Long years of efficiency drives left hospitals exposed and current procurement practices — dense RFP clauses demanding exhaustive supplier mapping and real‑time metrics — are prompting smaller firms out of contests and narrowing competition, industry commentators say. Experts urge risk‑based, tiered requirements and secure disclosure mechanisms to rebuild resilience without eroding supply diversity.
Hospitals’ insistence on ever‑more detailed “resilience” requirements for suppliers risks becoming a self‑inflicted wound, according to a MedCity commentary that argues years of efficiency drives left the sector exposed and that current procurement practices are now producing unintended harm.
The piece — written by Lars Thording, vice‑president of marketing and public affairs at Innovative Health and published through MedCity’s Influencers programme — traces the problem to long‑running cost pressures. Suppliers have raised prices and introduced proprietary designs that make switching difficult; hospitals have pared inventory, staff and redundancy in pursuit of leaner operations. The result, Thording argues, is a supply chain that is efficient but brittle, prone to backorders and intermittent availability of devices that clinicians rely upon for patient care.
That diagnosis echoes analyses made during and after the pandemic. An academic review in Harvard Business Review noted that the search for efficiency rendered the US medical supply system increasingly global and dependent on concentrated sources, reducing the capacity to absorb “black swan” shocks such as Covid‑19. As Douglas Hannah wrote in the Review, “resilience need not negate efficiency” — but rebuilding it requires investment and changes to sourcing and policy.
The human cost of those vulnerabilities is well documented. A report from the US Department of Health and Human Services’ Office of the Assistant Secretary for Planning and Evaluation examined device shortages during Covid‑19 and found that reliance on foreign sources, production concentration and transport disruptions combined with surging demand to inflict acute shortages. Rural hospitals, nursing homes and ventilator‑dependent patients were among those hit hardest, and providers resorted to measures such as substitution, delaying procedures and reprocessing devices — steps that incurred additional labour and training costs and, in some cases, clinical risk.
Longer‑term data also show the fragility was not solely a pandemic artefact. A Health Affairs study covering 2006–2020 documented a marked rise in device shortages during the early months of 2020 but emphasised that shortages have multiple, distinct causes: manufacturing quality failures, regulatory actions and concentrated production among them. That study urged better monitoring, early warning systems and policies to diversify sourcing.
Given those lessons, it is understandable health systems now ask for stronger assurances. But Thording and others warn that the way those assurances are being operationalised — through dense request‑for‑proposal (RFP) clauses demanding extensive mapping of suppliers and sub‑suppliers, exhaustive transparency and real‑time resilience metrics across entire portfolios — has perverse effects. Small firms often lack the resources to produce the level of documentation buyers seek; very large suppliers find the scale and complexity of their product lines make full N‑tier mapping impractical. The net effect: RFPs that, in seeking to de‑risk supply, narrow the field of bidders and thereby reduce competition.
Independent industry research supports those concerns. An N‑tier survey by risk‑management firm Sphera found widespread difficulty in seeing beyond tier‑one suppliers: about 70% of respondents reported problems with the accuracy of data beyond tier two. The study concluded that while better visibility is important, mapping deeper supply tiers is technically demanding, data‑intensive and costly, and that a blunt insistence on comprehensive mapping will disproportionately burden smaller suppliers.
Academic and industry commentators add another caveat: excessive transparency can itself be harmful. An editorial in an operations‑management journal warned that policies demanding wide disclosure of supplier arrangements and proprietary operational detail can expose commercially sensitive information, increase legal and reputational risks, and discourage suppliers from engaging. In short, transparency pursued without guardrails can undermine the very diversity and competitiveness it aims to protect.
Those tensions point to a central trade‑off: resilience costs money and effort, but so too does fragility in lives and procedures. Thording’s piece calls for balance and compromise between buyers and suppliers. Policymakers and analysts propose concrete, risk‑based ways of achieving it. The Harvard analysis highlights options such as distributed domestic production for key items, strategic stockpiles, and flexible procurement contracts that allow rapid substitution in crisis. HHS’s review recommends improved supply‑chain visibility targeted to critical products, diversification of sources and coordinated policy action to shore up domestic capacity.
Industry practitioners advocate practical middle paths: prioritise resilience requirements by clinical criticality rather than applying uniform standards across every product; invest in digital tools and standardised data collection for the highest‑risk product lines; provide tiered RFP requirements that recognise the differing capacities of small and large suppliers; and create secure mechanisms for verified disclosure of sensitive information so that commercial confidentiality is protected even as buyers gain necessary assurance.
If hospitals and suppliers are to find common ground, the negotiation must acknowledge responsibilities on both sides. Providers drove many of the efficiency gains that left the system lean; suppliers, for their part, must be prepared to demonstrate contingency planning where it matters most. Health systems should avoid creating checklists that reward form over function — selecting vendors because they meet onerous bureaucratic criteria rather than because they offer superior clinical value and realistic resilience.
The pandemic revealed that supply‑chain resilience in healthcare is not merely an operational nicety but a dimension of patient safety. Rebuilding it will demand money, time and policy support — and a more nuanced approach to requirements that protects competition rather than eroding it. As industry analysts put it, resilience is attainable, but only if procurement standards are proportionate, risk‑based and developed in collaboration with the suppliers expected to meet them.
Source: Noah Wire Services
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