Unprecedented strain on America’s healthcare systems is set to worsen.
LOri Lee spends a lot of time trying to keep Connecticut’s largest health system stocked with medical supplies, from IV lines to gauze bandages. It’s a job that has become increasingly difficult as unprecedented rumbles have tied the supply chain in knots.
“There are probably hundreds of breakdowns of items we order that don’t arrive,” says Lee, senior vice president of clinical operations at Yale New Haven Health, which has an annual revenue of 5.6 billion dollars and hospitals in Bridgeport and Greenwich. She says the list of shortages includes basic items such as IV tubes and catheters, which are in constant use in hospitals.
With just-in-time orders, the healthcare system relies on distributors to quickly deliver supplies rather than hospitals keeping them in stock. “A lot of these things on a daily basis don’t show up,” Lee says. She used her team of doctors and nurses to research substitutes, which requires training nurses on the slight differences in how they might function. “It’s not really like Coke and Pepsi,” Lee says. “It’s a massive, massive effort every day that we really struggle with.”
The U.S. healthcare system is facing supply shortages that dwarf the problems experienced at the start of the Covid-19 pandemic, when necessary personal protective equipment, such as masks and gowns, were nearly impossible to find. Back then, shortages may have been more urgent, but today’s issues include a much wider range of equipment. They can be attributed to component shortages, pending ports, transportation issues and lockdowns in China to combat the spread of Covid-19. Much of the attention to the supply chain crisis has focused on automakers and electronics companies facing factory closures in manufacturing hubs such as Shenzhen and Shanghai, but the effects of hard-to-find medical supplies and devices are also severe, impacting medical offices and operating rooms across the United States
The list of rare items is long. It includes latex and vinyl exam gloves, surgical gowns, lab reagents, sample collection test supplies, saline flush syringes and dialysis-related products, according to the Food and Drug. United States administration.
Owens & Minor, a healthcare logistics company with annual revenue of $8.5 billion, says 45% of the items it handles are in some way limited by supply. They include hypodermic needles and flushing syringes, blood collection tubes, surgical tape, surgical gloves, suction canisters, intravenous solutions, dialysis concentrates, a variety of wound care products, sharps containers, catheters and adult and pediatric nutritional products.
“It’s huge,” says Jeff Jochims, COO of Owens & Minor Health Products and Services.
Medline, another major medical supply company, says hospitals, surgery centers, nursing homes and health care providers are all feeling the slump. “Due to industry-wide supply disruptions, storage has become critical to healthcare resilience,” Medline Executive Vice President Jim Boyle said via email. To strengthen its own supply chains, the company has opened five new distribution centers with two more expected to be completed this year, including one in Richmond Hill, Georgia, near the Port of Savannah.
Some shortages are directly linked to the pandemic. Mass vaccination efforts, for example, have strained supplies of syringes and needles. Others are due to closures in China. These shutdowns have yet to fully work their way into the supply chain for medical products and supplies, meaning limited supplies could worsen this summer, especially if the shutdowns are prolonged.
“We have the wrong products in the wrong place with the wrong shipment,” says Abe Eshkenazi, chief executive of the Association for Supply Chain Management. “It’s not a disturbance, it’s a series of disturbances.”
For often-used and stocked items needed to treat patients, the industry as a whole had fill rates of 96% to 98%, meaning only a very small percentage of orders remained outstanding. Today, says Jochims, the industry fill rate for these items is in the 80s. “Previously, hospitals were processing 50 to 100 out-of-stock items per day,” he says. “There are many institutions that are now processing between 800 and 1,000 backorders per day.”
It’s not just about medical supplies. There are similar longstanding issues with pharmaceuticals, many of which rely on key ingredients from Asia. Anesthesia drugs, antibiotics, painkillers, nutritional and electrolyte products and chemotherapy agents are often in short supply, according to a study by the Mayo Foundation for Medical Education and Research. The growing number of electronic devices in healthcare has left items such as defibrillators and imaging devices vulnerable to the same supply shocks as consumer electronics.
Even for items made in the United States, global supply chains have wreaked havoc as components are difficult to obtain from Asia and elsewhere. Owens & Minor’s Jochims says that for incoming items he sometimes sees fill rates of 50% or less, although that has picked up a bit. “We deal with the same things as our customers,” he says.
“It’s a massive, massive effort every day that we really struggle with.”
Making N95 masks, for example, requires small metal clips to be molded onto the bridge of the wearer’s nose. Syringe production requires both plastic resin (which has been in short supply, with prices rising) to mold the syringe body and needle tips for injection. “If you can’t get the plastic resin to mold a syringe barrel, then you have a shortage,” says Jochims. “If you can’t get the needle tips, then you have no use for your syringe even if you can get the plastic. It’s a very complex array of challenges that we face today.
Closures in China have a lag of 45 to 90 days before their effects appear in the United States, so Jochims estimates that supply chain challenges will continue until 2023. Meanwhile, costs are rising for components, for transportation, and even for warehouses, where traditional suppliers now face competition from Amazon and other e-commerce players, which could lead to long-term inflation.
While for decades manufacturers of medical devices and supplies have sought the cheapest location for their factories to cut costs, that calculus is starting to change. “There’s been this insane push to see the risks over the costs,” says Aidan Madigan-Curtis, partner at Eclipse Ventures.
Mexico, which is already a major manufacturer of medical devices and pharmaceuticals, has seen increased demand from companies seeking production there, says Omar Troncoso, a Mexico City-based partner at the consulting firm. Kearney management. “We have vendors with 50 RFPs awaiting response,” he says. “I imagine 48 will not receive a response.”
What is the solution ? In 2020, the National Academies of Sciences, Engineering, and Medicine examined the causes of medical product shortages and ways to improve medical supply chains, both in normal times and in emergencies. of public health. Its 364-page report, Building Resilience into the Nation’s Medical Product Supply Chains, released earlier this year, called on the FDA to publicly track supply, quality, volume and capacity information and establish a database. public; that health systems include penalties for lack of supply in contracts; and for the federal government to optimize inventory storage to address shortages of medical products, among others.
But neither of these solutions will happen in the short term, and in the meantime, hospitals and health systems are trying to cope. “This is a national problem,” says Lee of Yale New Haven Health. When the PPE shortages were resolved, “everyone was happy, including us. What people don’t realize is that now he’s moved on to all these other categories and it’s almost harder to deal with. You can’t store everything.