Healthcare Supply Chain Still Fragile A Year After COVID-19

April 05, 2021 - A year after the US declared COVID-19 a public health emergency, the healthcare supply chain is still struggling to meet increased demand for personal protective equipment (PPE) and other supplies, according to a new Premier analysis.

Most hospitals are finding greater availability of many types of PPE, including N95s and surgical masks, but the healthcare supply chain as a whole “remains fragile and constrained,” the analysis of the major group purchasing organization’s internal data suggested.

COVID-19 will have a long-term impact on the healthcare supply chain, Premier researchers confirmed.

The N95 market, for example, is still constrained but not in active shortage, researchers stated. Hospitals now have inventory of N95s and KN95s for 200 days of care as of March 1, 2021, compared to just 23 days during the COVID-19 surges in 2020.

Inventory days on hand also increased to 45 days from 30 days for surgical masks, 40 days from 20 days for isolation gowns, and 30 days from 15 days for exam gloves.

Hospitals and health systems are now better prepared to respond to COVID-19 threats compared to the early days of the pandemic when the healthcare supply chain was hit with massive increases in global PPE demand, which created an imbalance and drove up the prices of raw materials, and consequently, finished goods, Premier researchers explained.

The American Hospital Association (AHA) recently estimated that those price increases resulted in $2.4 billion in additional hospital costs for PPE from just March through June 2020.

But researchers attributed much of the newfound preparedness to providers implementing supply conservation measures and stockpiling efforts when COVID-19 cases were decreasing last year.

Hospital and health system purchases are also starting to level off compared to the pre-pandemic period.

For instance, the percent change in purchase order spend on N95s and KN95s decreased from a high of 14,302 percent in March 2020 versus March 2019 to 715 percent from March 2021 to March 2020.

Additionally, the percent change in purchase order spend is down to 93 percent from 1,310 percent for surgical masks and to 96 percent from 428 percent for isolation gowns.

However, the percent change in purchase order spend has increased from exam gloves, rising from 51 percent from March 2020 compared to March 2019 to 225 percent from March 2021 compared to March 2020.

The global demand for nitrile exam gloves still exceeds existing production capacity by about 215 billion units, or nearly 40 percent, Premier reported.

Additionally, raw material scarcity, port closures and delays, and a two-fold increase in glove usage since June 2020 have worsened ongoing exam glove shortages, researchers stated.

Supply chain issues with exam gloves is expected to persist into 2023, the experts predicted.

But healthcare providers can expect even more issues to come with the supply chain and how PPE products are sourced because of COVID-19.

“Across the board, Premier data shows that health system average days on hand have improved in March 2021 for masks, gowns and gloves. But as COVID-19 variants circulate and U.S. vaccination efforts continue, demand spikes alongside global manufacturing, labor and logistics issues (including the recent Suez Canal blockage) – PPE supply remains precarious,” Premier stated.

The company is leverage data to identify supplies most at risk of shortages and partnering with more US companies to bolster supply—a key strategy many group purchasing organizations are currently implementing to ensure hospitals have timely access to PPE in the event of more surges.

“With upwards of 80 percent of personal protective equipment (PPE) and raw materials for drugs made overseas, a future-forward supply chain management strategy requires diversifying production – both abroad and here at home – so that shortages become a thing of the past,” Premier stated in an official blog post earlier this year.

GHX is also predicting hospital use of technology to advance in light of the supply chain challenges brought on by the pandemic.* The organization predicted that 2021 will be the ear of the “post-modern ERP,” in which provider organizations will move to cloud-based enterprise resource planning (ERP) systems and invest in enterprise modernization to ensure supply chain data integrity.

Both Premier and GHX also predicted value-based care adoption and increasing provider consolidation to impact healthcare supply chain operations this year.

UPDATED 04/07/2021: Article has been updated to clarify that GHX is not a GPO.