Speaker 1: Shortage of supplies was one of the most crippling problems hospitals face when COVID hit. Two supply chain experts weigh in on lessons learned and ways we should rethink supply chain strategy for the future.

Speaker 2: The first is ARMS vendor vetting program where we initially have vetted over the course of the last year 1,000 or more non-traditional suppliers out there and have vetted and approved 40%, a little over 40% of these vendors. Basically what that's done is that's narrowed the field down and we've eliminated 60% of the questionable actors out there so that the supply chain professionals, healthcare organizations could focus on the remaining 40% and of course follow their own policies and procedures for final approval or formal approval of these vendors.

Speaker 3: I think right out of the gate, strong support from the C-suite here at Penn State Health really made a difference. My IT CIO came in and created dashboards overnight to help track and visualize where the inventory is. It was a great showing of support and greatly appreciated by myself and the team. The second probably key piece and resource was the amazing people. The amazing people in both our operation as well as our community. We're fortunate that here in Hershey, Pennsylvania, we have the Hershey Foods company. As we were getting overrun with supplies in our small warehouse space, I was able to reach out to my counterpart in the Hershey Foods organization and ask for some space. They graciously overnight made almost 40,000 square feet available to us to use. They took the Hershey Chocolate World supply chain staff and they staffed it for us. We had one organization meet weekly with us and they opened up their books and showed us exactly where their supply chain was. They gave us a preview of things that would become short and we were able to mitigate and we were far better off working together than we were before COVID in silos. I think we created this fragile supply chain that we're in today. We all played our part. We thought that we needed to get the cheapest products that we could find, carry no inventory, and outsource our strategy. That came as a big punch in the gut when the crisis hit and we realized we didn't have the infrastructure to really support what needed to happen. I think the first call to action is don't let that $0.77 N95 mask take your system out. It's really not worth it. Invest the time and effort so that you maintain a strategic supply chain and not a cost-cutting transactional supply chain. That strategic supply chain is going to enable you to better serve the community that you're entrusted to serve in their hour of need. We need visibility in the supply chain. It needs a seat at the C-suite table and it's a strategic partner.

Speaker 2: We need to look at how do we diversify our current manufacturing environment? How do we bring manufacturing back here to the U.S.? How do we create idle capacity? Idle capacity was a huge Achilles heel during the course of the COVID pandemic. We didn't have idle capacity to tap. We also need to be looking at how do we develop a clinically acceptable product substitute list at a global level versus 5,500 hospitals going out and developing their own clinically acceptable product substitute list. Another approach, bringing it closer to home at the healthcare organization level, is to look at our own vendor diversification strategies within our vendor portfolios. We need to look at the vendors we're sourcing from, the manufacturers they source from, and the raw material component manufacturers that the manufacturers source from. We need to also look at country of origin in each of these levels. The reason it's so important to have diversification of our manufacturing locations is Hurricane Maria is probably the most recent and best example, where you had the hurricane take out a huge percentage of pharmaceutical and IV solution manufacturing, and therefore we had a critical shortage of IV solutions here in the U.S. So diversification and moving away from a global concentration will absolutely help us to address that challenge and address that danger.

Speaker 3: I think there's a couple things I would probably say are lessons learned or observations. The first is we found that we really aren't as standardized as we thought we were, that there are plenty of opportunities now going through this where we could streamline our inventory and streamline the products that we think we need. Probably the other key area is we realized very quickly that a lot of this bureaucracy and forms that we all created to manage product selection and new product introductions really did not help us. We can be far more nimble once we figure out what are the key decision points for us to make so that we can accelerate time to value.

Speaker 2: The other thing that we need to really think about here is if you look at Fortune 500 supply chains, there are a number of hospitals that have supply chains that are of similar size in revenue and dollar values. Look at the talent that it takes to run those Fortune 500 supply chains, and that's the talent you'll need to run the supply chains in the healthcare setting. So there needs to be investment in talent. There needs to be investment in systems and in data analytics. All of this information to help us effectively manage the healthcare supply chain, bring about high efficiencies, and bring about the savings that we need to see, again, beyond just product pricing.

Speaker 3: I would also ask you, are you investing on your number two expense at the same level you're investing in your other areas? If you haven't made a strategic decision to invest in talent in supply chain, I would urge you to reconsider that. The community hospitals that are the backbone of this country and the backbone of the communities that we serve are dependent on a high quality strategic supply chain. We did learn that we could collaborate differently through this example of COVID. I think in the traditional model, finance would set financial targets and throw them against the administration and supply chain to try and hit those. What we've learned is, with more targeted objectives, where we collaborate closely together, we can actually accelerate value and make decisions quicker.

Speaker 2: We have got to educate in a post-COVID environment, product use, and in the proper care environment that those products should be used. We need to be looking at conservation strategies. We need to consider reuse of products, extended use of products. We need to look at decontamination of products. We need to look at the use of reusable products to augment our current disposable product inventory. We need to bring data forward to our clinicians and our physician partners so that they can review the data and be comfortable with these various strategies so that during the course of the next pandemic, the course of the next natural disaster, there's a comfort level and an acceptance, and we can go ahead and implement these strategies much more effectively than we did during the current COVID crisis. We also need to look at supply chain cost as more than just a line item in the overall health care organization budget. We need to look at it as more than just let's take 10% out of that dollar amount. We need to look at supply chain as being a much more strategic partner in conversations and initiatives that face the health care organization, initiatives such as population health management, addressing the social determinants of health, health equity, all of these initiatives that are really a part of a value-based care environment. Supply chain can bring a number of resources to the table and a number of ideas to the table and really needs that voice and needs that seat with the other leaders within that health care organization.