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Beyond recalls: The other types of supply-chain disruptions we must address in healthcare - by Guillermo Ramas

November 17, 2023

This article originally appeared on DOTmed Healthcare Business News.

In the past 15 years, there has been a surge in the number of medical device recalls and a staggering increase in the number of affected units.

At the same time, the process to manage medical supply recalls has not improved over time. In fact, it has become more inefficient, slow, and cumbersome.

But that’s only the tip of the iceberg when it comes to supply chain management challenges for hospitals. Recalls are difficult enough to manage from a provider perspective. Other supply chain disruptions can have just as big of an impact on a hospital’s ability to care for patients, and yet they’re going largely unaddressed from a transparency and technology standpoint. These disruptions include:

● Product shortages, which can arise for a number of reasons
● Backorders, due to production problems or shipping and distribution challenges
● SKU consolidations, in which manufacturers decide to concentrate production capabilities on a reduced number of products due to demand and profitability issues
● Market withdrawals, in which companies cease offering certain products or an entire catalog, sometimes regionally and sometimes across the board

Without a doubt, the healthcare supply chain is still suffering the effects of the COVID-19 pandemic, with a significant increase in all of the above disruptions when compared with pre-COVID days. Each and every one of these disruptions have consequences: In some cases, it might mean not being able to deliver proper care to a patient. In other cases, it can translate into canceled or rescheduled procedures. At the same time, to compensate for some of these issues, the sourcing team might decide to raise stock levels, which can lead to additional waste in a system that can simply bear no more.

The price of today’s insufficient, manual process

The current provider process for dealing with supply chain disruptions varies by organization and is almost always very manual in nature. For device recalls, manufacturers and distributors send out paper alerts. Providers then respond to these alerts and subsequently report back to the manufacturer or distributor, who in turn notify the FDA.

When it comes to other types of disruptions, the process is even less predictable and streamlined.

For example, backorders are typically communicated through EDI when the order from the hospital is processed. Now, once that happens, the process requires the sourcing team to start trying to figure out whether the backorder is an issue that will last two days, two weeks, two months—or more. Doing so requires phone calls, emails, and a lot of back and forth, as well as simultaneously figuring out if the hospital already has approved alternate products that the sourcing team can procure or if they need to identify some alternates and have Clinical Quality Value Analysis (CQVA) approve them.

Regarding shortages and other disruptions, it’s even more complicated, as it requires understanding the cause of the shortage and how long it might last. The sourcing team needs to troubleshoot multiple aspects of the disruption, depending on the type of issue. For example: Are there recommended conservation measures being provided by the manufacturer? Is a different size of the same product available? And if so, does it represent a good alternative? And in which cases?

Currently many sourcing teams are spending 50-60 percent of their time chasing down disruptions in their various forms. And, when it comes to backorders, sourcing teams are seeing a 10-fold increase in these incidents compared to prior to the pandemic.

How healthcare can solve the supply chain management crisis

Our industry needs a more efficient and transparent means of communication between suppliers and providers, not only in the event of product recalls, but also when it comes to the backorders, shortages and myriad other disruptions that have thrown the healthcare supply chain into turmoil in recent years. Such a system must account for the following.

● Electronic: Many members of hospital teams who aren’t in the trenches dealing with recalls and other disruptions are shocked to learn all communications aren’t electronic. But indeed, a lot of communication, especially with recalls, is still happening on paper. This needs to change.
● Complete: In addition to being electronic, supply chain disruption communications coming from suppliers need to be more transparent about causes and the path forward. It’s very different for a sourcing team to find out there is a backorder or shortage and have to start calling and emailing to find out details and options, as opposed to receiving an electronic communication that provides all the necessary information, including when the next expected update will be delivered.
● Consolidated: These electronic communications, in order to be useful to the providers, need to be delivered through a common source or platform that allows sourcing teams to manage all the disruptions in one place. In some cases, these teams are dealing with hundreds of disruptions. Today, their work is done via email, spreadsheets, SharePoint shared files, and other fragmented tools not designed specifically for the task. The process requires a lot of manual work and, in many cases, makes it very difficult to have a clear audit of what happened, what was done, and what was communicated.

● Real-Time, Two-Way Communications: A proper system for managing supply disruptions would enable a conversation between suppliers and providers, not just a broadcast. A lot of manufacturers have created online portals over the last couple years, where providers can log on to manage certain disruptions, like recalls. While this might sound like a step in the right direction, such portals only benefit the supplier, as the provider now has no way of keeping all of the information in a centralized repository that can be used to report to the FDA or the Joint Commission.

The healthcare supply chain has been bent to the point of breaking in recent years, and the sources of the strain run deeper than pandemic-related and residual disruptions. It has to do with how we communicate those disruptions, and the underlying burden it places on hospital teams. We can—and must—do better.

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