You don't want shortages. You don't want excess. What do you do?
We were struck by a few articles recently that blamed hospital and public PPE shortages on just-in-time or lean inventory practices. The basic idea being that, because facilities were stocking up just according to their needs, they didn't have what they needed when the demand was exceptional.
This suggestion betrays a fundamental misunderstanding of healthcare procurement. In healthcare, you have to consider expiration.
In our weekly five-minute web series Take 5, we leaned on our CEO (and resident movie star) Carl Natenstedt, who happens to have two decades of experience in healthcare's supply chain. Although, as he said, it's a procurement pro's "job to ... over-prepare" for events like a pandemic, you can't let supplies pile up, because they'll expire.
Case in point: FEMA's stockpile of masks that disintegrated as soon as they were retrieved from storage at the beginning of the coronavirus crisis.
So if you're over-preparing by ordering several times more product than you'd normally consume, what do you do to prevent that product from expiring before it can be used?
(This is a problem even during crises like the current COVID-19 pandemic, because a disease affects different areas at different rates, so as hospitalization rates drop in areas like the East Coast, where they rapidly stocked up on PPE and ventilators, what happens to those less-needed supplies?)
The answer is threefold:
1) Better Inventory Tracking
As Carl said in the latest Take 5 episode, when the current pandemic is passed, it's possible that tracking PPE in particular will become much more accurate and regular. But that doesn't seem likely. Which is a shame, because it's not any more difficult to keep a more accurate digital inventory. In fact, it's easier. (Double in fact, if you need to keep better track of your PPE levels, right now it's free.)
If you know what you have, you'll know what you need.
2) Better Communication
Healthcare is an unfortunately disorganized industry. Even within the same hospital system there might be - and probably are - several methods of inventory tracking and different standards around procurement. So, barring industry-wide standardization, we need to increase communication. When every facility is talking to every other, collaboration becomes possible. One hospital's much-needed supply might be - and probably is - another one's excess.
3) Collaboration & Reallocation
Once everyone's needs are understood, partnership becomes possible. This can start the easy way - within a network of hospitals or between similar-sized ASCs, for example - but it ought to become standard practice in the industry. (And selling excess for pennies on the dollar isn't the only option.)
We're big fans of achieving savings through reallocation around here. And, if you understand healthcare procurement, you probably do, too.