In early 2020, COVID-19 spread quickly and broke many global supply chains. For healthcare providers in the United States, this became a big problem. Almost all hospital leaders said the pandemic showed weaknesses in their supply chains, especially for Personal Protective Equipment (PPE). Between March and April 2020, prices for important items went very high; isolation gowns cost 20 times more, and N95 masks rose over 60 times, making buying supplies very expensive.
Even months after the outbreak, 70% of U.S. healthcare places still had trouble getting enough PPE. This caused a lot of pressure on hospital leaders who had to keep people safe while also managing costs. Procurement teams had to change how they worked, as they mostly used manual ordering and “just-in-time” stock systems that kept little inventory to save storage costs.
The pandemic made hospitals change how they handle inventory. They moved to a “just-in-case” system, keeping bigger supplies of key items to prepare for future shortages. Not only supply chain teams but also clinical departments, outpatient clinics, testing centers, and doctors’ offices got more involved in managing supplies. This made hospital supply systems more complex.
Before COVID-19, many hospitals used manual or old software systems for buying supplies. These systems did not show real-time updates and were slow to react. When the pandemic began, these ways were not good enough to deal with sudden demands.
The crisis pushed hospitals to use automated buying tools, such as cloud-based supply chain systems and enterprise planning tools with artificial intelligence (AI). For example, Aspirus, a healthcare system, used procure-to-pay automation. Julie Trudeau, their procurement manager, said after automation was used, “Nobody touches those orders anymore,” meaning manual input was no longer needed for big complex orders. These systems help lower mistakes, speed up orders, and make sure hospitals follow contracts.
Many hospitals also started using AI analytics to predict shortages and manage inventory better. These tools use real-time data to help hospitals plan and avoid running out of supplies during busy times.
The technology also changed how hospitals manage payments. At Children’s of Alabama, Chuck Payne, who handles payments, said automating invoice work made payment plans easier and stopped late payments that could cause supply problems. This automation helps hospital finances by lowering admin costs and improving cash flow.
One big lesson from COVID-19 was how different healthcare places are connected in supply chains. Hospitals no longer work alone from clinics, radiology centers, labs, and doctors’ offices. Supply teams now help these places buy and manage supplies in ways that fit their needs.
Data from supply chain surveys show that managing supplies increased by about 15% for imaging centers and also grew for radiology, labs, and doctor offices. This shows hospitals are working more together, making supply buying more reliable across different care sites.
This change required better teamwork between supply leaders and clinical teams to keep costs low and maintain quality. Hospitals built stronger ties with suppliers to get good deals and reliable supplies during uncertain times.
Using AI and automation in hospital procurement is a big sign of change in supply chains. AI helps automate supply orders, check contract rules, and pick the best vendors by combining clinical data. This reduces manual work, cuts errors, and saves money.
McLeod Health uses AI buying tools similar to online marketplaces. Carmen Winfield, their supply chain VP, says these tools help staff pick approved vendors and products easily, which helps follow spending rules without overloading the procurement teams.
AI analytics also give advice on how to reduce supply risks. Hospitals can see possible problems and change orders early to keep supplies steady. This is very important because running out of supplies can affect patient safety.
3D printing also helped during the pandemic. Hospitals made PPE and surgical tools locally this way, which lowered the need to depend on long supply chains and saved shipping costs. This tech is still new but may be used more in the future for custom tools and even human organ parts, helping supply chains stay strong.
Cloud supply chain systems improve teamwork and sharing of data. They give leaders better views of stock and orders. By 2026, about 70% of hospitals are expected to use these systems. Research shows 78% of hospitals that switched to cloud systems say it helps with decision making.
New tech like blockchain promises better tracking, security, and transparency in hospital buying. When combined with Internet of Things (IoT) devices and smart contracts, it could cut fraud, speed up deals, and make supply chains more reliable. Nearly 40% of supply leaders expect mostly automated supply chains by 2030.
Using new technology also means training workers. EY surveys show 61% of companies have started or planned retraining supply teams to use digital and automated tools. This includes learning how to use AI, analyze data, and work with cloud systems.
Hospital leaders and IT managers help by giving the right tools and education to staff. This training helps reduce resistance to changes, makes work easier, and brings clinical teams closer to procurement activities.
At the leadership level, supply chains have become more important strategically. About two-thirds of healthcare leaders now see supply chains as key to how well the whole organization works. CEOs and boards are more involved in supply chain planning that focuses on reducing risks, improving efficiency, and controlling costs.
Supply problems and mistakes cost hospitals a lot of money. U.S. hospitals spend over $57 billion a year on medical and surgical supplies, with each hospital spending about $15.4 million on average. Supply shortages and errors increase costs and make budgeting harder.
Automation helps by cutting admin work, stopping order errors, and improving spending rules. Hospitals with automated invoicing, like Children’s of Alabama, say they plan finances better and have better relationships with their suppliers.
Also, moving from “just-in-time” to “just-in-case” stock, guided by AI forecasts, stops emergencies and last-minute buying that cost more. Strong supplier partnerships mean better prices and more stable agreements.
Better procurement also helps patient care. Having needed supplies ready lowers treatment delays and keeps patients safer by making sure staff have what they need.
COVID-19 showed supply chain problems but also sped up using new tech. AI, automation, cloud computing, and advanced data tools are becoming common in hospital procurement.
Hospitals face growing challenges like supply disruptions, cost pressures, and changing rules. They need smart, connected, and automated supply systems to respond faster and more reliably.
The future may have mostly automatic supply chains where people focus on big decisions while machines handle routine buying, payments, and stock checks. Using clinical data with these systems will help match supplies better with patient care and costs.
Hospital managers and IT teams must keep supporting investments in technology, training staff, and teamwork across departments. These ongoing efforts will keep improving how hospitals buy supplies and get ready for future problems.
This ongoing change in U.S. hospital procurement is part of a larger update of healthcare supply chains. By using automation, AI, and digital tools, hospitals are working to build buying systems that are stronger and more cost-effective to support patient care during uncertain times.
The pandemic exposed significant vulnerabilities, with 98% of hospital leaders acknowledging supply chain issues, particularly shortages of personal protective equipment (PPE). This resulted in skyrocketing prices, with isolation gowns rising by 2,000% and N95 masks by 6,136%. Even months later, 70% of facilities struggled to secure PPE.
90% of hospital purchasing leaders reported changes in their procurement strategies, shifting to more effective inventory management systems. Organizations with automated solutions were better equipped to track supplies, while those using manual processes were severely challenged.
COVID-19 expanded the responsibilities of supply chain management teams, which began supporting procurement and inventory management not only within hospitals but also for clinics and non-acute settings.
Approximately two-thirds of executives stated that the pandemic improved their perception of the supply chain’s impact, highlighting its essential role during critical times.
Procurement teams encountered difficulties due to reliance on manual, paper-based processes and legacy systems. Restrictions on personnel hindered their ability to access necessary technologies for processing orders while working remotely.
Post-pandemic, healthcare providers prioritized mitigating supply chain risk (75%), forming strategic supplier partnerships (38%), and streamlining logistics (34%) to enhance overall operational efficiency.
Healthcare supply chain teams expanded their supplier relationships, reaching out to broader networks for critical items. They collaborated closely with clinical teams to ensure product quality while managing costs effectively.
The pandemic highlighted the importance of reliable supplier relationships, as healthcare supply chain teams needed to be agile in sourcing products quickly to meet urgent demands.
The pandemic shifted strategies from just-in-time (JIT) methodologies towards maintaining ‘just-in-case’ stock levels to better prepare for sudden demand surges.
The lessons learned during COVID-19 assist in building more resilient healthcare supply chains, focusing on optimization, risk mitigation, and stronger partnerships to better withstand future disruptions.
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