The COVID-19 pandemic showed major weaknesses in supply chains worldwide, including in the healthcare sector. Healthcare was hit hard because it depends on timely delivery of critical supplies and equipment. The pandemic caused disruptions in manufacturing and transportation, as well as sudden spikes in demand for items like personal protective equipment (PPE), ventilators, and medicines.
According to McKinsey, in May 2020, 93 percent of senior supply chain executives planned to make their supply chains more flexible and resilient. Healthcare has moved ahead in this transformation compared to many other industries. Around 60 percent of healthcare organizations regionalized their supply chains, locating production closer to the markets they serve. Meanwhile, 33 percent moved production nearer to the final users. These steps helped reduce reliance on distant suppliers and transport routes prone to disruption.
Despite these efforts, only half of companies had clear visibility into risks at the first supplier tier, and just 2 percent had insights beyond the third tier. This reveals significant gaps in understanding vulnerabilities deeper in the supply chain. For healthcare providers and administrators, it remains important to have thorough oversight to avoid blind spots that could affect patient care.
Several approaches are used to manage supply chain disruptions in healthcare:
Researchers like Ying Guo and Fang Liu emphasize inventory management as a key element in building supply chain resilience, particularly in healthcare where demand can be unpredictable.
UnitedHealth Group’s Sustainable Procurement program combines supply chain resilience with environmental and social governance principles. They evaluate and engage suppliers carefully to manage risks related to environmental impact, human rights, and supply stability.
In 2022, the company supported over 7,000 community jobs and paid $500 million in wages through its supplier diversity program. Over the last decade, it spent $4.8 billion with diverse suppliers, showing ongoing commitment to regional economic development and supply chain strength.
The program uses data-driven scorecards to monitor supplier performance on risk factors and service agreements. Executive leaders and the board review these results monthly to ensure accountability and alignment with sustainability goals.
Darren Harmon, Senior Director of Supplier Diversity and Sustainability, described this as a “purpose-driven approach” where collaboration with suppliers aims to improve environmental and social conditions while maintaining operational standards. For healthcare administrators, this model shows supplier diversity as a practical method for building a resilient supply chain.
Managing risks effectively starts with careful identification and evaluation. Studies on supply chain risk management note that healthcare supply chains must consider risks both upstream and downstream, including supplier capacity issues, political instability, transport delays, and demand changes.
Comprehensive risk assessments often include Scope 3 emissions evaluations, where indirect emissions from suppliers are analyzed for compliance and operational risk.
Technology plays a crucial role through:
Ongoing supplier engagement programs, like the CDP Supply Chain Program, improve climate reporting and assess environmental performance openly. This support helps organizations pick partners aligned with long-term risk management and sustainability priorities.
Investing in supplier capacity is important for healthcare systems that want a broad and reliable supplier base, including minority-owned and small businesses. Capacity building can include:
These actions enhance economic inclusion and strengthen supply chains by distributing risks among qualified suppliers.
Healthcare supply chains increasingly use digital tools and AI to improve visibility, speed, and decision making. Advanced analytics and workflow automation support:
Despite investments after COVID-19, only 39 percent of organizations have implemented risk monitoring tools. Healthcare administrators and IT managers should prioritize technologies that combine visibility with proactive risk analysis.
Rapid digital adoption has created a skills gap. By mid-2021, just 1 percent of companies believed they had enough internal digital talent. Healthcare providers should consider:
Closing this gap is key to fully using AI and automation for managing supply chain risks and suppliers.
Regionalization means moving procurement and production closer to healthcare facilities. This reduces transit time and vulnerability to international disruptions. Healthcare leads in this approach; a McKinsey study found that this sector regionalized supply chains more than others.
This strategy fits well with sustainability goals seen in programs like UnitedHealth Group’s, combining supplier diversity and environmental responsibility with operational strength.
Regional suppliers often are small and diverse businesses. They support local economies and improve response times. For healthcare providers, aligning regionalization with diversity efforts helps create supply chains that are both robust and socially aware.
For healthcare administrators, owners, and IT staff in the U.S., managing supply chain risks requires a broad approach. This includes advanced analytics, strategic supplier partnerships, capacity building, and sustainable purchasing.
Integrating AI and workflow automation enhances real-time risk monitoring, logistics optimization, and supply continuity, all of which impact patient care and operational stability.
Learning from organizations like UnitedHealth Group and applying lessons from pandemic responses can help healthcare providers create stronger, more diverse, and better-prepared supply networks that handle current and future challenges.
Ongoing investment in technology, digital skills, and supplier collaboration remains essential for effective supply chain management as healthcare continues to change.
UnitedHealth Group aims to advance responsible environmental and social practices through a sustainable procurement program, focusing on sustainability priorities including a high-performing health system, a healthy environment, and responsible business practices.
UnitedHealth Group partners with suppliers to minimize risks, promote human rights, and enhance diversity in the supply chain, ensuring compliance with the Supplier Code of Conduct and ESG expectations.
The program aims to assess suppliers’ sustainability practices, reduce greenhouse gas emissions, enhance supplier diversity, and ensure compliance with environmental and social governance standards.
A supply chain ESG risk assessment is conducted, informing strategic decisions and reviews of suppliers based on their environmental, social, and governance practices.
UnitedHealth Group has committed to setting near and long-term emission reduction targets in line with the Science Based Targets initiative Net-Zero Standard to mitigate greenhouse gas emissions.
UnitedHealth Group integrates supplier diversity into sourcing processes, supporting diverse suppliers and offering training and opportunities to ensure their engagement in subcontracting.
This program monitors supplier performance against service agreements and key risk indicators, using data-driven scorecards to identify trends and areas for improvement.
The company offers technical support programs, training sessions, and a Supplier Diversity Accelerator program to enhance diverse suppliers’ performance, particularly in ESG areas.
The enterprise-wide Supplier Risk Management Program identifies critical suppliers, engages in resiliency planning, and conducts assessments to ensure compliance and stability in supply chains.
The 2023 Sustainable Procurement Summit focused on ‘Partnering for Purpose and Impact,’ emphasizing collaborative efforts to achieve the company’s ESG goals and improve healthcare outcomes.
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