By John Strong, Co-founder and Chief Consulting Officer, Access Strategy Partners Inc
December 2023- The Journal of Healthcare Contracting
Hospital merger sizes are getting bigger
Analysis of Kaufman Hall data shows that the smaller sized merger partner in transactions from 2012 to 2022 have grown at a 11.9% Compound Annual Growth Rate.1
Use of migrant children in dangerous jobs continues
According to The New York Times, more than 250,000 unaccompanied migrant children entered the United States in the past two years.2 Many of these children are forced to work full or part-time jobs in dangerous conditions while still trying to go to school. Now, Perdue Farms and Tyson Foods find themselves under federal investigation for using contractors who allow these children to clean and disinfect dangerous meat processing equipment at night.
Healthcare providers who care about social justice need to carefully examine who they spend money with, and let these large companies know they will not tolerate this practice in the name of higher profits.
Drug diversion: A significant national problem
The recent “The State of Drug Diversion Report” found that 98% of healthcare executives agree that drug diversion occurs in hospitals and 79% believe that most drug diversion goes undetected.3 The report notes that the problem negatively impacts the quality of patient care and patient safety, as well as negatively impacting finances. Diversion costs real money.
Because of shortages, data from Premier, Inc. shows that hospitals spent more than $1.1 billion on substitute products.4
Drugs are not the only things in short supply
Unpredictable spot shortages of essential medical supplies continue to plague healthcare supply chains and are not expected to ease for at least 1 year, according to an Axios report.5 Among products that are in short supply are surgical mesh, tissue mending products, tourniquet cuffs, body fluid warming solutions, balloon catheters, fetal monitoring devices, chest drains and suction cannisters.
These shortages are a cause for real concern, according to a recent report by ECRI and are causing harm in a variety of key areas.6 The accompanying chart includes drugs, single use supplies and other medical devices during a six-month period prior to the survey (n=200 respondents). Quality is broadly affected by these shortages in many key areas.
Kaufman Hall’s recently released “2023 State of Healthcare Improvement: Signs of Stabilization Emerge” notes that distribution delays (71%) and raw product and sourcing availability (55%) are the only two supply chain issues over 50% at the present time, based on a recent survey.7
82% of respondents identified approved vendor product substitutes as the leading way to mitigate supply chain shortages. Unfortunately, increasing inventory levels were identified by 57% of respondents as well. More hospitals also reported moving to direct purchasing (38%) versus using distribution partners.
305 drugs were in short supply in the third quarter of 2023. According to manufacturers, 56% were for “unknown or refused to provide” reasons by suppliers.8 It’s time we find out what the real reasons are behind short supplies of both medical products and drugs, so that they can be resolved.
1 Kaufman Hall and Associates
2 ”As Migrant Children Were Put to Work, U.S. Ignored Warnings,” The New York Times, April 17, 2023
3 ”The State of Drug Diversion 2023 Report”, Wolters Kluwer, September 12, 2023
4 Premier, Inc., February 20, 2023
5 “Health Systems Plagued by Shortages Scramble for Essentials,” AXIOS, June 29, 2023
6 “Medication, Supply, Equipment Shortages are Harming Patients,” ECRI.org, October 13, 2023
7 ”2023 State of Healthcare Performance Improvement: Signs of Stabilization Emerge,” Kaufman Hall, October 2023
8 ASHP: Drug Shortages Statistics through Sept. 2023