NEWS
Inflation and the healthcare supply chain: What you need to know There’s no getting around it.
and accurate information is critical to
remains near or above $80 per barrel
Inflation has permeated every aspect of
minimize impact and determine risk
and producers continue struggling to get
the economy – including the healthcare
mitigation strategies.
resins moved through the supply chain.
supply chain. Raw materials, energy,
“Supply chain leaders use various
Both issues are anticipated to remain
labor and logistics have all been affected,
tools, such as budget impact projec-
through most of 2023. Oil price fluctua-
said Margaret Steele, Vizient senior vice
tion reports, market supply updates and
tion, trucker shortages and port backups
president, med/surg.
category specific insights, to understand
will also impact the costs for transporting
the impact of changes affecting raw
products to the provider locations.
Indeed, over the 12 months from February 2021 to February 2022, the
materials, labor and logistics as they look
Consumer Price Index, which measures the
to understand cost and risk for supply dis-
impacted as the situation is affecting raw
average prices of consumer goods and ser-
ruption,” Steele said. Now, supply chain
materials,” Steele said. “That said, impact
vices, increased 7.9% to a four-decade high.
leaders are utilizing these same sources to
mitigation strategies vary by location
monitor the impact of the recent events
and provider type. Providers are sharing
manufacturers and freight companies
that also have an impact on raw materials,
conservation strategies in efforts to re-
struggling to attract workers and drivers.
manufacturing and transportation.
duce usage as appropriate, pre-qualifying
Labor costs rose 4% to 8% with
“Many products have not yet been
In the healthcare sector, escalating labor
alternative products in the event of a
costs have been particularly painful. In its
disruption, increasing product on hand
February National Hospital Flash Report,
(or at a distributor/partner location)
Kaufman Hall found that from Decem-
and ensuring product is sourced from a
ber to January labor expense per adjusted
variety of locations. Several suppliers have
discharge climbed 14.6%.
medical teams that will work with the
Through the last year and a half
providers directly to discuss alternative
(since fall 2020) energy, resins, cotton
uses. And, many are also participating in
and most metals have all surged in excess
commitment programs, wherein suppliers
of 30%. “With the recent upturn of oil
and providers agree on a longer, commit-
prices, the rate of inflation will continue
ted supply and in some cases pricing.”
this upward trend,” Steele said. “These
While GPO and self-negotiated con-
levels of inflation are impacting manu-
tracts are keeping prices fairly stable at the
facturers and service providers signifi-
moment, supply chain leaders fully expect
cantly and they have begun raising prices
to see significant price increases in the
on the supplies, equipment, and services
next series of contracts, said Mike Schil-
they deliver to hospitals.”
ler, senior director of supply chain at the Steele projects the most impactful
Association for Health Care Resource &
and of most interest will likely be oil as
Materials Management (AHRMM) of the
Global events hit home
so many products contain some form
American Hospital Association (AHA).
Steele said the healthcare supply chain
of plastic or resin (a derivative of oil).
has been significantly impacted over the
In mid-March, resin prices remained
low double digit price increases and have
last several years due to many factors
higher than pre-COVID levels and were
begun to include these into their budget-
including world events. As a result, timely
expected to remain so as long as oil
ary considerations.”
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“Many are anticipating high single to
April 2022 | The Journal of Healthcare Contracting
