Resilience requires collaborative leadership

May 25, 2023

On May 11, the Public Health Emergency (PHE) ended in the United States, and with it, a return to the more restrictive regulations in place before the pandemic. The question now is, “Will we also return to the pre-pandemic supply chain practices that many believe made the U.S. healthcare system more vulnerable to significant supply shortages?”

There is little dispute that an overemphasis on lowering supply chain costs created the conditions in which the healthcare system could not meet the substantial increases in demand for certain products, e.g., personal protection equipment (PPE). A disproportionate reliance on products produced overseas also made the U.S. healthcare system more vulnerable.

Deloitte queried more than 400 healthcare clinical, service line, and supply chain leaders if they were prepared for the next disruption, and the response was a resounding no; they expect more supply chain failures the next time there is a pandemic or other major emergency.1

The problem, according to Deloitte and healthcare supply chain scholars, is that healthcare leaders lack the commitment to make the systemic changes necessary to support resilience. For Arizona State University professor Eugene Schneller, PhD, this is also a board governance issue, adding that collaborative leadership is needed to support community and individual system preparedness.

During the pandemic, many healthcare systems – some even mandated by state governments – stockpiled massive amounts of PPE. Today, those stockpiles have led to fewer orders for those products as health systems use up existing stock, threatening the viability of new domestic PPE manufacturers that require a steady pipeline of business.

Deloitte also notes that supply shortages were not always a matter of not having enough stock. Sometimes it was a lack of visibility as to where the stock is located in order to shift it to meet local demand. This is a topic we discussed in the December 2021 issue of Value.Delivered, (https://hpnonline.com/21247071 ) demonstrating how the use of standard identifiers, such as unique device identifiers (UDIs), could have helped healthcare systems adjust supply levels at various facilities and even support the ability of the Strategic National Stockpile (SNS) to deliver supplies to where they were needed most.

At the height of the pandemic, health systems understandably sought to acquire as much product as possible, although unbridled competition led to massive price hikes. Going forward, both Deloitte and Dr. Schneller have recommendations to avoid the mistakes of the past and ensure the U.S. healthcare system can deliver the supplies needed to support the nation’s health and wellbeing.

Deloitte recommends creating digital supply networks, including the use of control towers and inventory management solutions, cautioning that data quality and standardization are also needed to address the visibility issues discussed earlier.

Even the right technology is not enough without the support of executive leadership, the buy-in among those who must implement the technological and process changes, and strong inter-organizational relationships across the supply network. Dr. Schneller goes further, suggesting that the resilience of individual provider organizations demands a sense of shared community risk, even among the fiercest of competitors.

During the pandemic, he noted how supply chain and clinical leaders from competing systems came together to share data on both patient volume and supply availability, at times transferring both to ensure an effective allocation of resources. This collaboration was tolerated by the C-suite but has waned with the passing of the pandemic. That, he says, is a mistake.

What leaders fail to recognize, says Dr. Schneller, are the system-level interdependencies within communities. When leaders come together to understand their shared risks, they can most effectively determine how best to implement and finance appropriate response mechanisms. In his words, “Preparedness for the next ‘big one’ is a community affair,” noting how the financial constraints faced by most health systems today make it impossible for a single organization to achieve resilience on its own.

Instead, he and his colleagues Mikaella Polyviou and Jim Eckler propose what they call a Common Pool Resource Organization (CPRO). A CPRO can be virtual, with each organization managing its own resources but with a high level of transparency across the participants, or it can be physical, in which resources are managed and distributed by the CPRO on behalf of the participants. In such cases, stock can be effectively rotated to prevent products from expiring or becoming unusable due to lack of regular maintenance, an issue that plagued the SNS in the early days of the pandemic.

A CPRO also requires a commitment by the boards of the participating organizations to provide necessary financing for maintaining “just in case” stock levels, but in a manner that also supports their ongoing supply needs. There are plenty of details to work out, such as ensuring advance agreement on clinically equivalent products should stock normally used by one organization need to be distributed to another. But these are matters that can best be handled by clinical and supply chain professionals, but only if they have the edict and support of their leadership at the highest levels. 

 References:
1. Health care supply chain resilience | Deloitte Insights; https://www2.deloitte.com/us/en/insights/industry/health-care/healthcare-supply-chain.html

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