To better understand how health systems are advancing the supply function amid the COVID-19 pandemic, in fall 2020 we surveyed 39 large US health providers, primarily nonprofits ranging in patient population and geography.
Their responses offer insights into how to reinvent the health supply chain. Several themes emerged in the areas of strategy, integrated planning, procurement, performance and risk management, and efficiency:
- Supply chain is increasingly seen as a strategic function of health systems, likely as a result of the COVID-19 experience; nevertheless, there is still room for improvement. Only 23% of the hospital systems in the US report that an integrated supply chain strategy has been developed and aligned with the corporate strategy.
- Many participants do not have a holistic integrated planning program with real-time data forecasting. Ninety-five percent of US health systems surveyed want to increase demand planning. More than half do not use any system for planning.
- Increased costs came at a time when health systems were cash-strapped and margins had been decimated. Most participant are considering a shift in their relationships and risk management with respect to group purchasing organizations (GPOs), distributors and suppliers.
- Health care systems and payers are shifting to an outcome-based model. More than 50% of the survey respondents tie patient outcomes to supply chain initiatives.
- There is a definite need for more efficiency in the supply chain, which can be supported through automation and other technology. More than 74% of the survey respondents have implemented lean continuous improvement programs, but few have seen gains worth the effort.