A Conversation with Dr. Eugene Schneller: Managing the Health Care Supply Chain 

The Association of National Account Executives recently spoke to Dr. Eugene Schneller regarding the second edition of his book, Strategic Management of the Health Care Supply Chain, Co-edited with Yousef Abdulsalam, Karen Conway and Jim Eckler. The world and health care industry has changed so drastically since the release of the first edition in 2007, most notably with the onset of the COVID-19 pandemic.  

Here are four key takeaways from that conversation Dr. Schneller.  

Innovations introduced during COVID-19 aren’t sticking around 

During the disruption of COVID-19, it was necessary for healthcare systems to find innovations to work around the many obstacles they were experiencing. Now that COVID has largely subsided, Dr. Schneller and his team found that many of the innovations that came from the desperation and pressure of the pandemic are not staying in place.  

He said, “A healthcare CEO survey reported in Becker’s recently reported that provider CEOs saw their biggest issue as system expansion. Way down at the bottom of their list of concerns was disruptions – which of course is key to supply chain, clinical risk, and organizational resilience.  When the pressure’s off, you don’t pay as much attention to those as you did in the past. Notably, we still don’t have provider systems that have resilience in their mission statements or as part of their governance processes.” 

Cost is still an issue for supply 

“In the face of the many mergers and acquisitions across the healthcare systems, costs have continued to escalate,” Dr. Schneller said. “Hospital management continues to look at the growing costs for supplies as a major opportunity for savings.” 

Costs are still going up for health care organizations across the board. While Dr. Schneller did make the point that value-based purchasing for products could potentially reduce costs, that process is still in the early stages of being utilized. Cost-cutting measures are a must for health care organizations everywhere, especially when it comes to managing supply inventory levels.  

Transparency in information is crucial for successful partnerships between suppliers and providers 

Building successful partnerships between suppliers and providers is critical to the health of the health care supply chain. Like any relationship, these partnerships will work best when both sides are getting what they need. One of the benefits of the pandemic is that it necessitated a certain level of transparency between suppliers and providers. When the pressure starts to subside, that level of cooperation is one of the first things to go.  

Dr. Schneller said, “Much sharing of data happened during COVID. When the crisis goes away, how do we sustain collaboration? Putting governance structures in place to assure access to and equitable allocation of critical products is important.  Resilience is important. Providers knowing how suppliers are managing their upstream risk is critical to great partnerships.” 

GPOs are going through significant changes  

According to Dr. Schneller, the major GPOs have begun to rebrand themselves as consulting companies or health information companies, competing with the big consulting firms. It’s an interesting evolution, spurned by the dynamic shifts that are always happening in the health care supply chain.  

He said, “GPOs have realized that they need to be much more involved in creating value for the system and supporting their provider customers in their quest for value-based-purchasing by contracting for value.  COVD led to many systems enhancing their strategic sourcing and contracting capabilities, frequently aligned with the evolution consolidated service centers. Hybrid purchasing models are evolving, with national GPOs having a significant supporting role.”