How an Arizona report on its healthcare system can help the entire U.S. healthcare supply chain.
February 2023 – The Journal of Healthcare Contracting
In 2016, HHS released the 2017-2022 Health Care Preparedness and Response Capabilities guidance to describe what the healthcare delivery system, including healthcare coalitions, hospitals and emergency medical services must do to effectively prepare for and respond to emergencies that impact the public’s health. There had been lessons learned from natural disasters like hurricanes in Texas and Florida, but nothing foretold the coming COVID-19 pandemic in 2020.
The U.S. healthcare system wasn’t alone in the lack of preparedness. Global action and leadership was needed throughout the world’s healthcare systems. For example, the European Union created the European Health Emergency Preparedness and Response Authority in response to the pandemic, but it must continue to support countries in revamping and nurturing their own preparedness capacities.
In Arizona, a team of Arizona State University (ASU) undergraduate, graduate and doctoral students, along with staff from the Healthcare Transformation Institute, which is affiliated with ASU, surveyed members of the Arizona Coalition for Healthcare Emergency Response (AzCHER), including hospitals, long-term care facilities, medical clinics, dialysis centers and other medical care providers, and interviewed medical supply manufacturers, distributors and government agencies to determine supply chain vulnerabilities for:
- Blood.
- Medical gas.
- Fuel.
- Pharmaceuticals and nutritional products.
- Leasing entities for biomedical and other durable medical equipment.
- Disposables supplies, including PPE.
They were led by Professor Eugene Schneller, adjunct faculty member Jim Eckler and Assistant Professor Mikaella Polyviou in the Department of Supply Chain Management at the W.P. Carey School of Business at ASU. Schneller, Eckler and Polyviou spoke at The Journal of Healthcare Contracting’s IDN Insights: Showcasing Level IV Health Systems last year, chronicling supply chain preparedness for the long game and the implications for providers, suppliers and distributors.
Report: Building Supply Chain Resilience in the Arizona Healthcare System
Their report on Building Supply Chain Resilience in the Arizona Healthcare System was prepared to familiarize the Arizona healthcare community with the need for resilient supply chains and to propose solutions for the design and sustenance of a resilient and prepared supply chain. It focused on the perspectives of Arizona providers of care but also considered other key stakeholders: manufacturers/suppliers, distributors, GPOs and governments. Most of the findings, conclusions and recommendations in the study for Arizona providers are applicable to other U.S. providers.
AzCHER is a federally funded program administered by the Arizona Hospital and Healthcare Association (AzHHA) through a grant from the Arizona Department of Health Services. AzCHER has focused on the availability of critical medical supplies and equipment prior to and during the COVID-19 pandemic. It worked closely with county public health departments, hospitals and healthcare facilities across Arizona to provide resources and means to access medical supplies and equipment.
And in 2022, AzHHA contracted with the Healthcare Transformation Institute to complete the Medical Supply Chain Integrity Assessment for AzCHER.
“Documented in the full report, Building Supply Chain Resilience in the Arizona Healthcare System, are clear and significant vulnerabilities along with a wide range of mitigation strategies, the capabilities required to engage in mitigation activities and the required business structure,” said Ann-Marie Alameddin, president and CEO of AzHHA, in a statement. “AzHHA and AzCHER will utilize this information to coordinate effectively within the state, in collaboration with ESF-8 public health and medical service agencies, to develop a joint understanding and strategies to address vulnerabilities in the medical supply chain.”
Alameddin says these strategies provide AzCHER a pathway to enhance its efforts in meeting its mission to build a more resilient healthcare system so that it is prepared to respond to and recover from a large-scale emergency or disaster.
More frequent and significant disruptions for patients and healthcare workers
There are increasingly more frequent and significant disruptions that influence patients and healthcare workers. These disruptions make the systems and their services vulnerable to failure. And the highly fragmented structure of the U.S. healthcare system leads to many providers learning about the problems too late with insufficient time to properly adjust to the situation.
Many of the disruptions during the onset of COVID-19 were related to reliance on suppliers across the globe, who themselves faced disruptions. This was especially true for PPE. And for blood, disruptions had to do with the reluctance of their donors, the source of their supply.
Before COVID-19, PPE supplies were largely treated as “Class C” items by organizations, or least important. During the pandemic, they had to engage more closely and at a strategic level with their suppliers. A blood supplier told the research team:
“[…] things like PPE supplies, [which are] typically a “C item” [for which] we don’t heavily manage… but, in light of the circumstances, they became more of a critical supply. So, when we engage those suppliers, we engage to a better, more strategic level… I know, most of the executive team at those suppliers… at the chief operating officer level. So that’s the level we were dealing with we had to get to that level people that can make decisions quickly, not only on our side, but commitments from the supplier.”
An extensive assessment of the uncertainties surrounding PPE and supply issues in the U.S. revealed overlapping entities and multiple networks. But strategies to buffer against dependencies are quickly evolving.
Mitigation strategies to help provider resilience and preparedness
Building Supply Chain Resilience in the Arizona Healthcare System addressed supply chain resilience and preparedness needs for healthcare providers to meet long-term disruptions in the supply chain.
“This work, while focused on providers in Arizona, is directly applicable across the country and globally,” Schneller said in a statement. “The findings and recommendations for building resilience apply to all aspects of healthcare delivery. We strongly urge more focus on six fundamental supply chain strategies.”
Those six mitigation strategies include:
- Increased flexibility and redundancy.
- Formal collaboration and coordination programs.
- Information transparency across the supply chain.
- Good governance of the supply chain.
- Organizational authority to do what is needed.
- Good supply chain management practices.
The report also includes recommendations for upgraded business structures and capabilities to facilitate these strategies.
“Experts have predicted that medical supply chain disruptions will increase in frequency and severity in the coming years,” Schneller added. “More resilient supply chains are critical for our ability to confront and manage these disruptions.”
According to the report, the mitigation strategies above provide a path for providers to reduce the impact of supply chain disruptions and develop resilient organizations. However, organizations need a set of business capabilities to support the supply chain processes and preparedness mission, including:
- Information visibility for monitoring risks, product availability and setting allocation goals.
- The presence and commitment to a collaborative culture.
- Leveraged sourcing to competitively procure necessary products.
- Capital to finance the implementation and operation of these capabilities.
- Competencies in the practice of supply chain management.
These capabilities can enable organizations to successfully apply mitigation strategies. To establish and manage these capabilities, basic supply chain management structures are needed in the organizations. Four basic business structures to support the capabilities include:
- Information systems.
- Governance processes.
- Trained workforce.
- Distribution networks.
The report scrutinized seven categories of supplies and their ability to respond to the experienced surges in demand during the COVID-19 pandemic. Reliance on the global supply chain significantly impacted the availability of PPE supplies like masks and gowns. Deficiencies in supply for other categories were impacted for various reasons and impacting the supply of blood was the reluctance of donors to come to blood bank locations due to fear of travel and being in public places.
Building Supply Chain Resilience in the Arizona Healthcare System reveals the important roles fulfilled by healthcare coalitions and provides insight into their potential role as an important supply chain facilitator. Find the full report at azcher.org.