According to an old military saying, armchair generals study strategy, but true warfighters study logistics. The coronavirus pandemic has shown the truth of that in the healthcare sector: for all our strategic planning, and all the contingencies we’ve tried to anticipate, the key questions have been simple. How much equipment do we have available, and how do we get it to where it’s most needed?
In answering those questions, we’ve run up against systemic shortcomings — most troublingly the federal government’s failure to properly maintain, and rapidly and equitably distribute, adequate stockpiles of medical supplies, ventilators, and PPE. Many state leaders did better, scrambling to obtain necessary equipment via the private market, but few were able to provide a steady supply of vital equipment in the vast quantities needed by overburdened hospitals.
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So how did healthcare providers cope? Well, in some cases, tragically, they didn’t. Too many doctors and nurses had to reuse or ration equipment and widely circulated images of frontline workers improvising gowns from trash bags sparked rightful outrage. But despite that, we actually weathered the storm in much better shape than many had feared — because when the going got tough, our hospitals learned to share.
How Healthcare Met the Moment
Despite its worthy mission, the healthcare industry isn’t known for cooperation. Hospitals are competitors; in New York City, for instance, the five largest health systems collectively spend $149 million a year on advertising, mostly aimed at winning patients from one another. But in the coronavirus era, a deeper truth has emerged: we’re all in the business of saving lives, and sometimes that means putting rivalries aside and pooling our resources.
Lacking support from elsewhere, hospitals have forged cooperative agreements to share supplies. New York hospitals with unused ventilators began sending their surplus stock to locations lacking adequate equipment. In Texas, the statewide hospital association created an online portal to help member hospitals share personal protective equipment – just one of many examples of online “swap meets” where participants can barter among each other for supplies.
Elsewhere, hospitals in the same networks or regions have pledged to collectively battle Covid-19, sharing resources to bolster the capabilities of each facility and expand testing and treatment options into rural areas that would otherwise have remained under-served. In the Northeast — the country’s hardest-hit region — seven states have joined a regional supply chain designed to seamlessly move supplies from low- to high-need areas without delays or red tape.
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Alyssa Rapp Alyssa Rapp is the CEO of Surgical Solutions, a health care services company owned by Sterling Partners. She is also a lecturer in management at Stanford Graduate School of Business and the managing partner at AJR Ventures.
In the face of an immense challenge, hospitals rose to meet the moment and pulled together to save an incalculable number of lives. The big question now is whether we’ll take anything forward from that experience, or just revert to old ways of doing business as the first flush of the coronavirus pandemic fades.
A New Paradigm for Healthcare Resources
Certainly, there’s reason to hope that hospitals will move forward from this crisis with a new, more cooperative spirit. Such an approach would help build equity into the healthcare system: instead of competing merely on access to equipment, we’d ensure everyone got the treatment they needed, leaving us open to compete on more important factors such as procedural innovations and the qualifications of our caregivers.
By pooling select healthcare resources, we could also collectively buy supplies in bulk, lowering costs for everyone and minimizing our exposure to supply chain disruptions. That’s especially important right now, with hospitals facing billions of dollars in lost revenues and unanticipated costs as a result of the pandemic. According to data from Definitive Healthcare, the top 25 hospitals with the highest total medical and surgical supply costs spent a total of over $14.2 billion in 2018. Hospitals that find ways to pool even a relatively small proportion of their equipment could reap significant financial savings.
How would such a system look in practice? The foundation would be regional or network-level resource-sharing agreements similar to the ad-hoc deals struck in response to Covid-19. Healthcare facilities could start by collaborating to establish shared reserves of critical supplies such as PPE and ventilators, and move on to pooling other resources — such as specialized supplies or equipment — for which demand can be unpredictable.
Hospitals can also leverage the telemedicine technologies that have proven so important during the Covid-19 pandemic to improve access to knowledge and medical expertise. Doctors can now treat patients remotely, so areas where practitioners are overburdened could ease the strain by allowing doctors from other facilities to manage some patient interactions remotely.
Third-party providers have a role to play, too. Many hospitals already outsource specialized technical roles, such as OR set-up and sterilization, to outside organizations that can serve multiple facilities — essentially an efficient, market-driven approach to lowering costs and sharing resources across multiple hospitals.
Political leaders must help to spur collaboration and resource-sharing, too. State and federal governments should learn from their mistakes during the coronavirus crisis, and lead an ongoing effort to manage resources more fairly and effectively. Both the current administration and the CDC have announced programs to facilitate resources sharing, and such efforts could be a first step towards creating a national resource-sharing infrastructure robust enough to respond to equipment shortages anywhere in the country.
The bottom line is that while we’ve long trusted the invisible hand of the market to ensure that we deliver the best possible medical care, the Covid-19 crisis has shown that sometimes we still need to band together in order to get the best results. The case is clear for more cooperation in healthcare. If we’ve learned one thing from the Covid-19 pandemic, it’s that at the end of the day, we are all in this together.
Photo: manop1984, Getty Images
Alyssa Rapp is the CEO of Surgical Solutions, a health care services company owned by Sterling Partners. She is also a lecturer in management at Stanford Graduate School of Business and the managing partner at AJR Ventures.
