Gut Check | Thursday, June 18, 2020

In This Together: A Q&A With Supply Chain Professional Jean Sargent

The COVID-19 pandemic has brought a plethora of uncertainty and challenges to those working in healthcare across the world, including supply shortages. SGNA spoke with Jean Sargent, president of Sargent Healthcare Strategies, about how the pandemic has impacted the ability to attain proper supplies for healthcare professionals, ongoing issues for supply chain teams, opportunities for the future and more.

The COVID-19 pandemic has posed a tremendous issue for getting proper supplies to healthcare professionals. However, these issues persisted in the months leading up to COVID-19. What are some of the top challenges you’ve witnessed in the last year?

The challenges have been the same for several years. Many of the healthcare supplies are manufactured offshore or the raw material comes from outside the U.S. I’ve also witnessed collaborations between manufacturers, healthcare providers and distributors, which has occurred on a smaller scale in the past. Manufacturers are also being more upfront about possible disruptions in the supply chain due to lack of raw materials, plants being shut down and shipping issues. This transparency in communication needs to continue moving forward.     

It’s not been uncommon for institutions to transition to “just-in-time” deliveries for supplies, which in turn diminished or completely removed onsite backup inventory. Did we go too far in that direction?

As many of my peers and I are realizing, we moved too far toward “just-in-time,” which has demonstrated an impact on the current supply chain. The supply chain needs to move toward demand forecasting, which is when healthcare providers notify the manufacturers of upcoming needs. The manufacturers are then able to increase or decrease production based on anticipated needs.

Now, no one anticipated the COVID-19 pandemic and the effect on the healthcare supply chain, and therefore, the clinicians. We need to be more diligent in managing the supply chain back to the raw materials through to use on a patient. This is very complex and involves the manufacturers, distributors and healthcare organizations needing to be transparent in their access, or lack thereof, to raw materials, delivery issues, etc. This has led to back orders that will occur in the future.

Back orders are another piece of the puzzle that are perplexing and time consuming for all to address. I hope we are able to use the new practices to rid the reactive scramble to back orders, become proactive where clinicians are included in the event and have an opportunity to provide expertise into the solution.

One of the biggest discoveries for many in healthcare is realizing a reliance on “half a world away” for much of what we use regularly. Do you anticipate a shift in prioritizing from where and how we receive supplies?

We have been dealing with IV shortages for several years, which began with manufacturing issues and was exacerbated by the weather damage in Puerto Rico. That damage also affected many healthcare manufacturers, which generated a change in where products are manufactured. Manufacturers had to take their eggs out of that one basket to determine how and where to have capabilities for back up manufacturing. This is not as easy as retooling the plant. They also have to comply with FDA regulations in good manufacturing practices, and be surveyed by the FDA prior to making this change.

The cost of manufacturing in the U.S. is much higher than in other countries. We are constantly looking for best price to keep healthcare costs down. This becomes a cost benefit analysis to determine what the increase is and whether it is more appropriate to move the manufacturing to the U.S. As an example, a 4X4 costs $0.04 and we use millions. If that cost goes up to $0.06 (50%) at millions, it is a significant increase. A stent may cost $100 and may increase to $105 (5% increase). We use thousands, however; when there is no substitute, we will be more accepting of this increase.

What are the opportunities for the average endoscopy manager to partner with and influence the supply chain for their individual department?

Communication is always key. In the supply chain, we do not know the details of every department’s business. We look at periodic automatic replacement (PAR) levels and update based on requests or changes in usage. Yet, we don’t necessarily know what products are must-haves with no substitute and what can be substituted with a product on hand, versus ordering something not previously ordered. I suggest endoscopy managers take a copy of their inventory, determine what cannot be substituted and what can, and meet with their supply chain partner to review their needs.

Substitutes can be added to the Enterprise Resource Planning (ERP) — ordering, receiving and inventory — system for future reference. This will speed up the process to obtain substitute products without the buyer having to track you down for information. Any time there is a change in procedure, physicians leave, physicians join or guidelines change, communicate the needs with the supply chain partner to avoid lack of supplies, or expired supplies.

What moments of success or innovation have you experienced during this time? 

There are many successes, such as the distilleries making had sanitizer. Many non-healthcare manufacturers have seen the opportunity to make personal protective equipment (PPE) by transforming their assembly lines with minor changes. They have had to adhere to FDA manufacturing guidelines, obtain AAMI approval and possibly obtain an Emergency Use Authorization (EAU) issued by the FDA.

The supply chain partner must also vet these manufacturers prior to ordering product, to ensure they are in good standing with the government. The provider organizations are working together to ensure each other’s needs. One may have too much inventory of gloves and another might be in desperate need. The lines have been blurred and the understanding is we all need to work together to ensure clinicians have what is needed to take care of patients.   

We also saw SMS material (used to make gowns, table covers and sterilization wrap) was being used to make isolation gowns in order to fill the gap. This product comes from outside of the U.S. where it has had limited production. The effect on the downstream is unknown, other than there will likely be a time when products made with SMS material will be on back order. Speak with your supply chain to create a back-up plan, which may include the use of reusable procedure gowns. Ensure all procedural areas are involved to create a plan for the organization, not only your department.

One last note about PPE and potential backorders that all healthcare employees should understand: Due to the shortages and looking to non-healthcare manufacturers, where we paid $0.35 for an isolation gown, we are being quoted anywhere from $5.00 to $14.00 per gown. An organization that typically uses 100,000 gowns a month and is receiving 75% of their normal usage, adding in a spike of 50% becomes 75,000 gowns at a cost of $6.00. This equals an additional cost of $450,000 for one product a month. These expenses are why providers are looking at furloughing or laying off employees to offset these costs. All should be prudent in the appropriate use of PPE and supplies. The supply chain is spending a great deal of time seeking alternatives, planning for future back orders and working with manufacturers to understand any future gaps in the supply chain that need to be addressed now.

We are all in this together and should do our part in ensuring we have what you need to take care of our patients.