In the healthcare supply chain, "resilience" has become a ubiquitous term. It emerged as a critical focus during the COVID-19 pandemic, when hospitals and health systems struggled to procure personal protective equipment, ventilators and medications.
The disruptions brought renewed attention to deep-rooted vulnerabilities in the healthcare supply chain, sparking industrywide calls for greater transparency and supplier diversification for essential products.
Nearly five years since the onset of the pandemic and despite heightened attention building more resilient systems, little progress has been made. Recent disruptions, including the ongoing IV fluid shortage, underscore just how far the industry has to go to achieve true supply chain resilience, as described by hospital leaders.
The American Hospital Association's 2025 Environmental Scan report found 80% of healthcare providers expect supply chain disruptions to worsen or remain the same over the next year. Additionally, 39% of providers said product shortages have forced them to cancel or reschedule procedures at least quarterly.
Here are some of the barriers standing in the way of a more resilient supply chain, and what health systems are prioritizing to improve their ability to predict and respond to disruptions.
What is getting in the way of resilience?
When asked to define supply chain resilience, George Godfrey, chief supply chain officer of Coral Gables-based Baptist Health South Florida, and Tom Harvieux, senior vice president of St. Louis-based BJC Health, painted similar visions — though they acknowledged that achieving these goals industrywide remains a formidable challenge.
"In an ideal world, supply chain resiliency would encompass complete visibility through real-time tracking and of all supplies, diversified supply resources and advanced technology that automates inventory and demand management activities, including sourcing changes due to supply disruptions," Mr. Godfrey told Becker's.
To Mr. Harvieux, this means understanding risk at every stage of the supply chain, including knowing where products are made, the country of origin and raw material sources.
"When you understand where things are, you can begin to have dialogs with trading partners to assess risk and prepare for disruptions," he said.
Mr. Godfrey noted, however, that the size and complexity of healthcare supply chains, spanning tens of thousands of items, makes complete transparency a difficult and distant goal.
A major barrier to greater supply chain resilience is the healthcare industry's dependence on a small number of manufacturers in critical product categories, leaving hospitals with few alternatives when disruptions occur.
This vulnerability became clear during the IV fluid shortage, when Hurricane Helene severely damaged a North Carolina plant owned by Baxter, the nation's largest supplier of IV fluids. The resulting production slowdown triggered a nationwide shortage, prompting some health systems to delay elective surgeries and temporarily limit the number of new peritoneal dialysis patients. To ramp up supplies and manufacturing capacity, Baxter activated seven manufacturing plants worldwide to boost production and shipments from Spain and Mexico.
Baxter has been working to restore manufacturing operations and anticipates to reach 100% allocation levels by the end of 2024.
The long-term tight supply of IV fluids can be traced to the low profitability of these products. Manufacturing IV solutions requires significant investment in regulatory approvals, infrastructure and resources to meet high production standards. Additionally, there are considerable costs associated with space and weight requirements, making it difficult for new players to enter the market.
Currently, the U.S. IV fluid market is largely dependent on four manufacturers: Baxter, producing 60% of the country's IV fluids; B. Braun Medical, producing 23%; and ICU Medical and Fresenius Kabi, rounding out the rest of the market.
National policy interventions, such as the Defense Production Act, have provided short-term relief during periods of need, as seen during the pandemic and IV fluid shortage. The DPA allows the government to prioritize domestic production of essential medical supplies, helping to alleviate supply bottlenecks.
The Biden administration invoked the DPA to expedite the recovery of Baxter's IV fluid facility in North Carolina. However, the legislation remains a reactive strategy for addressing immediate crises rather than being a part of a long-term, proactive approach.
Experts say the lack of transparency in the pharmaceutical supply chain is one of the biggest barriers to building greater resilience and addressing medication shortages, which have long been a challenge for hospitals.
For example, Erin Fox, PharmD, senior director of drug information and support services at the University of Utah Health in Salt Lake City, told Becker's in June 2021 that half of drug shortages stem from manufacturing problems.
She also noted that much of the drug manufacturing process, including the source of raw materials and where specific drugs are produced, is opaque.
How health systems are coping
For Mr. Godfrey, resilience comes down to preparedness and adaptability. "In today's healthcare environment, supply chain resiliency refers to our systems ability to anticipate, prepare for, respond to and recover from disruptions while maintaining outstanding patient care and operational stability," he said.
Despite disruptions beyond their control, health systems are making strides toward greater resilience.
Technology has emerged as one asset in this pursuit. Mr. Godfrey and Mr. Harvieux said their health systems have adopted solutions to enhance visibility, improve tracking and ensure a more agile response to supply disruptions.
The AHA report underscored the increasing role technology plays in strengthening supply chains. It found that 62% of healthcare providers are focusing on stock-keeping unit rationalization, and 54% are working to enhance supplier performance key performance indicators.
"The pandemic forced us to become much better at managing supply chain-related data," Mr. Godfrey said. "To improve supply chain visibility, we developed several business intelligence workbooks, providing us with daily dashboards."
Baptist Health South Florida's adoption of tools such as HealthChain have enhanced real-time visibility, improving activities such as contract renewals and invoice match exceptions, with the tool ensuring a quicker deployment of actions with associated resolutions and improved communication, he said.
Over the past few years, Mr. Harvieux has noticed health systems place increased focus on collaboration to better anticipate product shortages or shipment delays, and shield themselves from operational disruptions when shortages do arise.
"Before COVID, the healthcare supply chain was very price focused," he said. "Post-pandemic, we have made a large effort at BJC and our peers around the country on how we focus on the end-to-end channel management and foster collaborative planning."
For example, BJC is a member of the Healthcare Industry Resilience Collaborative, a nonprofit consortium of more than 90 health systems, suppliers and industry partners that share mitigation strategies and set standards to enable greater reliability and predictability across the healthcare supply chain.
BJC also invested in a new warehouse that was built during the pandemic, which has allowed the health system to carry more inventory and respond more effectively to shortages. This strategy helped BJC avoid some of the worst effects of the IV fluid shortage, Mr. Harvieux said.
He also emphasized that the shift toward greater collaboration with suppliers, manufacturers and even competitors has been a crucial development.
However, other experts have cautioned that despite initial progress in the wake of the pandemic, the momentum for long-term supply chain improvements has since slowed.
"When the pressure's off, you don't pay as much attention to these issues as you did in the past," Eugene Schneller, PhD, a professor of supply chain management at Tempe-based Arizona State University, told the Association of National Account Executives. "Notably, we still don't have provider systems that have resilience in their mission statement or as part of their governance processes."
For Mr. Harvieux, it remains crucial for BJC Health to sustain the momentum of collaboration that spurred the industry's response during the early days of the pandemic.
"There are a lot of challenges, but it really comes down to communication, collaboration and then, ultimately, it comes down to reliably and consistently sharing information and not going back to the old ways," he said.