How Does the Health Care Supply Chain Impact Care at Hospitals?

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A health care professional looks at a clipboard while reviewing inventory in a supply room.The health care supply chain can have a significant impact on job satisfaction and patient outcomes in a hospital. When it runs well, it is largely invisible. When it breaks down, it can result in poor quality of care and a high-stress work environment. The COVID-19 pandemic provides an extreme case in point, as it contributed to numerous supply chain issues, including shortages in manufacturing capacity and raw materials, as well as transportation and delivery delays.

Two years on, hospital administrators are managing supply chain challenges with renewed focus. Health care professionals can develop valuable supply chain management skills in a Master of Health Administration program that can help them ensure clinical staff have the resources they need to provide quality care.

The Health Care Supply Chain

First, what is the health care supply chain? It encompasses the complex global network of manufacturers, third-party distributors, and shipping companies that produce, sell, transport, and deliver health care supplies to the facilities that use them. Many hospitals and health care providers belong to group purchasing organizations (GPOs) that combine their purchasing power and handle complex supply chain logistics.

What Are Health Care Supplies?

Health care supplies include medical devices; pharmaceuticals; products such as gauze and hypodermic needles; masks, gloves, and other personal protective equipment (PPE); surgical tools; lab supplies; wheelchairs; and hundreds of other products. For the majority of these supplies, manufacturers must maintain sterile conditions; if they fail to do so, products are subject to recalls. Some products expire, which shortens their life cycle and limits how long they can be stockpiled before use.

How Are Supplies Transported?

Manufacturers ship products to distributors. Health care supplies may travel thousands of miles via container ships and then overland to distribution sites. GPOs are responsible for sourcing and purchasing products from manufacturers, negotiating prices and contracts, and delivering products to their members in a timely fashion.

What Are the Weak Links?

As illustrated by the pandemic, the health care supply chain is vulnerable in a number of areas. Potential risks include shortages in basic raw materials such as plastic, resins, cotton, and metals, which can decrease manufacturing capacity. Another potential problem is shipping congestion at busy ports, which leaves products to linger offshore for weeks or months, as occurred in early 2022. Manufacturing issues can also cause a supply chain breakdown. A shortage of baby formula resulted when Abbott Nutrition, a subsidiary of health care products giant Abbott, closed a manufacturing plant due to concerns over the powdered formula produced there.

Supply Chain Challenges and Their Impact

Supply chain challenges are more than just an inconvenience. They create a cascade of effects that impact patients and providers. They can delay care, increase health and financial risks to patients and clinical staff, and reduce the effectiveness of care. One of the responsibilities of hospital administrators is to manage and optimize the supply chain to mitigate these challenges and improve the quality and efficiency of their facility’s operations.

Supply Chain and Providers

A shortage of equipment or supplies can seriously compromise a provider’s ability to care for patients. The pandemic was a stark example of how a lack of PPE can increase the risk of infection among clinical staff. Many providers got sick, causing staffing shortages. These shortages increased workloads for remaining personnel, contributing to a high-stress professional environment and sometimes leading overworked staff to quit.

Although they play a huge role, shortages are not the only supply chain issue. In many hospitals, nurses have to sign out supplies and document requests, which can be a time-consuming process. This can slow down care delivery and lead to mistakes, such as not checking for recall or expiration dates. Some hospitals are turning to point-of-use systems, which streamline the process of accessing supplies.

Supply Chain and Patient Care

Medical supply shortages impact patient care in many ways, some obvious and some more subtle. A shortage of vaccines or antibiotics can have an immediate impact on patient care. During the pandemic, hospitals ran out of ventilator tubes and other medical equipment. The use of some experimental drugs to treat COVID-19 also caused a shortage of those drugs for patients who needed them for other conditions. Expired medical supplies were used as a way to ease some shortages, potentially risking patients’ health.

Health care supply chain challenges continue to impact patient care. During the height of the pandemic, hospitals and other providers delayed or canceled many tests, surgeries, and treatments in response to the lack of equipment and supplies, or reduced their facility’s capacity. Two years later, prescription drug shortages continue to impact patients, especially those who take medications for chronic conditions.

Supply Chain and Hospital Operating Costs

Medical supply expenses generally amount to around 20% of a hospital’s expenses, according to the American Hospital Association. During the pandemic, these costs surged, due to the increased demand for hospitalization and the rising cost of pharmaceuticals and raw materials. For intensive care units especially, per-patient medical supply expenses rose almost 32% above 2019 levels.

This pressure continues as COVID-19 infection rates rise and fall. Supply chain shortages can impact the financial outlook of health care providers. Hospital administrators are working to solve these issues as part of their risk-management initiatives.

Hospital Supply Chain Best Practices

Even before the pandemic shone a spotlight on supply chain vulnerabilities, health care and technology experts were working hard to shore up the process. Solving this complex issue requires a combination of resources, technology, and management changes. Some best practices for streamlining the health care supply chain include:


GPOs predate the pandemic and have long been part of the health care industry. They can reduce costs for hospitals and increase their negotiating power. GPOs can also help hospitals manage supply logistics, such as timely ordering, supply management, and data analysis, so administrators can better predict demand.

Data Analytics and Data Dashboards

Data analytics is making inroads into all aspects of health care. Administrators use data to forecast demand and make decisions regarding supply management and staffing levels. Artificial intelligence (AI) and machine learning applications can also help with data analytics. Tools such as data dashboards for resource planning allow for data visualizations that aid in decision-making.

Inventory Optimization

What is the right amount of inventory to have on hand? The answer to this question is complicated. Too little inventory and hospitals can’t react to a surge in demand. Too much, and costs arise from unused medical supplies, especially as those supplies expire. Ensuring that supplies are ordered, stored, and used efficiently is the goal of inventory optimization.

Point-of-Use Systems

The last link in the health care supply chain connects the supply closet and the patient. Some hospitals have eliminated cumbersome supply checkout and documentation processes and replaced them with point-of-use (POU) technology. These systems automate record-keeping tasks for supplies and let nurses and other clinicians focus on providing patient care. They can also boost the job satisfaction of clinical staff who no longer have to deal with lengthy supply forms.

Hospital Supply Chain Management — Make a Difference in Health Care

The pandemic revealed vulnerabilities in the nation’s health care supply chain. However, hospital administrators responded with data-driven solutions to navigate these complex challenges and strengthen their facility’s position for the future.

Students who aspire to make a difference in health care should explore how Regis College’s Master of Health Administration online program can prepare them for navigating the supply chain as a health care administrator. The program’s curriculum covers crucial concepts that contribute to an effective supply chain management strategy, such as costing and price setting, resource allocation, and strategic planning.

Learn how the program can provide you with the foundation for a rewarding career in health care administration.

Recommended Readings

Improving Patient Safety

The Future of Smart Hospitals and Improved Patient Experience

5 Principles for Improving Quality Management in Healthcare


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Association of American Medical Colleges, “Shortages from Syringes to Dye for Diagnostic Exams: How World Events Are Straining Everyday Health Care Supply”

Becker’s Hospital Review, “Supply Chain Issues Are Here to Stay: Health Leaders Share Predictions, Strategies”

Bloomberg, “How a Shortage of Plastic Is Impacting Health Care”

Circulation: Cardiovascular Quality and Outcomes, “Navigating Healthcare Supply Shortages During the COVID-19 Pandemic”

CNBC, “What Led to the U.S. Baby Formula Shortage — and How Officials Are Trying to Prevent It from Happening Again”

Community Hospital Corporation, “4 Best Practices for Hospital Supply Chain Management”

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Managed Healthcare Executive, “Why Building a Nurse-Centric Supply Chain Matters”

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WHIO, “More Than 100 Medications in Short Supply; How Pharmacies Are Being Impacted”