jackson, executive director of Henry Schein.
One best practice is to appoint and empower someone who is passionate about what they do to manage the supply chain. Also, surgery centers could invest in a materials management system that is tailored for their operations. Finally, leaders could put policies and procedures in place to use the chosen technology that helps with supply chain management.
Horvath, Jackson, and Hall offer more suggestions on how to improve supply chain management and how to be prepared in the event of a disruption:
• Stay current on the newest guidelines. Ambulatory surgery centers (ASCs) should stay abreast of guidelines related to PPE that are issued by associations that represent the specialties a center provides.
“For example, there may be new guidelines for GI that are different than those issued for orthopedics,” Jackson offers.
• Learn your supply chain’s risks and vulnerabilities. At a minimum, the person managing the supply chain should know the manufacturers, where they are located, how the items are shipped, and where they are warehoused. “If a tsunami hits Southeast Asia, [the supply chain manager] should know which necessary supplies are going to be difficult to obtain,” Horvath says. “They need to have a backup plan in place.”
For example, Puerto Rico is home to dozens of medical manufacturers. When a hurricane destroyed much of the island’s infrastructure in 2017, manufacturers could not ship supplies. This affected healthcare organizations across the United States, leading to shortages of basic supplies like IV fluids.
Supply managers also should consider the kind of disruptions that most people do not imagine, such as labor strikes at docks or factories that could keep supplies stuck in limbo. Similarly, embargoes are another disruption over which healthcare organizations have no control.
In addition to geographic and shipping factors, surgery center supply managers need to know their suppliers’ total capacity, financial stability, track record for dealing with problems, and their facility’s own relationship with that manufacturer or supplier.
• Partner with others to ramp up scale. Surgery centers should look for local partners with whom they could team to achieve some scale in developing a more resilient supply chain.
By joining forces, facilities can gain expertise from other organizations’ experience, and they can work together in negotiating with distributors and manufacturers. “It’s not merging, just a local/regional partnership that is formed to bring some brain power together,” Hall notes.
• Develop a few backup plans. There usually are situations when a surgery center will deal with one supplier to obtain the best price. This could be for commodity items, such as gauze. “You might choose to deal with one supplier for the sake of good contracting and the relationship,” Hall explains. “There are many other options if that supplier falls through.”
But in the case of complex supplies, surgery centers should not rely on one supplier. They need to build relationships with two or three suppliers that could find those items if the main supplier experiences a disruption.
• Use variation. Surgery centers should include in their inventory some items that are available in both nondisposable and disposable forms, such as gowns. “If the disposables supply is threatened, you can reuse [nondisposables] a little more,” Hall suggests.
• Stockpile more than before — with prudence. The pandemic put a glaring light on the flaws of the just-in-time inventory system. Many healthcare organizations are responding by building stockpiles of certain critical items. “That costs money and efficiency, but we need those safety margins back,” Hall explains.
Organizations also can take longer-term contracts on key items, such as face masks. “We normally wouldn’t have taken a two-year-long commitment to buy masks in high quantities,” Hall adds. A drawback of stockpiles is waste. For example, Horvath recalls that when the pandemic began, a large health organization owned a bountiful stockpile of N95 masks. That would have been fortuitous, except the masks had been in storage for so long they were dry-rotted and had to be discarded.
“Even if you have to stockpile, you need to check on them frequently and replace them as needed,” Horvath stresses.
The supply manager should know their supply chain’s risks and vulnerabilities, including the locations of manufacturers and suppliers. With local partners, surgery centers could achieve purchasing power and develop a more resilient supply chain.
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