June 21, 2022  |  Lynn Schear

Creating a More Diverse Supply Chain in Healthcare

Today's world has had a significant impact on the healthcare supply chain. With greater efforts to create a more inclusive economy, healthcare buyers are looking to expand their supply chain with a more diverse set of owners and leaders.

Additionally, the effects of the pandemic have contributed to major supply chain disruptions, causing healthcare organizations to look to more agile suppliers for the essential medical items they need.

What is the healthcare supply chain?

The healthcare supply chain includes all the businesses, people and processes involved in moving healthcare–related products from manufacturers to end users.

How does the healthcare supply chain work? It's a very complex and fragmented system. Managing the supply chain involves:

• Contracting with suppliers
• Managing budgets and costs
• Estimating inventory needs
• Placing product orders
• Receiving and managing inventory, out–of–stock items and substitutions
• Transporting products to providers or patients

Supply chain issues in the healthcare industry

Many medical systems rely on "just–in–time" ordering, rather than keeping a large amount of inventory in stock. But as supply chain issues and shortages continue to increase, it's creating a scramble for substitutes – and a great deal of stress on healthcare providers.

The pandemic initially sparked a growing demand for medical supplies and equipment. Healthcare providers and hospital systems urgently needed more personal protective equipment (PPE), ventilators, medications and other items to respond to the growing influx of COVID–19 patients. Later on, vaccination efforts required more supplies like syringes and needles.

At the same time, many medical suppliers grappled with COVID–related closures or production slowdowns, both locally and globally. These medical supply chain issues translated to a decrease in the overall supply available.

The Food and Drug Administration maintains a lengthy list of current shortages, which includes a wide range of equipment and supplies such as gloves, surgical gowns, laboratory reagents, testing supplies, and ventilator– and dialysis–related items.

Jeff Jochims, chief operating officer at healthcare logistics firm Owens & Minor, recently described the current situation in a Forbes article. He explained that for commonly used items, the healthcare industry used to have a fill rate of 96% to 98%, meaning only a small percentage of orders went unfilled. Today, that fill rate percentage is estimated to be in the high 80s. Healthcare institutions that used to have 50 to 100 back–ordered items per day are now faced with 800 to 1,000 out–of–stock items. For some globally sourced components, the fill rate has been as low as 50% or below.

According to the Forbes article, today's shortages can be traced to component scarcities, backlogged ports, transportation glitches, and COVID–19 lockdowns in China. Many manufacturers and logistics companies have faced challenges with ill workers and increased costs. Issues with technology, reliability, timing, and fluctuations in customer and industry demand add to the complex situation.

The benefits of a diverse supply chain

Healthcare providers and health systems are increasingly focused on working with suppliers that align with their values and reflect the diverse communities they serve. According to Premier, supplier diversity includes businesses owned by minorities; women; lesbian, gay, bisexual and transgender people; veterans; service–disabled veterans; and small–business owners.

Ongoing medical supply chain challenges have prompted healthcare buyers to reevaluate their supplier rosters. Building a diverse set of suppliers means an organization doesn't have to rely completely on a restricted number of suppliers. In the event of a supply chain issue with one supplier, buyers are able to balance out a shortage by tapping into other suppliers.

Healthcare organizations have recognized that diverse suppliers can fill in gaps and typically have greater flexibility to make quick changes, due to their more agile size. These suppliers often develop strategic, collaborative relationships and uphold a strong commitment to customer service. Together, suppliers and buyers work to find innovative solutions to supply chain challenges.

Doing business with diverse suppliers can benefit healthcare organizations from a business and clinical perspective. This approach promotes inclusiveness, increases health equity, and improves patient outcomes. By supporting small and diverse businesses, health organizations contribute to a stronger local economy and establish valuable relationships within their communities.

Making an impact

Here's an example of what a commitment to diversity looks like: Saint Francis Hospital and Medical Center, located in Hartford, Connecticut, established a supplier diversity program to expand their supplier roster to include more minority–, woman–, veteran– and service–disabled veteran–owned small business enterprises. The program has also increased community engagement, offering educational workshops for diverse suppliers and fostering relationships between these suppliers and other New England–area healthcare organizations in order to help them grow their businesses.

Today, Saint Francis works with diverse suppliers across several industries, such as medical supplies, waste management and janitorial services. Though these suppliers are located across the United States, their makeup reflects the population of Hartford. This shift has not only generated overall cost savings, but the Saint Francis team has recognized the added value of suppliers who were willing to go "above and beyond" to meet their unique needs and solve supply chain challenges.

Diversity in our data

It's important to note that it's not just the suppliers and healthcare organizations that have a responsibility to help diversify the supply chain. Marketers in the healthcare industry also have an opportunity – an obligation – to expand diversity within the sales campaigns and sales initiatives surrounding the medical supply chain moving forward. To start building these impactful partnerships, it's crucial to connect with the right people, at the right time and place.

That's where the power of diverse data comes into play.

At MCH, we have the appropriate array of distinct healthcare contacts and prospects to reach more healthcare leaders, owners and industry influencers than ever. That means collecting and collating diversified datasets to help put all the various businesses, people and processes involved in the healthcare field in the best situation to receive diversified products and services.

Our ListBuilder tool helps marketers and suppliers find relevant job titles for decision–makers and diversity–focused healthcare leaders. And our diverse data is one of the many ways to help health leaders simplify and mend a very complex and fragmented supply chain. With the right data, suppliers and buyers can work better together – collaborating and developing different strategic initiatives – to find innovative solutions to help solve systematic supply chain challenges worldwide.