Symptoms and Root Causes of Supply Chain Resilience

In April, Innovative Health was among the first suppliers in the US to earn a “transparency badge” from Healthcare Industry Resilience Collaborative (HIRC). HIRC is an organization of hospitals and suppliers – lead by Mayo Clinic, Cleveland Clinic, Northwestern, Stanford, and others – that has come together to promote resilience and transparency in the healthcare supply chain. In the Fall, Innovative Health was the first supplier to fully comply with HIRC’s resilience standards. This demonstrates our continued commitment to a collaborative and resilient healthcare supply chain.

To achieve HIRC’s Transparency badge, suppliers must become “fully engaged” with three standards:

• BCM Assessment: A framework for providers to assess suppliers’ formal preparedness (designed to promote awareness of, and investment in, resiliency maturity)
• Mapping & Monitoring: A framework to balance geographic transparency and confidentiality (designed to promote proactive awareness and collaborative response)
• Resiliency Scorecard: A framework for providers to assess the resiliency of suppliers (designed to promote and enhance partnership and resiliency in trading relationships)

In addition to Innovative Health, HIRC’s supplier membership includes nearly 80 leading medical supply providers, suppliers, and industry partners. To date, only eight companies have achieved HIRC’s transparency badge.

As I have previously written, I believe the HIRC standards and the transparency badge represent an absolute minimum level of resilience that suppliers should demonstrate to even be considered for contracting. They address the symptoms of a vulnerable healthcare supply chain, but HIRC and the healthcare industry should go further and address the root causes of supply chain vulnerability, and among these specifically a MedTech industry whose technology design and marketing activities daily cause backorders and cancelled procedures.

...the HIRC standards and the transparency badge represent an absolute minimum level of resilience that suppliers should demonstrate to even be considered for contracting.

There are two specific MedTech practices that work directly against supply chain resilience and arguably have a bigger impact than the lack of transparency suppliers’ suppliers and business continuity management plans:

1. More and more devices are designed to be single-use – in some cases replacing devices that have been reusable for decades. While it makes sense that syringes, for example, are single-use, I would argue that designing and labeling cables used in the electrophysiology lab as single-use is not only unnecessary, but a threat to the resilience of the supply chain, the cost structure of the lab, and the environmental sustainability of healthcare. In terms of resilience, when single-use devices go on back-order, procedures get cancelled. When reusable or reprocessable devices go on back-order, the supplies do not immediately get affected.
   
2. MedTech marketing and sales aggressively push the newest, most expensive devices to hospitals, while doing everything they can to prevent re-use, for example through reprocessing. In some labs, manufacturer reps will remove devices after a procedure and take them with them, threaten to withdraw support from procedures where reprocessed devices are used, force the labs to buy new (although reprocessed devices are available) through volume contracts, etc. In other cases, “environmental programs” are put in place to recycle devices – thereby preventing re-use, blocking the much larger carbon impact reduction from reprocessing – and creating vulnerabilities for the supply chain. 

MedTech marketing and sales aggressively push the newest, most expensive devices to hospitals...

HIRC should address these fundamental practices outside the logistical and contractual world of the supply chain when defining what resilience means. The dialogue in healthcare about technology, healthcare costs, and resilience is changing. HIRC should lead this discussion and put the guard rails in place for a progressive path to healthcare supply chain resilience.