How Healthy Is the Healthcare Supply Chain Today?

The healthcare supply chain plays a pivotal role in ensuring the widespread availability of essential medical supplies, equipment, and pharmaceuticals to support patient care. As the healthcare industry continues to recover from the global COVID-19 pandemic, its leaders are working to address the inherent supply chain vulnerabilities revealed during the crisis and anticipate the new challenges and solutions their teams may encounter in the years ahead.

The Healthcare Supply Chain is Still Unhealthy

The importance of fostering a healthy healthcare supply chain — the interconnected network of systems and processes involved in producing, distributing, and delivering medical supplies, equipment, and pharmaceuticals — became evident amid the fallout of the worldwide pandemic. While this global event left no industry untouched, the healthcare sector, in particular, saw unprecedented challenges and disruptions. Severe fluctuations in the supply and demand of medical commodities, equipment, and essential pharmaceuticals exposed weaknesses and the fragility of these networks. These vulnerabilities left many organizations without the resources to care for patients effectively while simultaneously struggling to keep costs low as they attempted to manage supply chain disruptions.

Now, supply chain leaders across the healthcare industry are emphasizing solutions that support adaptability to avoid such detrimental ramifications in the future.

Five Challenges Facing the Healthcare Industry Today

Industries are slowly recovering from the pandemic and trying to find a new “normal.” In the healthcare sector, this healing journey will likely involve facing a few substantial challenges in the process, including:

  1. Rising costs: According to the American Hospital Association, drug expenses per patient were up over 18% in 2022 compared to 2019. These rising costs, in combination with the increasing medical supplies, utilities, and labor costs, continue to strain healthcare organizations.
  2. Fragmented systems and data silos: Healthcare teams, especially those working with legacy systems, struggle with disparate and disconnected processes that create data silos. Poor integration and interoperability inhibit visibility, efficiency, and collaboration.
  3. Product recalls and regulatory compliance: Compliance with stringent regulatory requirements, such as quality standards and traceability, is essential in the healthcare supply chain. However, this can be incredibly daunting as standards are ever-evolving. Every year the S. Food and Drug Administration (FDA) receives a striking amount of suspected device-associated issues from medical device reports (MDRs). The FDA recalled at least 60 devices in 2022 alone. Compliance issues and consistent product recalls disrupt operations, impact patient safety, and erode trust in the supply chain.
  4. Lack of real-time information: Teams across healthcare production and distribution channels need real-time visibility into information like inventory levels, order statuses, and shipment tracking for effective management. However, businesses still struggle to obtain this information on demand and use it proactively to avoid inefficiencies and delays.
  5. Demand variability and forecasting: The pandemic highlighted the need for more comprehensive and agile demand forecasting models that help companies keep pace with medical supply, equipment, and pharmaceutical requests.



Building a More Resilient Healthcare Supply Chain

The pandemic revealed that the traditional approach to managing healthcare supply chains left organizations ill-prepared to handle rapid change and fluctuating supply and demand — forcing teams to reassess their systems. Research from Ernst & Young found that COVID-19 triggered 60% of executives to increase their supply chain’s strategic importance.

For improved adaptability and agility, leaders in the healthcare industry are now prioritizing strategies that:

  • Ensure diversified suppliers: Identifying and partnering with multiple suppliers for critical medical supplies helps businesses establish strategic stockpiles and develop contingency plans that mitigate risk. By reducing dependence on a single source, supply chain leaders can minimize the impact of disruptions as they come.
  • Enable real-time visibility, information sharing, and collaboration: Companies are implementing cloud-based supply chain technologies that support the generation and utilization of advanced and actionable analytics. These technologies require investments in systems that support integration, automation, and collaboration among key stakeholders. Robust supply chain management systems and digital cloud-based solutions ultimately empower flexibility and scalability.
  • Boost data-driven forecasting: Advanced analytics and predictive modeling support improved demand forecasting accuracy. These processes enable proactive planning and more efficient resource allocation that can meet variable demand while avoiding excess inventory or shortages.
  • Strengthen local production capabilities: Healthcare organizations can reduce reliance on particular regions or international supply chains by expanding domestic manufacturing facilities and establishing partnerships with local suppliers. These partnerships ensure more reliable and timely access to critical medical supplies.
  • Continuous process improvement: Teams must actively leverage opportunities to streamline workflows, eliminate bottlenecks, and enhance operational efficiency. It is integral to constantly evaluate solutions and strategies to create a healthier supply chain in the long term.

Looking to the Future of Healthcare Supply Chains

The COVID-19 pandemic accelerated pre-existing issues within the healthcare supply chain, making visibility, resilience, and digitization the priorities of many organizations. Why? Because when staying vigilant and fully operational during crises can mean life or death, improved strategies are required to anticipate emergencies, ensure uninterrupted supply flow, and swiftly adapt to changing demands.

Oracle Cloud applications and solutions, such as those from Cerner (acquired by Oracle in June 2022), empower healthcare organizations across the supply chain to foster healthier, more efficient, sustainable, and connected networks. Implementation techniques and strategies from Inspirage supplement these solutions, providing an end-to-end suite of business processes that augment your internal capabilities and improve talent deployment.

Ready to boost resilience, improve care, increase satisfaction among physicians, drive cost-efficiency, and better position your organization to succeed amid an increasingly complex healthcare supply chain landscape? Contact us to learn more about how Inspirage can support your team today.

Sarah Hart | Key Contributor

Sarah Hart is an experienced Marketing professional with a demonstrated history of working in the information technology and services industry. She is skilled in management, customer service, account management, sales, and marketing strategy. Her responsibilities include initiating, directing and executing B2B marketing initiatives.