Materials Shortages in Healthcare: An Operations Management Expert’s Perspectives

At a time when healthcare leaders are trying to work out a huge range of issues around preparations for the COVID-19 pandemic, one area of endeavor that is coming into further focus is the operations management field. Operations management professionals work in many industries, focusing on ensuring the orderly and organized functioning of supply management and of operational processes. Their professional association, the Catonsville, Md.-based Institute for Operations Research and the Management Sciences, or INFORMS, has been active in helping its members who are working in the healthcare industry to help their organizations prepare for what’s coming next.

One active member of INFORMS is Sridhar Tayur, Ph.D., the Ford Distinguished Research Chair and a professor of operations management at Carnegie-Mellon University in Pittsburgh. Dr. Tayur has had experience in operations management across a broad range of fields. He spoke recently with Healthcare Innovation Editor-in-Chief Mark Hagland about this challenging moment in healthcare, and his perspectives on the challenges and opportunities involved, from an operations management standpoint. Below are excerpts from that interview.

For those not familiar, can you briefly explain what’s involved in the field of operations management?

Yes, we are the folks who look into processes in hospitals and other organizations—processes of checking people in, low long they wait in the waiting room, bed utilization, training programs, and so on; a Anything to do with operating a facility, and the management of operations, and measuring metrics.

So in healthcare, among other elements, that would encompass managing patient flow and bed management?

Yes, as well as managing the operating room, and managing and scheduling doctors’ time. What we don’t do is get into healthcare policy. Healthcare is one of our big areas; I’m also focused on supply chain management, particularly around pharmaceutical supply chain management. So I do both hospital and pharmaceutical supply chain management work. Most recently, in a call, as a board member, we’re going through asking how many ICU beds do we have? How many ventilators? How many masks and gloves?

Both as a board member and an operations management professional, where area hospitals right now?

They’re trying to be calm but to be well-prepared for a potential wave of admissions. They’re working to make sure that inessential activities such as elective surgeries or routine face-to-face visits can be postponed. Elective surgeries will be postponed, and routine visits will go to telemedicine. So step one is reducing total amount of foot traffic that needs to come in.

That’s at eye level. At the second level, they’re trying to decrease the number of people in waiting rooms by increasing the lengths of intervals between appointments. They’re training around the use of PPE and are working to make sure they have adequate supplies of PPE, as well as preparing their physicians and nurse practitioners around phone call management. You don’t want people to be driving to the ER or showing up; you want to do as much telephonic triage as possible. So that’s what’s happening at the preparation level, and they’re working to be ready.

What key things should hospital leaders be thinking about right now?

The issue, as you probably know, is that because we haven’t had enough test kits, we haven’t tested asymptomatic people at random. So we actually don’t know the true spread of the virus. So right now, they’re planning for a worst-case-scenario deluge, because they don’t know. As they speed up the testing, it would be good to not restrict testing to the seriously symptomatic, but also that they be able to begin to randomly test non-symptomatic individuals. As an operations management professional, I think it’s important to prepare for resources in that way. That’s the big unknown.

The second thing is that different states have established stronger restrictions on movement and activity; and time is of the essence. The earlier you’re socially distancing yourself, and the more serious you are about it, the better. And while it’s taking place later than would be optimal, people are now taking it seriously, and folks are staying home, and restaurants are take-out-only, and gyms are being closed. All these things are good, at a high level. And it’s a matter of discipline. And I’ll hope that Americans are more disciplined.

How should one think about resources in an unprecedented situation like this?

So think about the supply chain as having four stages.

At the top, someone makes something, like toilet paper. And 90 percent of the toilet paper used in the US is made in the US. So that’s not a real thing; it’s a phantom scarcity. It was created by lack of knowledge and by a psychological reaction, rather than a real problem. Kimberly Clark makes toilet paper, and they’re in Neenah, Wisconsin. The second stage is the warehouse. And these warehouses typically have many weeks of inventory. They’re not as efficient as you might think; they move things in truckloads. So there are large volumes of inventory in the warehouse, and that’s good news. Also, warehouses are mostly automated. Amazon is going to be adding 100,000 workers in warehouses and in delivery; they can do that with social distancing.

The third stage is the transportation that gets you from warehouse to retail. And the fourth is the retail store itself. So in the media, you’re seeing videos of empty shelves, and that’s feeding some of the panic. And there is some rational panic, because if other people are panicking, you will panic. So in a week or two, with regard to consumer packaged goods made in the United States, we’ll get back to a normal semblance of normal supply chain. And the same thing is true of food. I don’t expect America to run into food shortages.

But real shortages coming involve generic drugs, many of which come from China and India. And right now, even if the inventory has been sent and landed on U.S. soil, it hasn’t gone through customs, so it’s physically on our soil, but not yet in the supply chain. The good news is that Cardinal and McKesson have some inventory. But the generic drug supply—that’s where we have to look at certain types of rationing. So the pharma supply chain has issues. And perfume manufacturers are repurposing to produce hand sanitizers. And Medtronic has said they’ll repurpose to make ventilators.

So we don’t have to really panic. One of the messages I want to give is, as a professional who has worked with hundreds of supply chains in various industries, it’s natural for people, because of a lack of knowledge, to overact. So there’s no need to panic in those areas.

Diaper manufacturers are being asked to manufacture masks. Can that happen fast enough?

I think so. A lot of manufacturing is actually contract manufacturing. And these factories are not so special-purpose that they can’t do other things. There’s a certain amount of flexibility in what can be processed. And so there is more headroom here to focus on making the things that are needed, as well as increasing the capacity. That begs the question of the raw materials. As long as there is sufficient raw material within the U.S., I think that many of these changes can help to alleviate what otherwise would be severe shortages.

What do you think will happen in the next few months, broadly speaking?

In the next few months, we’ll start depleting stores of certain goods. I do hope that Mexico, which has been a big partner of the U.S., will be able to step up a bit. In the next month, people will be repurposing, and in the second month, hopefully through some mechanism, the repurposing, rationing, and everybody calming down, will lead to things working out. I am not panicking, myself. And the other good news is that supply chain professionals have been working at these processes for 25 years. Things have become more efficient and more global. People have invested in information systems, they know how to react quickly, and supply chains are more flexible. The people capability, the IT capability, and the logistics capability, are much, much higher today.