MARKET ALERT: Hospital Strategies to Navigate Supply Chain Disruption

Recent updates to China’s “Zero-COVID Strategy” and lockdowns that began in March will be extended for the foreseeable future. With the continued uptick in COVID-19 cases, 87 of the 100 largest cities in China are now under some level of restriction or lockdown. Experts are predicting the already challenging global supply chain conditions will worsen in coming weeks and months.

As the largest importer of goods from China, the US is expected to see further disruption to the flow of critical goods – including medical equipment and supplies. Hospitals should consider the following strategies to help with the unpredictable product shortages expected to persist through 2022, and possibly longer.

  1. Assess Exposure to Products Produced in China –While this is often not an important consideration for hospitals, in light of the recent lockdowns in China, it will help to understand the degree of reliance upon mission-critical products produced in China, even if you are purchasing from a US based supplier or distributor. This will help you anticipate and plan ahead to mitigate risk and the potential impact on hospital operations.
  2. Identify Acceptable Substitutes – Hospitals have become accustomed to having to accept substitute products over the past several years. Engaging your providers in establishing as many possible “acceptable” product alternatives as possible can help. Today, however, there is an even greater strategic benefit to sourcing products manufactured outside of China, including here in the US. The premium it can cost to secure these products may far outweigh the price and consequence of not having what is needed to deliver patient care.
  3. Act Quickly, Stockpile Hard-to-Find Products – As the impact from the current COVID conditions in China ripples through global markets, hospitals should hedge against further unplanned shortages by working to buy up available products and increasing their on-hand inventory even if it is at a premium price. With supply for many products already constrained, prices that are inflated above pre-pandemic levels are expected to increase even more.

Utilizing the purchasing strategies outlined above may help prepare your hospital for ongoing uncertainty about when, and if critical products will be available. Plan ahead and keep in mind that whenever lockdown restrictions in China are relaxed, the resulting surge of pent-up product shipments is predicted to clog the supply chain even further before conditions improve. 

Miga will continue to monitor market conditions and share any relevant information and updates as they become available.

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