Having the right supplies at the right time is critical for medical providers. When shortages occur, potential consequences may include missed procedures, burdensome costs, and an increased chance of errors arising from the use of unfamiliar products, to name just a few.
Taking steps to mitigate risk is especially important in today’s climate of increased globalization and supply-chain complexity. This can strengthen resilience and help protect patients in any size organization.
The Real-World Impacts of Supply-Chain Risks
Supply chains within a health system can be very complex. Stakeholders may range from forecasters, procurement specialists, and inventory managers to medical staff, doctors, and patients. A disruption at any point in the supply chain, or an issue that affects product availability, can affect everyone downstream.
Real-world events show the serious impacts: PPE shortages during COVID-19, IV fluid shortages after 2024’s Hurricane Helene, and destabilizing tariff policies under the current U.S. administration. Other potential risks can involve:
- Quality issues
- ESG considerations (e.g., sustainable sourcing)
- Plant closures
- Pharmaceutical drug shortages
- Surges in demand
Inventory management challenges
Enterprise Risk Management: A Proactive Framework
Large medical organizations and smaller practices alike can benefit from processes to proactively address supply-chain challenges. This may include enterprise risk management, which can be used to manage threats organization-wide. Steps can include:
- Identifying areas of concern. For example, what are you worried about on a day-to-day basis? How does this affect your ability to meet your goals?
- Evaluating risks on severity and frequency. How likely is the risk to happen (e.g., tariff-driven risks, vendor price increases, supplier issues), and how bad would it be if it happened?
- Prioritizing top risks. This can include documenting risks on a centralized register and assigning people to be responsible for them.
- Implementing an action plan and providing regular updates. This can help teams monitor effectiveness and make adjustments, if needed.
Assessing Vendor Vulnerabilities
In procuring products and supplies, vendor selection can play a pivotal role. For example, do you rely on just one vendor? If so, what would happen if they had a problem? If you have multiple vendors, are they spread out across different geographies to protect against environmental emergencies or other threats? Are they reliable? What is their capacity to respond to disruptions?
Risk Mitigation Strategies
As part of an organization’s action plan, certain mitigation strategies can help manage supply fluctuations and shortages:
- Supplier (vendor) diversification. While having just one vendor can sometimes provide certain advantages like cost savings, working with multiple vendors or considering local sourcing may provide more flexibility if there is a disruption.
- Alternative sourcing plans. Establishing clear communication with potential suppliers before an emergency can ensure there’s someone to call in the event of a problem. Also, resources such as the American Society of Health-System Pharmacists (ASHP) Drug Shortages List can provide sourcing information in a shortage.
- Compliance and regulatory monitoring. Monitoring changing market dynamics and implementing strategies such as tariff caps in contracts can help you manage certain risks.
- Inventory buffers and management. Considering extra inventory and monitoring changes to reimbursement, inventory costs, etc., may help ensure the availability of key supplies. Technology and data can help organizations stay on track. Processes like weekly or biweekly inventory counts, or setting minimum stock levels, can also be effective.
- Managing usage and educating staff. How organizations use supplies matters. For example, in the face of IV fluid shortages, one group found that they were wasting fluids. As a result, they implemented new protocols to be more efficient.
Documentation in the EHR and Communication with Patients
When supply shortages occur, documentation in the electronic health record is critical. For example, say a physician prescribes an approved alternative to a patient in a drug shortage. Does their organization have protocols for this? Are care decisions and patient interactions clearly documented in the EHR? Documentation guidelines include:
- Follow protocols
- Clearly state the shortage
- Specify the substitute (or the decision not to use a substitute)
- Provide clinical justification
- Document communication
- Monitor patient outcomes
Communicating clearly and openly with patients helps maintain trust and shows them that their care team is doing everything possible to keep them safe.
Scaling Strategies to Fit Your Organization
Organizations and practices of all sizes can adapt supply-chain strategies to their capabilities. For example, larger groups may use sophisticated software and dedicated risk management teams, whereas smaller practices may consider an annual meeting with senior leaders and scheduled updates to develop action plans and monitor progress.
Expect the Unexpected
In today’s fast-moving healthcare climate, waiting until a shortage occurs can mean waiting until it’s too late.
Organizations that take proactive steps can bring greater resilience to their day-to-day operations and care delivery. Getting input from different functional teams and operational leaders is important to address diverse perspectives. In the end, planning and regular monitoring can save time, lower costs, and improve the quality of care.