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HOW HEALTHCARE SUPPLY CHAINS ADAPTED TO COVID-19 CHALLENGES

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The COVID-19 pandemic disrupted a lot of people’s lives, especially in healthcare. However, the impact on the industry’s supply chain was not something most people thought about. It happened fast, though. When nations began sending workers home and closed businesses to contain the COVID-19 outbreak, it caused an abrupt stop to many vital global supply chains. That impact was felt greatest on the healthcare industry, which was on the front line fighting the pandemic.

“It was kind of a shock to everybody, and it was felt with regards to PPE before anything else,” said Air Methods VP Supply Chain Jay Mahen.

The priority for healthcare providers was to ensure employees were safe and to provide them that crucial PPE. However, many quickly realized they did not have the supply levels necessary. Worse yet, usual suppliers were unable to provide the needed PPE or current allocations were not enough. Many hospitals had to ask employees to reuse what they could for as long as possible – often putting workers at risk of exposure.

It was crucial then to create relationships with new suppliers, and even ask employees for help. At Air Methods, the Supply Chain team put out a call to all teammates, asking if they knew of anyone providing PPE, or someone they had bought from the in the past, to help build a list of potential suppliers. They collated that information and began to build a portfolio of companies and do vendor evaluations. Many healthcare leaders did the same. According to a joint report from Becker’s Hospital Review and Cardinal Health, the pandemic caused the majority of supply chain and c-suite leaders to rethink supply chain partnerships and prompted them to work with new vendors or suppliers.

However, there were challenges using new suppliers and trusting that the materials provided were safe. This was especially important when some studies claimed that some products manufactured in India, Vietnam, and China were not technically certified to be used in a medical setting. So, the Air Methods Supply Chain team worked with the Safety department and enlisted local university researchers to help vet these suppliers and the products.

“We started sending some of these mask products to Colorado State University to be tested in their lab to see what the particle flowrate was – whether they met the filtering specifications required to be called an N95 mask. And the reality was they all did. So, regardless of what people thought, they actually did pass,” said Mahen.

While that problem seemed solved, there had also been reports that some masks had pinholes in them. So, the team had to adjust and be flexible once again. They hired workers to handle an additional quality evaluation and control of every item. Then, to ensure teammates that the materials they received were indeed safe, the Logistics team included all certification documents and results from the testing at Colorado State University with every package sent to the field.

Additionally, some larger, spread out healthcare systems, including Air Methods, found that they didn’t have systems in place to determine if they had the necessary PPE because departments had been ordering independently. So, they had to quickly create a centralized process.

For the Air Methods team, that meant having every air medical base return all their PPE to a single warehouse to be sorted and allocated internally. The team then created a mechanism offline, utilizing SmartSheets, to understand what was out there, who had it, how to access it, and then to redistribute where it was needed most. Once Air Methods had a good supply of trust-worthy masks and ensured a continuous supply, they were able to share with hospitals, solidifying and expanding on partnerships.

“If we identified hospitals that fell short – they didn’t have the PPE they needed, or they were reusing stuff over and over again – we were in a position of surplus, so we were able to provide PPE for our hospital system partners for a period of time,” explained Williams.

Air Methods sold the PPE at our cost to community EMS partners, fire departments, hospitals, and doctors offices that were in desperate need. Out teams also shared our supplier information with customers and pointed them in the direction of good suppliers that had reliable, high-quality material, after doing our own tests with Colorado State University.

Aside from the immediate shock of the PPE shortfall, there was also the question of what to do with existing vendors to ensure continuity of operations. Hospitals and healthcare systems could now be at risk if vendors were unable to provide materials due to shutdowns or quarantines. Once again, supply chain teams had to get creative.

For Air Methods, that meant working with existing connections and asking about discounts or rebates and adjusting payment terms (shifting to long-term pay to preserve cash) and ways to avoid escalation by taking on increases over a six-month period, for example. In some cases, this also meant spending money to protect the financial security down the road.

“It was wildly successful,” said Mahen. “The result was a million dollars in cash impact because of terms enhancements and then several million dollars in assistance in price reduction or escalation waits.”

After moving PPE ordering to a centralized process for oversight, supply chain teams faced yet another challenge: how to get it back to where it was needed most. This meant utilizing analytics and looking at patient numbers to see where the PPE was likely to be most needed.

The pandemic truly highlighted the importance of supply chains in an organization’s financial success, especially in healthcare, but it has also led to valuable improvement opportunities. The Air Methods Supply Chain team has been improving many processes with the learnings from the pandemic. For example, the previous decentralized model made it difficult to know what equipment and materials were at bases, and not knowing each bases’ vendors was impossible to manage, risky, and costly.

“We have identified a very focused need to centralize our clinical supply chain and build the infrastructure to support the new system,” said Mahen. “That’s a project we’re actively working now and hope to make significant progress by the end of the year.”

While the pandemic sent shockwaves across the world, particularly the global supply chain, the disruption has also served as a catalyst for opportunity. Our Supply Chain team learned how to act quickly and be flexible as challenges came their way. Additionally, it has helped create new relationships with vendors and suppliers we may not have otherwise embraced. It has also provided an opportunity to work with our hospitals and community partners in new ways. Most importantly, it has given the healthcare industry a chance to look at weaknesses in the global supply chain and find ways to improve and make create a more resilient system if – or when – the next pandemic hits.