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Healthcare Supply Chain Resilience: The Right Response to a New Normal

November 30, 2021

By Michael DeLuca, EVP of Operations & Robert Pavlik, EVP of Business Development at Prodigo Solutions

COVID-19 forced all of us to reflect on the special challenges faced by healthcare. Regardless of the lens you choose, we know that the pandemic highlighted issues of equal access, created financial hardships, strained our workforce, and exacerbated long-standing operational deficits. As we moved through 2021 and the in-patient pressures on our system began to stabilize, the focus correctly shifted to the aforementioned operational concerns. Specifically, healthcare supply chains and the post-pandemic state of U.S. healthcare supply chain management (SCM).

While panic-driven hoarding of Personal Protection Equipment (PPE) and other high-demand consumables can be blamed for early-stage shocks to our SCM system, the problems ran far deeper. The lack of visibility to the counts, location, and status of COVID-19 care-critical assets revealed uncomfortable vulnerabilities and opportunities for improvements. Beyond external problems with suppliers, troubling internal inventory management deficits were also exposed.

Although the pandemic introduced us to what many considered "unique moments," supply chain decision processes are now changing to account for them, as failure to do so is no longer acceptable. In the name of supply chain resilience, sourcing decisions now incorporate risk assessments. Accordingly, domestic sources are now being re-evaluated. And because supply chain interruptions impacting manufacturing and distribution are expected to continue, healthcare SCM leaders are stepping-up their investigations into new technologies that can help. Not only as a hedge against future uncertainties, but to address current internal SCM weaknesses. The right SCM technologies are now seen as a way to  reduce risk, upskill staff, and drive non-traditional collaborations that accelerate operational maturity.

The past 18 months have been challenging across the whole of healthcare SCM, so not surprisingly, Prodigo’s technology has been put the test. As our top priority was to ensure our client-partners received the extra-behind-the-scenes support they needed, we were eyewitnesses to their struggles. Light was shed on the hurdles that clinical staff, physicians, and administration face every day when making the best decision, in the moment, for their specific organization.

Supply chain has traditionally been at the bottom of many minds but not anymore. The public eye is hyper-focused on supply chain, and even more so on the opinions of the leaders and professionals that drive it. As hospitals and their health systems started to stabilize from the pandemic spikes, Prodigo too experienced a heightened level of focus as SCM prioritized investing in their future. Interestingly, what we heard, and what we're continuing to hear from SCM leaders across the industry, is that investments in building supply chain resilience have emerged a top priority. Prodigo can confirm that the controls we provide at the point of requisition are regarded as key enablers.

ERP's shift from on-premise deployments to the cloud has also emerged this year as a related business driver. Why? Because Prodigo's integrations to ERPs are healthcare-specific and led by professionals with deep industry acumen. The post-pandemic appetite for implementation risks is much lower, so healthcare-dedicated solutions are winning.

Case in point, because Prodigo’s data model is built for healthcare and not based on the direct and indirect spend constructs that are typical of cross-industry products, our integrations are far more straightforward. Abstracting data models that are not relevant to healthcare creates integration complexities and tradeoffs. At a minimum, it limits the ability to satisfy custom requirements, which is a frequent challenge faced by cross-industry solutions.

By contrast, Prodigo's ERP integrations are virtually standard, as our data model embeds clinical context. Bills of Materials (BOMs) are presented as "pick lists," as we know that requisitions, procedures, and inventory management processes are logically linked. A deep understanding of item relationships and functional equivalents is also required, as given current fulfillment challenges, substitutions must be accommodated. The "healthcare logic" embedded in our data model dramatically simplifies the ERP integration process and results in far more streamlined implementations. Our clients and ERP partners are now keener to this benefit than ever before.

Keep in mind that COVID‐19 proved unique because it simultaneously affected both supply and demand. And ongoing supply disruptions are expected to continue based on limits in raw materials and delays in distribution. As a result, the stockpiling of goods for sale at inflated prices seems inevitable. The expectation is that healthcare supply chain management practices will ascend to a new normal where, among other changes, comprehensive risk assessments become integral to planning and decision-making.

Migrating SCM processes to the cloud is now considered a smart way to manage such uncertainty and improve business continuity. However, without the right data, the move is ineffective. As a foundational SCM data-provider whose solutions provide real time visibility at the point of service, Prodigo is exceptionally well-positioned. The benefits of our solutions are also well-timed because the clinical use-cases we support and the insights that we provide allow SCM specialists to shape supply and demand as required.

Supply chain resilience is the goal. It lessens the impact of external disruptions and naturally sorts existing internal deficits. Driving resilience not only means less reactive supply management decisions, but better overall preparedness and more predictable outcomes. No one expects a return to the old normal. Rather, the expectation is that healthcare supply chain management practices will ascend to a new normal where, among other changes, comprehensive risk assessments are integral to building the resilience that underpins maturing SCM operations.

If COVID-19 is ultimately regarded as the event that served to loosen the reigns on historically lagging investments in supply chain resilience and operational maturity, then that's at least one good outcome to consider. Everyone will benefit, most notably, patients. As a path forward, expert advice should be sought, but only if the recommendations provided can be supported by healthcare references and successfully operationalized healthcare examples. Healthcare supply chain isn’t an easy egg to crack, so surround yourself with technology leaders and industry experts.

Additional Readings

Data Driven: 2021 Notions of a Healthcare Supply Chain Data Expert

New Year, New Normal, and New Clients – Prodigo’s 2021 Highlights

About Prodigo Solutions

Prodigo Solutions is a healthcare technology company that improves provider’s financial control and reduces supply chain cost. Prodigo Solutions’ technology was purpose-built for healthcare by supply chain experts to deliver tangible results across a continuum of care. Customers who use our systems purchase more than $20 billion annually for the more than 600 hospitals they operate.