Since COVID-19 began its spread through the American population, health care facilities with increased patient loads and new protocols have struggled with supply challenges. In the category of personal protective equipment (PPE), for instance, facilities seeing some rebounds from critical 2020 supply levels still encounter lingering issues with shortages today. Supply chain department leaders remain reliant on a somewhat tenuous global system, while adjusting budgets hit with massive PPE price increases topping out at 300% last year.1
Supply disruptions on many critical products in the pandemic illuminated the need for additional product options, alternative sources of supply and evolving strategies to counter future issues. Through aptitude, Vizient, along with its supplier community, continues to create and expand supply support to member hospitals and health systems to counterbalance dips in the availability of essential products.
Seeking stability in an unstable environment
Amidst both supply and pricing uncertainty, health care purchasing departments must continuously manage inventory levels and identify dependable supply channels. A five-year medical disposables global market growth forecast of $501.8 billion2 combined with residual pandemic forces leaves U.S. facilities still experiencing supply strain precipitated by stockpiling, transportation challenges, increases in protocols and manufacturers’ inability to keep up with demand.
“We’re continuing to see a critical member impact from COVID-19,” said Sarah Herrmann, lead program services manager for Vizient. “The pandemic’s strain on the supply chain magnified and accelerated the need for options for our membership.”
Expanding member access to Vizient’s Novaplus® private-label products through the aptitude online contracting platform provides one avenue to greater supply assurance, with better opportunities for stable pricing and dependable supply on many of the products facilities need the most. The growing program catalog already includes many large purchase categories of products, including hot and cold therapy items, patient positioners and transfer devices, disposable manual resuscitators, supraglottic airways and pressure infusion bags. In total, Novaplus® offers more than 30 essential categories through aptitude, with plans to add several more by the end of the year.
Dedicated supply sources and collaborative partnerships
Ensuring the steady flow of products when times get tough requires a multi-faceted strategy. Through Novaplus Enhanced Supply, participating suppliers agree to provide greater production capacity to meet member demand spikes due to critical events. This innovative contracting model combines diversified approaches to inventory, increased transparency into raw materials pedigree and other manufacturing factors, and a focus on domestic manufacturing and storage to result in improved flexibility and supply assurance for critical products. The diligent supplier vetting process and prenegotiated contracts ensure both a high level of product quality and member price protection.
“Being confident in the availability of critical medical supplies when they are needed has never been more important,” said Brandy Copeland, senior consulting director for aptitude. “At the same time, securing those supplies at a fair price remains crucial. The availability of Novaplus products in the aptitude platform helps members achieve both goals successfully.”
As an example, major disruptions in exam gloves accelerated a new agreement with Sri Trang USA for nitrile exams gloves produced in Thailand. Sri Trang USA is a vertically integrated manufacturer and is offering a direct-from manufacturer solution for our providers. For those still facing supply chain challenges, committing to monthly volumes with Sri Trang through Novaplus Enhanced Supply now creates greater supply assurance for this vital product category. Products on this agreement are in the process of being added to aptitude.
Advanced preparation as a strategic differentiator
Effective purchasing strategies can prepare health care facilities and systems for future challenges. Novaplus Enhances Supply contracts are based on four foundational principles to mitigate supply disruptions and demand surges and their impact on members. This contracting model increases trust, transparency and predictability with strategic supply partners who are committed to delivering value to members.
| • | Establish manufacturer relationships and purchasing agreements during non-peak times. Pre-negotiating contract terms and completing clinician review and acceptance processes prior to a disruption enables nimble adjustment when the need arises. |
| • | Ensure supply through diversification and incremental product availability. Achieving a balance between just-in-time and stockpile inventory, domestic and global sources, direct and distributed channels provides a cushion of not only product but also reaction time. |
| • | Improve visibility into raw materials, manufacturing and geographic factors. Having reliable insights into the logistics considerations that affect production reduces the impact of demand surges and supply disruptions. |
| • | Gain clearer forecast and consumption insights. Mutual data sharing and commitment benefits all sides of the supply equation. Enabling manufacturers to plan production more accurately supports ongoing production and viability, helping supply and demand to remain in balance. |
To date, Vizient has partnered with suppliers to develop Novaplus Enhanced Supply contracts for seven supply categories, helping to support members in their efforts to mitigate the impact of supply shortages on their organizations.
Moving forward with confidence
Supply challenges are not in the rearview mirror, and purchasing leaders continue to brace themselves for future turmoil. However, providers who take advantage of these collaborative agreements can not only stabilize and sustain their supply chain, but also increase resilience and create greater supply assurance – often more effectively than going to market on their own.
The speed with which the collective supply chain has moved – to create a stronger focus on critical items; to establish a path for facilities to access high quality, cost-effective products; to deploy efficient ways for hospitals to plan and prepare – is encouraging and inspiring. And it’s something we are proud to be a part of.
References
1 Society for Healthcare Organization Procurement Professionals. COVID PPD costs analysis. Updated April 2020. Accessed July 14, 2021. http://cdn.cnn.com/cnn/2020/images/04/16/shopp.covid.ppd.costs.analysis_.pdf
2 Global medical disposables market to reach $501.8 billion by 2026. Yahoo! Finance. Updated June 2021. Accessed July 14, 2021. https://finance.yahoo.com/news/ global-medical-disposables-market-reach-143000895.html