By Ryan Bullock, Chief Operating Officer at Aeroflow Healthcare
When the pandemic began, countries all over the world went into production lockdown with US-based companies moving teams back to domestic territory. This move, coupled with the massive increase in online ordering and lack of onsite workers due to quarantine/social distancing mandates, caused inventory backlogs, delivery delays and spikes in shipping and freight costs all throughout the supply chain. As we head into the new year, these supply chain challenges still plague almost every industry, especially as container, truck and driver shortages, and port congestion continue. While many consumers are mostly worried their holiday gifts won’t arrive on time, or that they’ll have to forgo making their favorite dishes, some consumers are grappling with shortages of life-saving medical supplies.
According to the CDC, around six out of every ten people in the U.S. currently live with a chronic disease that requires a medical device, and in September of this year, the FDA officially declared there was a shortage on a number of important devices due to challenges within the supply chain. Companies ranging from CPAP machine and ventilator manufacturers to robotic surgery supplies are experiencing major supply concerns. Even some hospitals around the U.S. began seeking donations of basic supplies such as crutches, walkers and wheelchairs this fall to offset shortages.
Increased prices cause healthcare companies to get creative
A lack of trucks, planes and drivers caused shipping companies such as FedEx, UPS and the Government USPS programs to beef up their own infrastructures by creating new surcharges for all parties involved, from manufacturers to the end customer. Between May 2020 and May 2021, prices of goods rose by 19 percent, the largest year-over-year increase since 1974.
Unfortunately, these costs are currently still increasing as we enter 2022, causing healthcare companies to rethink the way they manage inventory, find alternative freight options, and ramp up communications with established vendors. Healthcare companies hoping to stay ahead of the curve in the new year will need to improve all aspects of internal operations to save margin percentages wherever possible and increase in-person counts to help negate shortages and prevent delays in fulfillment.
Although prices are increasing, there is some good news for medical device providers in 2022. Recently, the FDA just announced its FY 2022 budget that includes $21.6 million for a new Resilient Supply Chain and Shortages Prevention Program (RSCSPP), which will provide assistance for U.S. supply chain resilience for medical devices. The program will be dedicated to strengthening the domestic supply chain through investments in preventive measures, identifying potential medical product supply short-falls and increasing surveillance for rapid intervention.
Aging population influences challenges for the future of devices
The United States currently has the second largest oldest population in the world and by 2050, 21.4% of our population will be 65 years or older. Because of this aging trend, the amount of Americans suffering from diseases or disorders, such as heart disease and stroke, are steadily increasing every year – thus so is the demand for medical equipment.
One important supply is the CPAP device. Those workers associated with the DOT such as truck drivers, pilots, container shippers, and train drivers are required to use CPAPs for their safety and the safety around them. The Sleep Association reported that between 7 and 20% of all truck crashes are due to drowsy/fatigued drivers where OSA is the leading cause. Without the vital CPAP equipment our supply chain is further complicated. Our drivers cannot obtain access to the equipment needed to do their part in the chain.
Additionally, the formal healthcare system has become increasingly stressed throughout the past two years during the pandemic. The industry as whole is facing a labor shortage, forcing patients to be released from hospitals and other health facilities still needing care. To counteract the lack of workers available and the amount of in-person care taking place, health professionals are turning to a wide variety of medical devices to manage their patients’ health care or receive assistance with health management. Today, 4.5 million Americans are currently receiving home health care, with these numbers expected to rise in 2022 and beyond. With the U.S. population continuing to age within the coming years and this remote care trend continues to take place, medical device demand will skyrocket and the need for supply chain challenges to be resolved will be heightened.
Looking ahead, providers are looking for support from their health plan partners that would allow them to obtain the vital equipment at the increased cost. Additionally, they are in dire need of support in ensuring more CPAPs are manufactured to help aid in the supply chain and are looking to the federal government for relief.
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