CBC- The Medical Supply Chain Explained

Nov 30, 2020

Credit Steve Burger / WNIN

Like any business, financial needs can drive decision making – but unlike any business – a hospital’s decision can actually be life or death.  Sarah Lemanczyk digs into who is deciding what.

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Upon being treated at a hospital, my first thought has never been: “I wonder if they’re using the ‘Mayo Model’ of collaborative purchasing with their Group Purchasing Organization to acquire this sterile gauze? But then, I am not either of these men:

"Rob Handfield and I’m the professor of supply chain management in the Poole College of Management at North Carolina State University."

"And I am professor Eugene Schneller in the Department of Supply chain management at Arizona State University."

LEMANCZYK
Think of these two as a CSI team – for health care supply chains. 

HANDFIELD
"Part of the problem is that most hospitals are really, really bad at managing supply chains – they’re not very good at it."

LEMANCZYK
And then COVID hit

HANDFIELD
"Kind of a perfect storm, isn’t it?"

SCHNELLER
"Think of it this way, that it’s a set of dominoes, okay?"

HANDFIELD
"Simultaneously several things happened.  Number one, the center of the epidemic was in Wuhan China, and Wuhan, coincidentally is the epicenter of the PPE manufacturing base for the world.  So right off the bat the supply was cut off."

LEMANCZYK
Domino number one:  Wuhan.  Hospitals and clinics would have to rely on what they had in their stockrooms –

SCHNELLER
"Didn’t want a lot of stuff on the shelves. The hospital wanted low unit-of measure,"

LEMANCZYK
Domino number two: “Just-In-Time” Inventory Management.

SCHNELLER
"And this is maybe another piece of your story, of why they were caught the way they were – I mean, the second largest cost to a hospital other than labor is supplies."

LEMANCZYK
So naturally

SCHNELLER
"Price became a huge issue."

HANDFIELD
"Everybody was looking to buy things cheap."

SCHNELLER
"So we went off-shore and we found lots of companies that could make things cheaper.  You could get masks and gowns and all those things sewn cheaper in China and Vietnam and Cambodia and Thailand."

HANDFIELD
"And when you’re price buying you don’t care where you buy it, you’re not really developing reliable channels or trusted relationships, you’re buying it wherever you can find it cheap."

LEMANCZYK
And there are a lot of things to buy – take – oh a don’t know -  a vaccine – you need the pharmaceutical compounds, and the syringe, but you also need the push-pull mechanism that makes it work, you need the needle, you need disinfectant and cotton to swab the area and then there’s this:

HANDFIELD
"It’s not like a – you know - a manufacturer sells directly to a hospital -there’s a bunch of people in the middle who can hoard things and make decisions as to who gets it. "

LEMANCZYK
Because everyone one of those middle folks – Group Purchasers, suppliers, brokers, they are there to buy and to sell and to make money.  And when you have that many hands in a cookie jar, you need a mom in the room. 

HANDFIELD
"It’s funny, I wrote a paper in 2010 about Federal Supply Chain Preparedness – this was around the time of H1N1 with all of these guidelines, I don’t think anybody read it."

LEMANCZYK
It was called:  "Planning for the Inevitable:  The Role of the Federal Supply Chain in Preparing for National Emergencies."

AMBI
"We had nothing.  We had empty cupboards, we had empty shelves.  Because it wasn’t put there by the last administration."


SELLMAN
"The stockpile just so you have a- a background –the stockpile is basically, what’s it was originally for was to address any C-B-R-N threats.   So Chemical, biological, radiological, nuclear threats. That’s what it’s funded to do. Pandemics?  It was not."


LEMANCZYK
Suzanne Sellman is a Public Affairs Specialist at the department of Health and Human Services and if there’s one thing she’d like us all to know - it is that the National Stockpile was never supposed to be part of the medical supply chain.  It was funded for 1-time events like:
 

SELLMAN
"Anthrax.  Or anything like that – we have the antidotes in the stockpile to push out for the short term – it’s not for something like a pandemic where – you know a pandemic could last months and months or even a year and to have that – And there’s just no way any place could have that much capability– and that much at hand - Think about it – there’s just no way."

SCHNELLER
"I mean, I was always the guy at a cocktail party and people would say “what do you do” I would say “health care supply chain” And their eyes would sort of roll over.  Um.  That’s changed a bit
If people didn’t hear the word “health care supply chain” before this pandemic, they sure have now."