2020 sure hasn’t turned out like I had hoped. I’m sure you feel the same. So many people talk about the new normal. At times I can’t even imagine a new normal; other times things seem clear. It’s fair to say things have changed when it comes to provider-supplier relationships.
In the past it was straightforward to evaluate a supplier and commence a relationship with the supplier. In fact, I bet there weren’t many times a hospital or IDN started doing business with a supplier they didn’t know. At least until March, when everything changed.
In the last few months, I’ve spoke to dozens of supply chain leaders and many (especially those in COVID hot spots) commented that vetting new PPE suppliers has become a full-time job. They also couldn’t believe the shear volume of scams attempted by companies or individuals masquerading as vendors. It has become clear that reliability has factored into the value equation for determining if a supplier will be engaged. Prior to COVID, reliability was assumed by the buyers.
Another supply chain leader I spoke to wondered out loud if some of the PPE shortages were caused by the lack of resources, or other issues within the supply chain. His system is based in a large Midwest city and he was able to buy a truckload of masks and gowns from Brooklyn, New York in mid-April, when COVID hit New York City so hard there were refrigerated trucks being used as makeshift morgues, and many New York hospitals reportedly didn’t have enough masks and gowns. This just didn’t make sense. It does make you wonder if the New York hospitals couldn’t afford them, or if they didn’t yet know how to buy through non-traditional channels.
It’s also been fascinating to see how distribution has handled the crisis. It’s often said the first rule of crisis management is communicate, communicate, communicate. I spoke to one distribution executive in early May who said his organization was working 18-hour days, yet revenues were down 40%. The bulk of his time was spent communicating and explaining to hospitals and IDNs why they were being allocated product based on previous usage.
I’ve always seen the value distribution gives to the supply chain. I believe many IDNs and hospitals see it more clearly now too.
Looking to the future, what changes will occur to buyer/seller relationships in the U.S. healthcare supply chain? I sure hope we will work closer together and not the opposite as a result of these stressed times.
Thanks for reading this issue of The Journal of Healthcare Contracting.