Supply chain resilience has become a key concept in healthcare today. This is because the pandemic (and the post-pandemic) realities of securing necessary supplies have proven to be problematic. More and more often, electrophysiology lab managers are seeing backorders or limited availability for key devices used in electrophysiology procedures.
Such disruptions are devastating to the EP lab: If a key mapping catheter is missing, the procedure either has to be cancelled, or the physician has to use a different device, possibly a device s/he is not as familiar with. In summary, sources of supply chain vulnerability in US healthcare today include:
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- Broken international supply channels: Shipments from, for example China, are delayed.
- Ports backed up: Devices may have arrived in the port but have not made it to the healthcare facility.
- Supply shortage: A limited number of devices are available.
- Backorders: Devices are unavailable for an unspecified amount of time.
- Component shortages: Domestic manufacturers cannot deliver because they are missing key components, such as microchips.
- Product recalls: Manufacturers recall sold products due to an identified problem.
How did healthcare end up in such a terrible spot? And how can the situation be repaired? For years, healthcare facilities have been under cost pressure, as suppliers have increased prices and introduced new technologies, often of proprietary designs that do not allow switching to other suppliers’ products. Efforts to improve delivery models through staff reductions and cost efficiency changes have proven to be insufficient to offset these. Many healthcare facilities have been successful in reducing costs in the supply chain, but it has come at a significant cost in terms of the sustainability and resilience of the supply chain.
Most efficient supply chains are not built to be resilient; they have been built to minimize costs. According to Douglas Hannah in Harvard Business Review, “The search for supply chain efficiencies has made our health care system leaner and more global. But this efficiency has come at the cost of resilience, with hospitals and health care providers now dependent on fragile global supply chains vulnerable to disruptions from ‘black swan’ events like Covid-19.”
In April 2022, Deloitte published an article that illustrates this: “Covid-19 exposed how the focus on minimizing costs can reduce supply chain resilience and make it difficult to effectively respond to and recover from crises.” There is a trade-off between cost reduction and supply chain resilience – a trade-off that shows itself in times of disruption, such as the pandemic: For decades, healthcare facilities have driven costs down through aggressive price negotiations and by, for example, awarding single-source contracts or accepting volume commitments to achieve a lower price. Under a single-source contract, if the supplier experiences supply issues or has to recall a device, the healthcare facility is left with no options to substitute. This is why the more resilient electrophysiology labs have pursued multi-source relations – and accepted slightly higher prices.
Ponomarov and Holcomb (2009) define supply chain resilience as the adaptive capability of the supply chain to prepare for unexpected events, respond to disruptions, and recover from them by maintaining continuity of operations at the desired level of connectedness and control over structure and function.
Preparing, responding and recovering are key areas to address in building supply chain resilience in healthcare. In preparing for supply chain disruptions, establishing multi-sourcing supply agreements is critical, as is in general ensuring that procurement balances pricing considerations with supply chain vulnerability. Responding to disruptions such as recalls or backorders means planning for how primary products can be replaced or how supplies can be supplemented to enable a stable level of operations. Finally, recovery from healthcare supply chain disruptions need to focus on product reliability, safety and consistency – product replacements or operational changes cannot compromise patient safety and should not force clinicians to use products they are not familiar with or that may be perceived as inferior.
The tradeoff between costs and resilience can be circumvented with circular economy solutions such as single-use device reprocessing, where you do not have to sacrifice resilience to drive costs down. Single-use device reprocessing builds resilience and addresses the prepare-respond-recover components in several ways:
Prepare:
- Production of reprocessed devices is local, so supply chain disruptions stemming from pandemics, war, and other forces that tend to shut down or create delays in international supply chains have no impact on supplies.
- The reprocessor can act as a secondary (or primary) source next to the original manufacturer. Having a reprocessing contract in place can delay or eliminate the impact of disruptions.
Respond:
- During recalls, backorder or other product unavailability situations, reprocessed products can act as replacements for new products. These products are functionally equivalent to the devices they replace.
Recover:
- Using reprocessed products allows the healthcare facility to recover completely without disruption of operational processes, as replacement products can be available almost immediately.
- Similarly, using reprocessed products enables the clinician to continue using the same devices, even when the original ones are under backorder or otherwise unavailable.
- Finally, performance reliability and patient safety are uncompromised when using reprocessed products – reprocessed products need to be cleared by FDA, and complaint statistics indicate the reprocessed products actually fail less frequently than new ones.
The impact of reprocessing as a means to respond to supply chain disruptions is not merely theoretical. Over the past few weeks, both two of the dominant suppliers in the electrophysiology space have reported device unavailability events in U.S. hospitals, and reprocessors have been able to supply reprocessed devices to solve the situation for the healthcare facilities.
This is important, as it underscores the role of reprocessing as a resilience strategy. Importantly, reprocessing enables healthcare facilities to continue operations as usual, not just to fix the situation with an emergency solution, such as changing brands or altering workflow.
Unfortunately, manufacturer approaches to reprocessing’s role as a resilience measure remains problematic, which should be discussed at the level of the Healthcare Industry Resilience Collaborative and the government: Manufacturers have put roadblocks (e.g., contractual requirements and designed non-interchangeability of products) in place for healthcare facilities that aim to expand their supply chain resilience. They have denied the value of the reprocessed product in spite of FDA oversight, literally shutting down procedures that could have been completed by using reprocessed devices, even though it means a loss in profitability for the healthcare facility and the cancellation of medically necessary procedures.
Designing devices for re-use remains a more resilient solution for supply disruption in healthcare devices. But until manufacturers consistently pursue this strategy, single-use device reprocessing can provide the benefits associated with a circular economy solution.
Photo: sorbetto, Getty Images
