Premier Inc.: Cost Pressures on Labor, Supplies Impacting Supply Chain

A recently released report from the Charlotte-based Premier Inc. is pointing to inflationary and cost pressures hitting healthcare supply chains and impacting the bottom line for hospitals and health systems nationwide.

A press release posted last month announcing the publication of Premier’s 2024 Supply Chain Resiliency Report found that, “Over the past four years, healthcare supply chains have faced an unprecedented number of complex and compounding challenges rarely seen throughout history The COVID-19 pandemic forced a shift to de-risk supply chains. And economic challenges spurred by ongoing inflation, geopolitical tensions, natural disasters – and more – compel leaders to focus on long-term transformation, rather than short-term gains.” The press release noted that “Hundreds of leaders from both healthcare provider and supplier organizations (NEW for 2024) shared valuable perspective for Premier’s 2024 Supply Chain Resiliency survey and Report.”

The report found four key issues facing patient care organizations right now: inflationary pressures, anticipation of continued challenges, a climate of unpredictability, and shortages impeding operations. Per inflation, the press release notes that “Ongoing inflation and cost pressures for labor and products are noted as the biggest operational and financial challenge for both provider and supplier organizations over the next year (47 percent and 45 percent, respectively). What’s more, they note, “Sixty-five percent of providers also say costs or financial pressures are the most significant barrier to achieving supply chain resiliency.”

What’s more, Premier notes, “Most survey respondents see the supply chain as in a permanent state of flux with issues like persistent product shortages/backorders, geopolitical instability and raw materials availability expected to persist or worsen over the next year. Nearly 80 percent of providers and 84 percent of suppliers expect supply chain challenges to worsen or remain the same – an increase from the 75 percent of provider respondents asked this same question in 2023.”

Survey respondents cite an ongoing climate of unpredictability, both in terms of prices and other supply chain-related issues, as well as around potential regulatory changes; Premier notes that “[N]early 85 percent expect regulatory policy changes to affect their 2024 supply chain strategies.”

Premier also notes that “Product backorders and shortages continue to impede organizational operations with direct impacts on employee burden and patient care.” Indeed, “Sixty-seven percent of providers said their teams are spending 10+ hours per week mitigating supply chain challenges and shortages. Nearly 40 percent have had to cancel or reschedule cases at least quarterly in 2023 due to product shortages.”

The full report can be accessed here.