National Health Care Supply Chain Week 2021: A Leader’s Guide

The health care supply chain is the backbone of the modern health care system. It ensures that providers and patients have the resources they need when they need them. As in any supply chain, health care supply chain leaders need to have a keen sense of business acumen, optimizing for efficiency, logistics, cost, and resiliency.

But due to its location within the health care sector, the stakes are higher in the health care supply chain than they are in the traditional business world: here, improved outcomes can literally save lives.

The Covid-19 pandemic underscored just how important the health care supply chain is, and it also demonstrated how costly its disruption can be. In the global scramble for access to personal protective equipment (PPE) and other medical supplies at the onset of the pandemic, between 59 and 83 percent of organizations reported delays or increased lead times in acquiring supplies.

The response from health care supply chain professionals has been quick, collaborative, and innovative. Top health care leaders are taking note. A 2020 survey found health care CEOs now rank supply chain optimization as their second-highest priority, behind only patient safety.

This year’s National Health Care Supply Chain Week (SC Week) takes place October 3-9, 2021. It’s a time to raise awareness around the importance of health care supply chain professionals, and recognize them for their critical contributions to patient care, health care organizations, and communities. It’s also an opportunity for all health care leaders to learn more about recent innovations in the health care supply chain, and how to best implement them in their own organizations.

To learn more about the state of the health care supply chain today, and where it’s going, read on.

Michael Schiller is the Senior Director of Supply Chain for the Association for Health Care Resource & Materials Management (AHRMM), a professional membership group of the American Hospital Association (AHA).

Schiller is a leading health care professional who models successful engagement with executives and leaders from across the health care field, including those from the provider and supplier communities, regulatory agencies, standards organizations, industry associations, analyst firms, health IT, and academic institutions.

As AHRMM’s subject matter expert, Schiller brings more than 30 years of health care supply chain experience to his role. In this capacity, he provides vision and direction for the association’s educational content and collaborates with industry leaders across the health care ecosystem on various health care, supply chain, and advocacy initiatives. Schiller was awarded the George R. Gossett Leadership Award in 2021.

“In traditional terms, the health care supply chain comprises a myriad of products, services, and equipment,” Schiller says. “But as health care organizations look to control costs, supply chain professionals must be viewed as a partner in managing not only the traditional supply chain areas of spend but should be involved in conversations as organizations are evaluating non-labor spend as well.”

One of the major trends in the modern health care supply chain is the Cost, Quality, and Outcomes (CQO) Movement. Developed by AHRMM to guide health care supply chain professionals through the changes brought on by the Patient Protection and Affordable Care Act (ACA), it promotes a holistic view of the correlations between cost, quality, and outcomes. This positions health care supply chains to optimize for the patient, which in turn delivers financial results driven by exceptional patient outcomes in today’s value-based care system.

“Fundamentally speaking, a key concept to understand and embrace in our value-based care environment is that the patient, not the product, is at the center of all we do—their experience, satisfaction, and outcomes,” Schiller says. “With this in mind, I would break the supply chain down into two primary areas: the tactical supply chain and the strategic supply chain.”

In Schiller’s view, the tactical supply chain involves concrete, micro-level considerations, such as inventory management, procurement, distribution, and logistics; it also incorporates data analytics and clinical expertise.

The strategic supply chain focuses on broader, macro-level issues, such as cultivating a culture of engagement between supply chain professionals and other health care stakeholders; it seeks to turn what were once purely transactional relationships with trading partners into collaborative ones.

Both the tactical and strategic supply chains work together to create a more effective, resilient, and transparent system. And they reinforce the need for health care supply chain professionals to be involved at multiple levels of a health care organization’s decision-making.

“As we reimagine a more resilient health care supply chain, today’s supply chain leader must possess a global perspective, be actively engaged in non-labor spend, and involved in developing diversity, health equity, and economic inclusion programs,” Schiller says. “Finally, supply chain leaders must have a seat at the table as health care organizations develop population health strategies that reach across the continuum of care including the acute, non-acute, and home health settings.”

“The Covid-19 pandemic has highlighted the ongoing importance of the health care supply chain,” Schiller says. “Providing the right products, at the right price, to the right place, at the right time, continues to be the focus of today’s supply chain professionals.”

Supply chains in every industry were disrupted by the Covid-19 pandemic, and health care supply chain professionals had to adapt in quick, innovative, and collaborative ways. The 100 Million Mask Challenge, launched by Providence and expanded by AHA, called on manufacturers, the business community, and individuals to facilitate new relationships with hospitals and health systems to produce much-needed PPE on a large scale.

At the same time, AHRMM vetted non-traditional, gray market suppliers of PPE who entered the supply chain under the Emergency Use Authorizations (EUAs) of the Food and Drug Administration (FDA) and collaborated with other vetting programs to develop an online PPE repository for health care and business leaders. And the AHA’s Dynamic Ventilator Reserve acted as a public-private online initiative to track and help distribute available ventilators and associated supplies to areas of the country with high Covid-19 infection rates and hospitalizations.

“We saw tremendous examples of collaboration between hospitals and local/community-based businesses who retooled their operations to support the PPE needs of the hospitals, as well as other cross-field collaboration,” Schiller says. “These collaboration efforts are, in my opinion, the silver lining coming out of the Covid-19 pandemic.”

The quick and collaborative response by health care leaders and supply chain professionals helped to save lives. It also acted as a catalyst for future change, where the health care supply chain is resilient to not only pandemic-related issues but other disruptions, too.

Health care organizations are now engaging with supply chain professionals to diversify their vendor portfolios and engage in multisource contracts for items deemed critical for patient care. Together, they’re evolving the health care supply chain to account for global disruptions and improve resiliency and reliability.

“The need to change is what encourages me,” Schiller says. “Just in Time (JIT) and Lean were accepted inventory management principles that now need to be re-evaluated. We have temporarily moved to a Just in Case (JIC) inventory model, but need to move to a Just Enough (JE) inventory model. This requires utilizing data—the capture of product use at the point of care/point of consumption and moving from par inventories to demand planning. We’ve seen technology play a central role during the pandemic with the increase in telehealth and remote patient monitoring. Technology will also play a significant role in a reimagined supply chain with cloud-based platforms, data analytics, AI, IoT, and other technologies.”

The health care supply chain is a dynamic ecosystem of interconnected parts, and tomorrow’s health care supply chain leaders will become increasingly involved in the decision-making activities of health care organizations.

Whether responding to public health crises, implementing cutting-edge technologies, collaborating with key stakeholders, or adapting processes to better serve the patient, health care supply chain professionals will be a major force in determining the future of health care as a whole.

“The future is, in one word, exciting,” Schiller says.

To learn more about how today’s leaders are thinking about the health care supply chain, and to connect with the broader community, check out some of the resources below.

• Association for Health Care Resource & Materials Management (AHRMM): The leading membership group for supply chain professionals, AHRMM strives to advance health care through supply chain excellence by providing the education, leadership, and advocacy necessary for its members to remain at the top of their field. With more than 3,600 members worldwide, AHRMM offers numerous opportunities for professionals to reach their highest potential and grow their network.
• American Hospital Association (AHA): Founded in 1898, the AHA provides education for health care leaders and is a source of information on health care issues and trends. Nearly 5,000 hospitals, health care systems, networks, other providers of care, and 43,000 individual members come together to form the AHA.