As a physician who specializes in the care of hospitalized patients, I am very aware of the challenges posed by the COVID-19 pandemic around the lack of protective equipment, tests kits and ventilators. However, I fear that the cause of these shortages is getting lost in the discussion.
We don’t have enough critical supplies to fight this pandemic, and cannot produce them rapidly, because of “lean” supply chain management principles embraced by business leaders over the past 40 years. Manufacturing of critical supplies like protective equipment and medications has been almost completely moved overseas to maximize profits. Even when a device like a ventilator is made in the U.S., parts and materials are sourced globally.
“Just-in-time” procurement has replaced the practice of keeping any backstock of supplies in case of emergency. Hospitals, like other businesses, are staffed and equipped as sparsely as possible to save money, so there is no longer any real surge capacity.
Another result of modern business philosophy is that the total number of hospitals and hospital beds in the U.S. has markedly decreased. From 1975 to 2015, the number of U.S. hospital beds shrank by 39%, according to the American Hospital Association, while the population increased by 33%. Today, even in the absence of a pandemic, hospitals routinely turn patients away or put them on waiting lists because they are full.
This pandemic should teach us that current business practices and concepts of supply chain management are desperately in need of re-thinking.
Alan Irwin, D.O.