VALUE. DELIVERED.


Building the moral and business case for supply chain visibility


by Karen Conway, Vice President, Healthcare Value, GHX A


s infl ation hits a 40-year high, hos- pitals are facing some of their most challenging financial headwinds


in at least as many years. Conversations among trading partners have shifted, from resiliency to intense price negotiations. This can be an uphill battle, with many prod- ucts still in short supply and suppliers, too, facing higher prices. It can also spell problems down the road, if we divert our attention too much from trying to create a more transparent, resilient, and socially conscious supply chain. Before inflation reared its ugly head,


many providers and suppliers were actively discussing how to create upstream visibil- ity into potential supply chain risks, from fi res at a production facility to longer term disruptions caused by geo-political con- fl icts, major natural disasters and the likely potential for another pandemic. Among the most coveted information by hospi- tals and healthcare systems has been the countries of origin for both fi nished medical products and the associated raw materials and/or components. By knowing where a product is made, as well as the sources of the critical ingredients, hospitals can bet- ter target vigilance efforts. Case in point: when the Ukraine war started, industry observers rightly predicted shortages in many of the raw materials sourced from Ukraine that are used in the production of surgical instruments, orthopedic devices and durable medical equipment. In the early stages of the pandemic, sev-


eral large global medical device manu- facturers told me it would be diffi cult to answer what seems to be a simple question: “Where are your products made?” That’s because the supply chain is complicated. The raw materials and components come from different regions, and the products themselves are often constructed in stages across geographies. During times of disrup- tions, manufacturers may move production lines. Many products are also produced, at least in part, by contract manufacturers. Supply chain complexity further reduces upstream visibility,1


which can impact more


than just the ability to predict and respond to potential shortages. Manufacturers can expect these requests to increase, as


regulators and commercial customers seek information to address multiple issues. Knowing the parties and places involved in the production of medical devices is also key to addressing other critical healthcare issues, including: • Health Equity – Many hospitals and health systems can include their manufacturers’ upstream purchasing with diverse suppli- ers in their own diversity spend reports.


• Environmental Sustainability – Knowing where and how products are produced helps measure the carbon footprint of healthcare products, which will become more of a regulatory and/or market requirement going forward.


A third critical question has to do with an issue that is only beginning to receive the attention it deserves in healthcare – the use of forced labor in the supply chain. Other industries, e.g., garment, electron- ics, have already begun tackling this issue, in response to the public outcry follow- ing the 2012 collapse of a textile factory in Bangladesh, which killed more than 1,100 workers, and a spate of suicides among tech- nology workers at a manufacturing plant in China. According to research2


, two-thirds


of surgical instruments are manufactured in Pakistan, often in unsafe conditions by children as young as 7 years of age who are forced to work to pay off family debt. Plants making personal protective equipment (PPE) in both India and Mexico have also been found to have violated similar labor laws, while there is increasing evidence that Uyghur people in China are being forced to make PPE.


Beyond the criticality of a well-function- ing supply chain, the pandemic also raised awareness of longstanding labor violations in glove manufacturing plants in Malaysia, where most of the world’s medical exam and surgical gloves are made. In March 2020, at the very start of the pandemic in the U.S., the federal government had just lifted a ban on imports from Malaysian glove manufacturers accused of violating the rights of migrant workers. A year later, as the pandemic raged on, the U.S. government once again banned certain Malaysian glove imports and ranked the country among the most egregious for human traffi cking.


56 September 2022 • HEALTHCARE PURCHASING NEWS • hpnonline.com According to research1 , the exponential


demand for certain products during the pandemic shifted the balance of power to manufacturers, while hospitals competed to secure necessary products. But even without a pandemic, the rising demand for surgical procedures (and associated, often dispos- able, products) only further increases the potential for labor violations.


Medical ethicists have pointed out the


tragic irony of the use of products to support the health of individuals in one part of the world leading to a decrease in the health of the people in other regions who (are forced to) make those products.3


Beyond the moral


dilemma, governments around the world, including the U.S., are taking a more aggres- sive stance against forced labor in the sup- ply chain. The U.S. has prohibitions against both the importation of product produced with forced labor and human traffi cking by any entity receiving federal fi nancial assistance. The Biden Administration has multiple strategies addressing human traf- fi cking and recently launched a working group on forced labor in the healthcare supply chain.*


Given the challenges faced by providers


(from infl ation to labor and supply short- ages), this may seem like another highly complex problem to add to an already full plate. While that’s true, I would argue that it also further builds the business case for more end-to-end supply chain visibility. How can we work across the entire supply chain to address these issues? Even start- ing with more visibility into country(ies) of origin could help target our efforts to combat human traffi cking and minimize the potential for more supply disruptions due to ethical and legal issues. HPN


* The opinions expressed in this article are the author’s own and do not necessarily refl ect the view of the Department of Health and Human Services or the working group.


References:


1. Harry J. Van Buren, Judith Schrempf-Stirling, Beyond struc- tural injustice: Pursuing justice for workers in post-pandemic global value chains, Business Ethics, the Environment & Re- sponsibility, 10.1111/beer.12466.


2. Sandler S, Sonderman K, Citron I, Bhutta M, Meara JG. Forced Labor in Surgical and Healthcare Supply Chains. Journal of the American College of Surgeons. 2018; 227:6. Pp 618-623.


3. Trueba ML, Bhutta MF, Shahvisi A. J Med Ethics 2021;47:423–429.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60