EXECUTIVE SUMMARY

As surgery centers brace for the emergence of influenza season and another possible spike in COVID-19 cases, one major focus should be on managing the supply chain in the event of further disruptions.

  • Shortages of personal protective equipment were a major reason why the nation paused elective surgeries earlier this year.
  • Stockpile mandates from local and state governments further stressed the supply chain.
  • Supply pressure led to wild price fluctuations, including N95 respirator masks selling for exorbitant prices.

The 2020-2021 winter period could be a particularly challenging time because of the ongoing COVID-19 pandemic and the emergence of influenza.

When the COVID-19 crisis first struck the United States, healthcare facilities faced unprecedented disruptions, including the suspension of elective surgeries, partly because of personal protective equipment (PPE) shortages nationwide. The healthcare industry is better prepared today to handle the crisis, but individual facilities still face obstacles.

“Even large hospital chains were unprepared for this type of disruption in the supply chain. It’s created an opportunity for people to become aware of where they get their [PPE] from and know what alternatives are available and how to access them,” says Gail Horvath, MSN, RN, CNOR, CRCST, senior patient safety analyst for ECRI.

Although the healthcare industry has become accustomed to supply chain disruptions, especially with pharmaceutical supplies, the COVID-19 pandemic has exacerbated the problem, says Bruce Hall, MD, PhD, MBA, FACS, vice president and chief quality officer for BJC HealthCare.

One of the top reasons elective surgeries were suspended nationwide in March and April was because the United States was not prepared with an adequate PPE supply, says Chaun Powell, MBA, group vice president of strategic supplier engagement for Premier Inc.

“We didn’t have adequate protection for patients and caregivers, [such as] N95s,” he explains. “If we had ample supply, my feeling is we probably could have continued with elective procedures. It wasn’t the only factor, but absolutely was one of the lead indicators.”

Use of N95 masks escalated rapidly during the pandemic, but the supply chain could not keep up with global demand. “Look at the overall global surge and demand [from the pandemic] to the demand you might see in response to [the terrorist attacks of] 9/11 or to a hurricane, and we are looking at a net large, global surge in demand,” Powell explains. “We were hit hard in the spring and summer with COVID, and we realize the potential impact in the fall with flu season. We didn’t take time to rectify the gaps in the global healthcare supply chain.”

For instance, many local and state governments mandated hospitals to stockpile PPE, which further stressed the supply chain. “You were taking masks out of circulation in order to put them on a shelf to meet future use expectation,” Powell says. “This means you have some caregivers competing to use those masks vs. those competing to put them on a shelf to meet the requirements put in place by local or state agencies.”

One of the stranger parts of this supply chain disruption was how unimaginable products suddenly were scarce. “Face masks are not difficult or expensive to produce, but because of interdependencies of different pieces of supply chains, things like face masks were threatened,” Hall explains. “It shocked us that organizations were buying products in larger quantities because they were afraid they’d never have another chance to buy more.”

The COVID-19 crisis revealed the fragility of the supply chain. “We never thought we’d have trouble getting disinfectant wipes,” Hall offers.

Supply pressures led to wild price fluctuations. For example, N95 masks, which sold for as little as $1 each before COVID-19, suddenly sold for six times the usual price.1 New York state paid more than four times the usual cost for gloves, 15 times the usual cost for masks, exorbitant prices for X-ray machines, and twice the usual rate for infusion pumps.2

Two driving factors were the industry’s reliance on efficient and just-in-time inventories and the lack of a cohesive national policy in handling the need for critical PPE and other items during the first COVID-19 surge.

“Organizations, due to financial constraints, have moved to virtual inventories or just-in-time inventories, and they keep minimal items on hand,” Horvath explains. “That works wonderfully in normal times, but not when you have supply chain disruption.”

The pandemic laid bare the true dependencies of the world’s interdependent supply chain. “Supply chains were disrupted at a really high level. Then, in the United States, there was not a unified federal response,” Hall observes. “What we had was 1,000 local responses and organizations battling with each other, and that made the market harder to deal with and harder to understand.”

In some cases, healthcare organizations competed with the federal government to procure necessary supplies. One physician executive reported how his hospital had to pay five times the usual cost for three-ply face masks and KN95 respirators, which are N95 respirators made in China. Before the hospital transferred payment, the FBI arrived to investigate the transaction.

Agents allowed the hospital to load the supplies, which staff disguised by putting in food service vehicles. Trucks were sent on different routes to prevent federal officials from seizing or redirecting the supplies.

“Only some quick calls leading to intervention by our congressional representative prevented its seizure,” the executive wrote. “When encountering the severe constraints that attend this pandemic, we must leave no stone unturned to give our healthcare teams and our patients a fighting chance. This is the unfortunate reality we face in the time of COVID-19.”3

A small medical equipment supplier was not so lucky. The supplier ordered 1 million N95 respirators, and tried to sell to his regular customers, including nursing homes. However, the FBI intervened, accusing the supplier of price gouging. The supplier countered those accusations, arguing he was selling those respirators at razor-thin margins. After weeks of waiting to distribute these supplies, FEMA told the supplier the agency was seizing the material.4

“Supply chains reaching into China were disrupted for both medical reasons and also because of political reasons,” Hall says. “Different governments changed rules about transportation and clearance of goods.”

The PPE supply improved as the pandemic continued through the summer and into the fall, says Scott Jackson, executive director of Henry Schein Surgical Solutions of Melville, NY.

“Manufacturers and distributors of PPE supplies have been working tirelessly to fill as much of the demand as possible, but some challenges still exist,” Jackson says. “However, the supply of PPE is less stressed today than it was during the peak COVID months.”

Face covering shortages have received plenty of attention, but there were other disruptions associated with IV fluids and a handful of drugs, including propofol. “Fortunately, these disruptions are mostly under control,” Jackson reports.

A virus resurgence could disrupt the supply chain again, so surgery centers should prepare accordingly. “We, within the supply chain, also need to learn from these disruptions and make continual improvements to help prevent future disruptions,” Jackson adds.

REFERENCES

  1. Root J, Najmabadi S. Someone says they have 2 million N95 masks for sale. The asking price is six times the usual cost. The Texas Tribune. March 31, 2020.
  2. DePillis L, Song L. In desperation, New York state pays up to 15 times the normal prices for medical equipment. ProPublica. April 2, 2020.
  3. Arnstein AW. In pursuit of PPE. N Engl J Med 2020;382:e46.
  4. Falzone D. ‘Like a bully at the lunchroom’: How the federal government took control of the PPE pipeline. Vanity Fair. May 6, 2020.