The COVID-19 pandemic disrupted a lot of people’s lives, especially in healthcare. However, the impact on the industry’s supply chain was not something most people thought about. It happened fast, though. When nations began sending workers home and closed businesses to contain the COVID-19 outbreak, it caused an abrupt stop to many vital global supply chains. That impact was felt greatest on the healthcare industry, which was on the front line fighting the pandemic.
“It was kind of a shock to everybody, and it was felt with regards to PPE before anything else,” said Air Methods VP Supply Chain Jay Mahen.
Supply chain leaders had to act fast and be flexible to adjust in this time of crisis. Mahen initially directed his team to assess the situation with current suppliers and common vendors regarding PPE availability. However, they discovered allocations fell short of what Air Methods would require to maintain continuity of operations. Air Methods has a decentralized footprint with more than 300 bases across the country. When the pandemic began, each base was purchasing PPE as needed, meaning small orders here and there.
“All of the PPE was in allocation and because of our current state of buying that equipment, we were not able to secure nearly enough of the pie for those allocations,” explained Paul Williams, Air Methods director supply chain. “So, we realized quickly we had to find another option.”
The first step was to create a more centralized process. So, the Supply Chain team had every base return all their PPE to a single warehouse to be sorted and allocated internally. The team then created a mechanism offline, utilizing SmartSheets, to understand what was out there, who had it, how to access it, and then to redistribute where it was needed most.
They also put out a call to all Air Methods’ teammates, asking if they knew of anyone providing PPE, or someone they had bought from the in the past, to help build a list of potential suppliers. They collated that information and began to build a portfolio of companies and do vendor evaluations. Many healthcare leaders did the same. According to a joint report from Becker’s Hospital Review and Cardinal Health, the pandemic caused the majority of supply chain and c-suite leaders to rethink supply chain partnerships and prompted them to work with new vendors or suppliers.
However, there were challenges using new suppliers and trusting that the materials provided were safe. This was especially important when some studies claimed that some products manufactured in India, Vietnam, and China were not technically certified to be used in a medical setting. So, the Supply Chain team worked with the Air Methods’ Safety department and enlisted local university researchers to help vet these suppliers and the products.
“We started sending some of these mask products to Colorado State University to be tested in their lab to see what the particle flowrate was – whether they met the filtering specifications required to be called an N95 mask. And the reality was they all did. So, regardless of what people thought, they actually did pass,” said Mahen.
While that problem seemed solved, there had also been reports that some masks had pinholes in them. So, the team had to adjust and be flexible once again. They hired workers to handle an additional quality evaluation and control of every item. Then, to ensure teammates that the materials they received were indeed safe, the Logistics team included all certification documents and results from the testing at Colorado State University with every package sent to the field.
Once Air Methods had a good supply of trust-worthy masks and ensured a continuous supply, they were able to share with hospitals and community partners.
“If we identified hospitals that fell short – they didn’t have the PPE they needed, or they were reusing stuff over and over again – we were in a position of surplus, so we were able to provide PPE for our hospital system partners for a period of time,” explained Williams.
Air Methods sold the PPE at our cost to community EMS partners, fire departments, hospitals, and doctors offices that were in desperate need. Out teams also shared our supplier information with customers and pointed them in the direction of good suppliers that had reliable, high-quality material, after doing our own tests with Colorado State University.
Aside from the immediate shock of the PPE shortfall, there was also the question of what to do with existing vendors to ensure continuity of operations. The company could now be at risk if vendors were unable to provide materials due to shutdowns or quarantines. The first task was working with the existing connections in aircraft parts and services for air medical and asking about discounts or rebates and adjusting payment terms (shifting to long-term pay to preserve cash) and ways to avoid escalation by taking on increases over a six-month period, for example.
“It was wildly successful,” said Mahen. “The result was a million dollars in cash impact because of terms enhancements and then several million dollars in assistance in price reduction or escalation waits.”
In some cases, they had to spend money to protect the company. For example, with some suppliers in Europe, like Airbus, the team looked at ways to be prepared if they were shut down for quarantine. So, they leveraged the used aircraft market to source critical parts and high-demand items to keep flight operations going.
After moving PPE ordering to a centralized process, there were challenges getting the material back out to the bases where it was needed. Once there was enough PPE to distribute, the Logistics team looked at each base’s monthly transports to determine what they would be likely to need. Then, they put together “care packages” of essential PPE and sent out a mass shipment to the bases. And, moving forward, they now have a system to help develop inventory strategy.
The pandemic highlighted the importance of supply chains in an organization’s financial success, especially in healthcare, but it has also led to valuable improvement opportunities. The Air Methods Supply Chain team has been improving many processes with the learnings from the pandemic. For example, the previous decentralized model made it difficult to know what equipment and materials were at bases, and not knowing each bases’ vendors was impossible to manage, risky, and costly.
“We have identified a very focused need to centralize our clinical supply chain and build the infrastructure to support the new system,” said Mahen. “That’s a project we’re actively working now and hope to make significant progress by the end of the year.”
While the pandemic sent shockwaves across the world, particularly the global supply chain, the disruption has also served as a catalyst for opportunity. Our Supply Chain team learned how to act quickly and be flexible as challenges came their way. Additionally, it has helped create new relationships with vendors and suppliers we may not have otherwise embraced. It has also provided an opportunity to work with our hospitals and community partners in new ways. Most importantly, it has given the healthcare industry a chance to look at weaknesses in the global supply chain and find ways to improve and make create a more resilient system if – or when – the next pandemic hits.