How can supply chain meet the demand for health equity?

May 25, 2021

The COVID-19 pandemic heightened the world’s awareness of the strategic importance of the healthcare supply chain, perhaps more than any other event in history. Now, as hospital shelves fill back up with necessary supplies, and America approaches herd immunity, supply chain has another opportunity to help address one of healthcare’s most challenging issues: Health Equity. 

Later this month, I have the privilege of chairing a supply chain-focused panel at a virtual national conference on Health Equity (healthequitysummit.com). The free event is made possible through the generous support of the Commonwealth Fund.  In preparation for the conference, I wanted to share some initial ideas on supply chain’s role, but first let’s consider the root causes and the implications for our healthcare system and society at large.

The concept of health equity originated in the mid-19th century, when social medicine scholars recognized that “social and class inequalities led to inequities in health.”  Today, a growing body of research has linked systemic racism to higher incidence and severity of COVID-19 among the poor, which are disproportionately people of color. Many of these individuals were deemed essential workers with jobs that increased their chances of contracting the disease. Inequities in access to a range of social and economic benefits - employment, housing and nutritious food, etc. - have also been tied to a higher prevalence of chronic diseases (e.g., hypertension, obesity and diabetes) that increase the acuity of COVID-19 among communities of color. 

Beyond the devastating impacts on individuals and families, health inequities also threaten hospitals. “Safety net hospitals have probably been the most hard hit, given their high proportions of indigent and socially vulnerable patients…[and their] disproportionate share of COVID-19 admissions,” stated economist Gail Wilensky, Ph.D., the first chair of the Medicare Payment Advisory Commission (MPAC) and the former administrator of the Health Care Financing Administration (HCFA), the forerunner to the Centers for Medicare and Medicaid Services (CMS).

But caring for the poor does not have to be bad for business. For example, during the pandemic, primary care providers that cared for high-risk patients under a capitated revenue model did much better financially than those operating under fee-for-service. Practices that rely on volume saw their revenues decline sharply as patients deferred care, while those under capitated models continued to receive revenue in the form of “per member per month” payments. The stark contrast has revived discussions about the value of capitation for hospitals. 

But what does this have to do with supply chain?

Social determinants of health (SDOH)

We’ve already seen supply chain become more involved in SDOH. Geisinger’s supply chain played a key role in the success of the health system’s Fresh Food Farmacy, by helping contract for and stock nutritious food for patients with Type II diabetes. Other hospitals are leveraging supply chain skill sets to support access to critical social needs, including affordable housing and transportation. 

Supplier diversity

Helping support diverse (women, minority and veteran-owned) businesses is often the first (and sometimes only) linkage many make between supply chain and health equity. That’s certainly true, but the full value is often underestimated.  Money spent with local, diverse suppliers and local community businesses can have a ripple effect, multiplying the economic impact through additional spending in the community by those businesses and their employees.

Domestic manufacturing

As hospitals seek more domestic manufacturers to reduce dependency on foreign made goods, even greater benefits can be realized if hospitals help support investments in manufacturing capacity in minority communities. Not only can they increase supply reliability, they are also helping create new manufacturing jobs that often have one of the highest multiplier effects. 

Training and development

With the creation of new jobs comes the need for training and career development. Hospitals are playing a role here, too. For example, in Chicago, hospitals serving disadvantaged communities on the city’s West Side joined together to create a shared laundry and hire local residents, while training others to fill much needed medical assistants’ positions. Hospitals, including supply chain departments, are also working to hire and create career pathways for women and minorities, in part to help reflect and better serve their communities. 

Operational foresight

As healthcare is increasingly delivered outside the hospital, supply chains are expanding their logistical footprints. This takes on greater significance as healthcare systems seek to identify and better serve vulnerable populations, which is not only the right thing to do but will be critical as hospitals take on more risk, including capitation. Some public health organizations are using SDOH data and other community-based information to support the allocation and delivery of critical resources to disadvantaged communities.

Now consider the possibilities that advanced analytics brings to the equation. We are already benefiting from artificial intelligence (AI) and machine learning to understand which products work best on which types of patient populations and to predict their future health needs. Supply chains could leverage this data to work with clinicians to both source and improve access to the products and services most needed by the poor and communities of color.

These are just a few possibilities to explore, and I suspect there are many more, if we view supply chain through a broader lens. Think beyond supply chain’s primary focus today - sourcing, contracting, storing and delivering clinical products used in hospital care. As the pandemic has taught us, health status depends more on what happens outside the hospital. Just as supply chain professionals collaborate today with clinicians to identify the best products to use in clinical care, so, too, can supply chain work with public health experts and community resources to optimize population health and minimize health disparities. For many, the pandemic was healthcare supply chain’s moment. To me, supply chain is just getting started.