Business and Supply Continuity in Times of Crisis 

Environmental disasters and pandemics are an absolute staple of Hollywood entertainment. In any given year, you are guaranteed to see at least one movie that explores environmental or epidemiological apocalypse. Part of the fun of these movies is the thrill in witnessing what can happen when things spiral dramatically out of control. Events cascade, dominoes fall, and the audience holds its collective breath, hoping for a miracle.

Unfortunately, the threat posed by natural disasters, pandemics or other crises isn’t a Hollywood fiction but is very real and raises considerable issues for healthcare leadership. Data from the World Economic Forum’s 2018 Global Risks Report highlights the increasing frequency of weather-related disasters in the United States between 1985-2002.

Source: The Global Risks Report 2018, World Economic ForumSource: The Global Risks Report 2018, World Economic Forum

As extreme weather events become the norm, infectious disease outbreaks may also increase due to the link between climate change and adaptive disease vectors. The chart below reflects how, globally, the costs associated with pandemic influenza are approaching the costs associated with climate change.

Source: Outbreak Readiness and Business Impact, 2019. World Economic Forum

Source: Outbreak Readiness and Business Impact, 2019. World Economic Forum

These risks, among many others, have the potential to disrupt supply chains as well as patient care. For executives across the healthcare value chain, hoping for a miracle is not the most effective business and supply continuity strategy.

SMI’s Next Initiative Team

To begin exploring ways to support supply networks in times of crisis, SMI is convening its next initiative team on business and supply continuity. Based on member past experience during crises, the issues facing the supply chain are manifold. One in particular that causes enormous concern is the practice of over-ordering or the hoarding of emergency supplies.

In times of crisis, the natural tendency is to ensure that your organization has all that it needs to be able to respond effectively. This tendency can stress the supply chains of manufacturers and distributors who are not equipped to meet the massive upswing in demand.

Linda Rouse O’Neill, who leads up policy efforts in emergency preparedness for HIDA, shared the following data from Johns Hopkins on the increase in protective mask usage during a 2009 H1NI outbreak.

Source: Johns Hopkins University Health System

While distributor allocation policies may alleviate some of the harm of hoarding, more than likely the US health system will find itself in a situation where there are haves and have nots when demand so significantly exceeds supply.

In fact, we saw this during the 2014 Ebola outbreak in West Africa. There was practically zero chance of Ebola spreading to the United States yet demand for PPE kits skyrocketed to the point where hospital purchasing departments were buying kits of uncertain quality off of eBay.

Right now, there is no mechanism by which health systems can work together or with trading partners to avoid individually going out to the market during some crisis event, and effectively draining the supply of medical necessities. While some systems do work together to understand and alleviate supply issues, this is happening informally, through personal networks.

What if there was a complimentary strategic stockpile to the CDC’s national strategic stockpile that providers could manage and deploy when a disaster or outbreak hit? Typically, such events are location specific, even if that location may span hundreds or even thousands of square miles. For instance, if a disease outbreak happens in the Northeastern United States, it wouldn’t make much sense for the Pacific Northwest to begin bulk buying supplies. A collaborative effort on the part of health systems and suppliers could help ensure the deployment of supplies where needed so as not to drain or cause excessive stress on the supply chain during crises.

Hoarding is just one example of an area our initiative team could work on together for the benefit of the healthcare supply chain. Part of the fun and excitement honestly will be working together to define the best opportunities for the SMI community to contribute to the strength of supply networks.

This is meaningful work that highlights another reason we are drawn to Hollywood disaster movies. As an audience member, you are reminded of two things—how helpless you would be in the face of such events, but perhaps more importantly, how connected you are to everyone else. At the end of the day, we are all in this together.

As always, we welcome your comments and suggestions.

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