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The Supply Chain Crisis is Hurting Small Practices—Here’s How to Overcome It

by scceu0243

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The global supply chain crisis continues to plague every industry—but in healthcare, the consequences can be life-threatening.

This crisis isn’t slowing down, so we wanted to find the best information to help you face it. We surveyed 154 doctors, nurses, and office administrators[*] about how the healthcare supply chain crisis is affecting practices and patients, and how providers are managing inventory.

Below, we break down our findings and provide data-backed advice to help your practice better manage this crisis.

We also asked Olivia Montgomery–PMP and associate principal analyst with Software Advice, specializing in supply chain management—for her expert insights and to provide practical and effective solutions for providers.

Key findings

  • 84% of providers say they or their patients have been directly impacted by the supply chain crisis, with the most common consequence being disruption of patient access to prescribed medications (55%).
  • Most providers use passive methods to manage their supplies: 53% only reorder when supplies are low, 66% don’t have a supply chain specialist on staff to manage inventory, and nearly half (42%) don’t even know if they use procurement software at their practice.
  • While 61% of providers have accepted these supply chain issues as the new normal, a quarter say they feel pessimistic and discouraged about supply chain challenges.

 

We’ll cover:

Patient access to medications is being cut off

One purpose for our survey is to fully understand the stakes—what exactly are doctors and patients dealing with due to current logistical issues?

We asked survey respondents whether they or their patients have been affected by the supply chain crisis; 84% said yes.

But how are providers and patients being impacted? The top response: Patients are having trouble accessing prescribed medications.

While drug shortages aren’t a new phenomenon, the extent of this one is extreme. Over 80% of active drug ingredients are produced overseas, which makes obtaining them a complicated endeavor[1]. According to the FDA, there are currently 124 open shortages of medically necessary drugs in the U.S.[2]



Patients access to medication has been the biggest consequence of the healthcare supply chain crisis

The second most-selected response to this question is that providers are being forced to treat contagious patients without the necessary personal protective equipment (PPE), which is especially galling as we meet yet another wave of Omicron cases.

And finally, a quarter of providers say they have had to actually turn patients away due to a lack of medical products and treatment materials. So not only are we dealing with a shortage of qualified healthcare workers, patients are also facing limited access to actual medical care.

In a more detailed look at the supplies practices are struggling to obtain, drugs and PPE were again the top contenders. Nearly half said general care materials are in short supply, and a third cited cleaning supplies.



Drugs and PPE have been the most difficult supplies for healthcare providers to acquire in the past year

There’s also a concerning shortage in refillable materials for certain biometric devices and other wearable technologies. We expect this issue to float to the top of some prioritization lists as providers look more and more to telehealth and remote patient monitoring tools to manage treatment of increased patient loads.

Telemedicine has been a huge boon to doctors in this time of remote patient care, but a lack of peripheral tools that enable this care delivery method could prove to be a stumbling block for telemedicine in the future.

Doctors haven’t lost hope, most feel this is simply the new normal

Speaking of the future, we wanted to find out how providers are feeling about that very thing as it relates to the supply chain crisis.

It turns out that most have accepted the current state of affairs as the new normal, and their current priority is finding ways to adapt and better manage their medical supplies.



Most providers see supply chain disruptions as the new normal

This is a good outlook to have, as all signs point to even more logistical disruptions in the future.

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We all enjoyed nearly unfettered global trade for the past 70 years, but the fact is clear this is no longer the case. From increasingly tense trade agreements with non-Western countries to climate change affecting manufacturing and logistics, the supply networks today’s businesses have designed their inventory management strategies around are too stressed to support them.

Businesses that continue to expect a steady supply of cheap and ever-ready products from overseas will be left without inventory as they deal with long wait times—if the items ever arrive.

Olivia Montgomery, PMP

All this to say, there’s simply no point in waiting for things to go back to what they were before. This is the new normal, and if you’re waiting to take action, you’re hurting yourself and your patients.

But it’s reasonable to wonder just what concrete steps you can take to better manage your supplies and this new reality. Fear not, we have data-driven recommendations for your consideration.

4 ways doctors are managing supply chain disruption right now, and tips for improving yours

This survey reveals that many practices aren’t actually doing very much to maintain their own supplies. Our bottom-line recommendation? Take an active role in managing this part of your business.

Here are four ways to do that.

1. Add a supply chain specialist to your staff

Only a third of providers in our survey have any kind of supply chain expert or specialist on staff to manage supplies and ordering. That number is too low.



Only a third of practices have a supply chain specialist on staff

If you’re among the 66% that lack a designated employee to manage this part of your business, our first recommendation is to change that.

If you have the budget to add a role to your team for this position, great! You’ll be looking for someone with the background and qualifications to be an inventory manager. Their responsibilities will include things like establishing and nurturing vendor contracts, supervising supply levels, placing new orders, and other general inventory management duties.

If you don’t have the budget for an entirely new position, that’s not the end of the world. You probably already have someone on staff who—by default—does a lot of this stuff already.

Maybe an office manager who keeps an eye on printer ink and pens, or a nurse who alerts you when tongue depressors are dwindling. Speak to these employees about assuming a more defined list of inventory management-related responsibilities (and remember to adjust their compensation to reflect the additional duties if they accept).

2. Stop waiting for supplies to get low before reordering

Here’s another tip worth shouting from the rooftops. In our survey, the most common procurement model for practices is what’s called just-in-time ordering, which means that a new order isn’t placed until existing stock gets low.

This is not a good way to do it.



Over half of practices only reorder stock when their supplies are low

With the new delays in delivery times, and the fact that the future of the global supply chain is getting harder and harder to predict, this is simply not a viable way to manage inventory in 2022. If you wait to reorder necessary equipment or supplies, chances are good that you’ll completely run out by the time the new shipment arrives.

That might not be the worst thing in the world for a lot of businesses, but it will have a negative impact on quality of care for yours.

Instead, move toward a just-in-case procurement model where you regularly order supplies—regardless of current stock—in sufficient quantities to stockpile supplies depending on how critical they are to your practice.

3. Join a group purchasing organization to increase your buying power

While the majority of practices in our survey simply monitor their own supplies and manage ordering as-needed, about a third say they are part of a group purchasing organization.

This number should be higher.



Ordering stock as-needed is the most common procurement method for small practices

Group purchasing organizations (GPOs) are coalitions that help healthcare providers access more buying power and authority when dealing with vendors.

By working as a group to purchase supplies, GPO members can take advantage of established vendor contracts, savings from bulk orders, and more reliable deliveries. GPO representatives also assume the responsibilities for things like vendor relationship management, finding the best deals and prices, and maintaining compliance with state and federal regulations.

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According to Software Advice’s SMB Retail Supply Chain Survey conducted in March 2022, 91% of small businesses report that larger corporations have an advantage over them in inventory procurement[**]. But suppliers and vendors are also feeling the effects of supply chain disruptions and are therefore prioritizing the larger orders received.

This is tough for a small business, as it’s just the reality that a small practice doesn’t need and likely can’t afford to buy everything in bulk, multiple times a year. In fact, nearly half (46%) of small businesses have been dropped by at least one vendor for reasons such as placing order sizes suppliers consider to be too small to be worth the effort.

Small businesses banding together in a GPO gives them a fighting chance to compete with larger corporations for inventory procurement.

Olivia Montgomery, PMP

There are a lot of GPOs out there, but any healthcare provider can join most of them at little to no cost. A quick Google search will help you get started.

4. Leverage technology to make order management easier

If handing the reins to an outside party isn’t your style, you have other options. Namely, investing in the right software tools to manage your inventory, which is something that—once again—not enough practices are doing.



Nearly half of healthcare provider don't even know if they're using procurement software

It’s surprising enough that only one in five practices use software to manage ordering, but the fact that 42% don’t even know what tools they have in place for this task is downright alarming.

Software is a magic bullet for taking over operational tasks, and you can find sophisticated functionality for both procurement and supply chain management if you know where to look.

To start, check out inventory management platforms that include features for vendor management, ordering, inventory management, and reporting. To make things even easier for you, you can use this link and filter results for medical practices, the size of your practice, and how much you want to spend.

Above all else, remember the bottom line: Be active, not passive

The first and biggest step is to move from passive inventory management to active inventory management.

You’re free to follow all four of these recommendations, or pick and choose which ones work best for you, but the biggest takeaway should be that you have to act.

For the sake of your patients, the quality of care you can provide, and your own practice’s wellbeing, taking action is the most important thing you can do right now to position yourself for supply chain success, regardless of what the future brings.

Survey methodologies

[*] Software Advice conducted the 2022 Healthcare Business Survey in August, 2022 of 154 healthcare providers to learn about business trends and struggles that are affecting the operation of their practices right now. We used screeners to ensure we were speaking to providers who would have relevant knowledge and experience with the topics addressed, including limiting job titles to doctors, nurses, and office administrators.

[**] Software Advice conducted the SMB Retail Supply Chain Survey in March 2022 of 305 U.S-based supply chain/inventory management managers in retail small/midsize businesses. Respondents were screened for size of business (1 – 1,000 employees), involvement in procurement and inventory management at their retail company (very to extremely involved), and that they had experienced at least minimal supply chain delays in the past 12 months.

Sources

  1. Fact Sheet: FDA at a Glance, FDA.gov
  2. FDA Drug Shortages, FDA.gov

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