TL/DR –
The US healthcare supply chain is vulnerable due to factors such as reliance on just-in-time inventory, globalization, and razor-thin margins; this vulnerability is becoming increasingly evident as the country’s aging population grows, leading to greater demand for medical supplies. The supply chain’s fragility can have life-threatening impacts on the aging population, who often require ongoing medical treatments and are disproportionately affected by healthcare supply shortages. To strengthen the supply chain, it is suggested that more investments be made in domestic manufacturing and distribution facilities, and that the supply chain be regionalized to allow for quicker access during emergencies.
Strengthening America’s Aging Healthcare Supply Chain
The increasing demand for healthcare supplies in the US demands a more robust supply chain as the population ages. The recent devastation of Hurricane Helene, and the consequent disruption to the supply of crucial medical supplies such as intravenous bags from North Cove’s Baxter International, highlighted this urgent need.
While Baxter International managed to quickly resume partial operations and plans to achieve 90% to 100% of certain IV solution product availability by the end of 2024, the event underscores the risk of supply disruption due to natural disasters.
The aging of America’s population is set to place unprecedented demand on healthcare systems and their supporting supply chains. By 2034, adults aged 65 and above will outnumber children for the first time in US history. The fastest-growing segment is those over 85, with the healthcare system unprepared for the oncoming surge in demand for life-sustaining products such as IV bags, oxygen tanks, and medications.
The Implications of an Aging Population and Fragile Supply Chains
The increasing demand for medical supplies is countered by the vulnerability of the US healthcare supply chain. These systems, built on just-in-time inventory and globalization principles, are susceptible to potential breakdowns due to disruptions like natural disasters or geopolitical events.
Unlike retail goods, the distribution of health-related products requires a balance between efficiency and sustaining human life. Disruptions can be life-threatening for older adults managing multiple health conditions, requiring ongoing medical treatments.
Increasing Domestic Production
The necessity for increased domestic production of essential medical supplies is highlighted by the US’s reliance on foreign sources, with up to 60% of active pharmaceutical ingredients coming from China and India. The COVID-19 pandemic emphasized this vulnerability, with shortages of masks, ventilators, and personal protective equipment.
A strategic systems approach encouraging development of domestic manufacturing capabilities for medical supplies is necessary. Tax incentives, public-private partnerships, and new federal regulations could spark investment in US-based production facilities for essential medical products.
Regionalizing Healthcare Logistics
Healthcare supply chains need to evolve to become less centralized and more regionalized, ensuring that medical products are produced and stored closer to where they’re needed. Creating more geographically diverse supply hubs can help facilities access critical supplies faster during emergencies.
Preparation for an Aging America
With the number of Americans over 85 projected to quadruple to 19 million by 2050, the need for a steady, reliable flow of healthcare supplies will only grow. Building an age-ready healthcare supply chain requires more than crisis responses; it needs a forward-thinking strategy that prioritizes the changing needs of the American public. Policymakers, healthcare leaders, and business executives must collaborate to ensure America’s aging population isn’t left vulnerable to future disasters.
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