Industry Expertise · September 23, 2021

Managing Inflation and the Medical Supply Chain During COVID-19

The COVID-19 pandemic disrupted global supply chains in nearly all sectors. The medical supply chain took a particularly bad hit, as demand for personal protective equipment, or PPE, and other equipment soared far beyond supply. In fact, between March 2019 and March 2020, providers saw a surge in spending—428% for isolation gowns, 1,310% for surgical masks, and 14,302% for N95s and KN95s. Those numbers have multiplied further since.

Shipping delays, production stoppages in countries with low vaccination rates and an increase in the price of raw materials further exacerbate stresses up and down the supply chain. The resulting inflation affects even health providers with strong manufacturing partnerships.

While healthcare supply chain management has improved in some ways since 2020, this inflation combined with the Delta variant continues to cause or stress supply issues for healthcare providers. Fortunately, smart adaptations and strategies have helped them cope in the short term and prepare for the long term.


Short-term strategies to manage supplies

Hospitals and medical providers facing the Delta surge need to cautiously manage their PPE. Some strategies recommended from government agencies include:

  • Reviewing your PPE burn rate: Even if you replenished your PPE stockpile, it could be strained by Delta and future variants. Use tools like the calculator from the Centers for Disease Control and Prevention, or CDC, to estimate how long it will last and plan next steps.
  • Working with government agencies for PPE access: State and city governments have had time to replenish their PPE stockpiles and could be a source of materials during the Delta crisis. The federal Office of the Assistant Secretary for Preparedness and Response is also working to maintain supplies in areas the hardest hit by COVID-19. Contact your local health department for information on how your organization can resupply.
  • Extending the life of existing PPE: Review the CDC guidelines for optimizing PPE supplies. They provide tips for how to increase the long-term use of N95s, gowns and respirators.

Long-term strategies to strengthen supply chain

For the long-term, providers and hospital supply chain experts must start thinking of how they can prevent the disruptions we've seen over the past couple of years:

  • Diversify your supply base: If all your materials come from one supplier, or all your suppliers are in the same country, that's a seriously weak link in the chain, including for potential supply chain fraud. Consider expanding to other producers, especially domestic ones, to avoid shipping delays. Some manufacturers and providers are also investing in technology solutions, like 3D printing, too.
  • Add redundancy to your chain: While keeping costs low is a top priority for your medical supply chain, the massive spike in healthcare inflation over the past years shows that this strategy isn't risk-free. Consider adding more redundancy to your supplies by holding more reserves and preparing backup contracts. That investment could pay for itself should further supply chain disruptions and inflation continue in 2022.
  • Track supply issues up the chain: Supply chain issues can seem like they happen overnight, but it's possible to predict them earlier. For example, if the price of rubber is spiking, it's likely that gowns and gloves will go up, too. This could be a way to stock up ahead of the price jump.
  • Use supply chain technology for tracking: Supply chain software can help you track inventory, automate orders and link with more suppliers to avoid interruptions. There are software programs available specifically designed for healthcare.

As you plan your supply chain management strategies, consider speaking with your business banker. They can help you understand the potential impact and your financing options for dealing with another potential hit from the Delta variant.

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