Topic: One Way to Build More Resilient Medical Supply Chains in the U.S.
The search for supply chain efficiencies has made our health care system leaner and more global. But this efficiency has come at the cost of resilience, with hospitals and health care providers now dependent on fragile global supply chains vulnerable to disruptions from “black swan” events like Covid-19. The pandemic demonstrated the devastating human and economic costs of this fragility: soaring prices and widespread shortages of critical medical supplies and personal protective equipment (PPE), and health care facilities struggling to protect staff and patients. The shortages also unleashed a homegrown resource that helped us cope: the tens of thousands of domestic manufacturers and community groups who stepped up to produce PPE and other critical supplies when existing supply chains failed.
These distributed producers — linked by digital platforms and operating in their own communities — represent a fundamentally different model than the traditional, centralized manufacturing paradigm on which the U.S. health care system has depended. They may never achieve the low costs of large overseas factories, but they do offer much needed strengths, including rapid response times and accessibility in times of crisis. If we put to work what we learned about distributed domestic production during the pandemic, we can create stronger and more resilient health care supply chains before the next inevitable black swan event occurs.
Under normal circumstances, a hospital system or smaller care facilities working with one another through a group purchasing organization, contract with two or three large distributors. These large distributors, in turn, purchase from wholesalers or may contract directly with manufacturers to produce what is needed. Supplies, most of which are manufactured overseas, are then shipped to distributors’ regional hubs and delivered periodically to individual health care facilities. The facilities maintain supply levels sufficient for several days to a week of continuous operation. When a disaster or accident stresses local hospitals, supplies usually can be shifted between hospitals or regions to make up for local shortfalls.
Topic Discussed: One Way to Build More Resilient Medical Supply Chains in the U.S.