Do Hospital Supply Chains Turn to Subs Too Early Without First Checking for Original OEM Products?
Article By:
Jonathan Jarashow, CEO and Chief Supply Chain Officer, OmniChannel Health
Hospital supply chains often turn to substitute medical products too quickly, primarily due to various pressures and system limitations. Below is an expanded discussion of why this happens, with real-world examples, expert opinions, and references.
Urgency in Patient Care
Hospitals prioritize uninterrupted patient care, and supply shortages are particularly disruptive. When key products are on backorder, the urgency to maintain operations often leads supply chain teams to choose available substitutes instead of taking the time to source original OEM products, which can be a longer process.
For instance, at an east coast University Hospital, supply disruptions occur weekly, especially in specialized areas like the OR and Cath Lab. These settings rely heavily on OEM products to ensure optimal patient outcomes. One real-world example involved a 7Fr biopsy sheath, which went on backorder several times. The team initially held back OEM products for specific patients but eventually had to use substitutes, which raised concerns due to anatomical differences. The alternatives performed below the original OEM product’s standard, increasing the risk to patient safety.
Vendor Influence and Availability
Distributors often promote substitutes when OEM items are unavailable, and in some cases, automated substitutions are triggered by the vendor. This limits a hospital’s opportunity to check for the original OEM product. Hospitals may rely on these vendor suggestions, skipping the process of searching alternative suppliers that may still have the OEM product.
Lack of Supply Chain Transparency
Hospitals sometimes lack visibility into the broader market of available OEM products. Supply chains are often fragmented, and procurement teams may not be aware of secondary markets or vendors. This is where companies like OmniChannel Health play a key role by offering hospitals access to hard-to-find OEM products through an extensive network of distributors.
Many hospitals work closely with local hospitals and companies like OmniChannel Health to ensure they avoid the premature use of substitutes. The operations team makes proactive decisions about checking OEM availability before switching to substitutes.
Limited Internal Resources
Locating original OEM products can require extensive time and expertise, which many hospital supply chain teams may not have, especially during widespread shortages. Hospitals are often managing shortages across multiple product categories, leaving them with limited bandwidth to perform exhaustive searches for OEM items.
Training and Workflow Adjustments
When substitutes are introduced, they often require new workflows or clinician training, which can increase the potential for errors. Hospitals might find substitutes easier to procure but risk inefficiencies or patient care risks due to the unfamiliarity of staff with the new products.
An example from a University Hospital Cath Lab highlights this issue. They had long used the Terumo TR Band, but due to shortages, they brought in the Teleflex Vascband as a substitute. Unfortunately, the substitute caused issues such as air leaks, leading to complications like patient bleeding and longer recovery times. This increased the workload for nurses and posed safety risks.
Expert Opinion
A long time OR supply chain expert points out that managing medical products effectively is critical to ensuring smooth surgical procedures. Even minor delays in receiving critical supplies can cause significant strain on surgical teams, leading to delayed procedures. By maintaining relationships with reliable backup suppliers, hospitals can improve their supply chain resilience and ensure timely access to necessary supplies.
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Financial Implications of Substitutes
The financial costs of using substitutes are significant. Substitutes can be more expensive than OEM products, and expedited shipping adds to the cost. Overstocking in anticipation of future shortages increases inventory value, and once OEM products are available again, substitutes often go to waste. Additionally, substitutes may require new workflows, leading to inefficiencies in both time and resources.
Conclusion
While the goal of hospital supply chains should be to prioritize OEM products for optimal care, the realities of supply disruptions force many to rely on substitutes. Hospitals can mitigate these issues by partnering with specialized companies like OmniChannel Health to source OEM products more effectively and avoid premature reliance on substitutes.
References
Article By:
Jonathan Jarashow, CEO and Chief Supply Chain Officer, OmniChannel Health
In 1995, I founded what would become the nation’s largest diabetes magazine. Over two decades, we published over 100 million copies, distributing them through major pharmacy chains such as Walgreens, Walmart, CVS, and Costco, as well as other leading retailers. Our magazines were also sent to diabetes centers in hospitals nationwide. The connections we built with hospital leadership were invaluable, and when the print magazine industry began to decline, we leveraged these relationships to meet the sourcing needs of hospitals.
We recognized the difficulty hospitals faced in sourcing original/OEM backordered, allocated, and low-stock medical products and supplies, and the headaches caused by having to settle for substitute products. These insights led to the creation of OmniChannel Health.
As an SBA-certified small business, OmniChannel Health prides itself on being small but nimble and highly responsive. We are a trusted, reliable, and AHRMM-vetted secondary distributor that steps in when primary distributors and suppliers can’t meet hospitals’ urgent needs.
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