Supply chain shortages to persist through 2024, Premier says

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Health systems are bracing for more supply chain disruptions over the next year as they expect more device and drug manufacturers to discontinue unprofitable products.

Nearly half of 233 hospital and health system employees surveyed had to cancel or reschedule procedures at least quarterly in 2022 due to product shortages, according to a poll conducted from late March to  mid-April by Premier, a consulting and group purchasing organization. Health systems have been managing shortages for hundreds of products, ranging from intra-aortic balloon pumps to chemotherapy drugs.

The number of shortages has grown in recent months amid staffing constraints, geopolitical tension and as more pharmaceutical and device manufacturers stop producing widely used generic drugs to prioritize more profitable items. In response, providers plan to work with more suppliers to source vital drugs, add key performance indicators in their contracts with suppliers and boost on-site inventories, according to the survey.

Here are five takeaways from the poll.

1. Supply chain challenges will remain the same or worsen.

Half of respondents said they expect supply chain issues to remain status quo while about a quarter expect the situation to worsen. Hospital and health system supply chain managers, operations leaders and clinicians pointed to backorders of critical items, raw material shortages and labor disruptions, concerns over Chinese and Russian geopolitical tensions, and the financial pressures smaller manufacturers and generic producers face.

“Geopolitical tensions have the potential to cause a significant risk to the supply chain,” said David Hargraves, senior vice president of supply chain at Premier. “China is still a significant source for finished medical devices and pharmaceutical products and raw materials.”

2. Shortages strain operations.

More than 75% of respondents said their teams were spending at least 10 hours per week mitigating supply chain shortages. One respondent said its hospital or health system took a $1 million annual revenue hit in 2022 stemming from canceled or rescheduled procedures as products ran short.

3. The most frequent shortages spanned product lines.

In the past year, the items most often in short supply were tourniquet cuffs and surgical equipment, contrast media used in imaging, local anesthetics, asthma treatments, antibiotics, intravenous fluids and catheters.

4. Supply monitoring technology is lacking.

Only 43% of respondents said their organization has the necessary technology to effectively manage their supply chain. That stems, in part, from limitations in providers’ electronic resource platforms.

5. Providers are stocking up.

More than 55% of hospital and health systems plan to increase on-site inventories for critical supplies in 2023. However, stockpiling too much of certain products can exacerbate shortages and increase waste.

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