Latest / CareTalk: Healthcare. Unfiltered. / Helene’s Impact on the Healthcare Supply Chain

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Helene’s Impact on the Healthcare Supply Chain · CareTalk: Healthcare. Unfiltered.

• 0:00
  Hurricane Helene knocked out a North Carolina factory that makes 60 % of IV fluids for US hospitals.
• 0:07
  What does it mean for the healthcare economy and for patient care?
• 0:17
  Welcome to Health Biz Briefs.
• 0:18
  I'm David Williams, president of Health Business Group here with John Driscoll, senior advisor to Walgreens.
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• 1:29
  Sean, these hurricanes are a rough thing.
• 1:31
  Why should we really worry so much about a plant that puts water in bags?
• 1:35
  Well, David.
• 1:36
  Saline, you know, one of the first things that happens to you when you hit the hospital after a serious or not so serious injury is you need to get hydrated to get your body healthy and get you to a healthy level of hydration.
• 1:49
  And saline is used in pretty much every part of the hospital.
• 1:53
  I you can't run a hospital without saline in bags.
• 1:57
  And I think what this hurricane is proving is that we do, we still have challenges.
• 2:05
  with the healthcare supply chain that we heard so much about during COVID.
• 2:09
  But I'm reasonably concerned that we don't have good backup strategies when some of our key suppliers are knocked offline for a bit.
• 2:19
  No, that's fair, John.
• 2:20
  I mean, there's limited things you can do.
• 2:21
  So sometimes, you know, they use IV hydration where you could use oral hydration, in other words, drinking things like, you know, Gatorade to get back in shape.
• 2:29
  And for some things you can use syringes, but that's going to be more of a conservation measure.
• 2:34
  I mean, the challenge when you lose something like sailing bags is they're relatively simple to manufacture, but you're going to manufacture a lot of them.
• 2:42
  They've got sailing and fluids in them.
• 2:46
  And so they're heavy to ship.
• 2:48
  So if you lose a major manufacturer, it's hard, even if you've got a backup, to move stuff around to make sure that people have enough sailing.
• 2:57
  And I think what this is going to immediately...
• 3:00
  do for hospitals is require them to start thinking very closely about conserving and focusing on things like oral hydration.
• 3:07
  But again, this is just another reminder that climate change and the one-time, historically one-time kind of events like tornadoes, heavy storms, hurricanes are a fact of life.
• 3:22
  And an increasing volume of them means that we need much more redundancy in our supply chain.
• 3:29
  And that's not just manufacturing, but also transportation and support, because these areas that are knocked offline are also knocked pretty hard.
• 3:39
  So John, it's not the first time that something like this has happened.
• 3:42
  And you say climate change may be a factor.
• 3:44
  I'll point out that another plant in North Carolina was damaged last year.
• 3:48
  That was a Pfizer plant.
• 3:49
  And it went offline for 10 weeks.
• 3:51
  They made anesthesia and sterile injectables, also very important for hospitals.
• 3:57
  I think one of the reasons that such a large percentage of the whole system is affected by one of these is there's a lot of economies of scale in doing this sort of manufacturing.
• 4:06
  And so if we want to make the supply chain more resilient, we're going to have to also just to be a better trade-off.
• 4:13
  There may be somewhat higher costs.
• 4:15
  there's absolutely no question there, David.
• 4:17
  mean, over the period of the 80s and then the 90s, manufacturing and distribution moved to a strategy of what they call just-in-time.
• 4:27
  So thinning out the supply chain so that there was less redundancy or extra supply.
• 4:33
  And what that meant is you focused, you focused factories.
• 4:36
  So you'd have one big factory that would be the best in the country at doing X or Y, like building the injectable syringes or the saline bags.
• 4:44
  And then you would have limited supply and distribution centers because that represent capital that was caught up.
• 4:52
  And then you'd have as little, you keep some supply in hospitals, but not so much that you were actually had.
• 4:57
  extra inventory and there was a lot of focus on optimizing inventory, meaning just having inventory you need, whether it's a syringe or an extra knee or a mechanical knee.
• 5:09
  The challenge there is when any one of the elements of the supply chain is knocked offline, manufacturing, distribution, you really have much less of a reserve to fall back on because you've optimized that supply chain.
• 5:24
  for reducing the amount of capital that's tied up in that supply.
• 5:28
  And I think we really are gonna have to rethink a lot of those strategies around critical industries like healthcare and frankly, a few others.
• 5:36
  Yeah, there's been some rethinking post pandemic and you could say in some ways supply chains are better off than they were before the pandemic.
• 5:43
  At least there's been some thought given to it.
• 5:45
  But there's a lot of interdependencies and even if you do something like, know, sort out distribution in a few different spots, you could have systemic issues.
• 5:54
  Like if you have a cyber attack that affects a certain software that's used across the different plants, then you could actually knock all the plants out with one attack, even if it's not something very localized like a tornado.
• 6:08
  So I think this is something that we're going to need to continue to wrestle with.
• 6:13
  Well, that's it for another episode of Health Biz Briefs.
• 6:16
  We've been discussing the impact of Hurricane Helene on the healthcare supply chain.