When Buying Gets Trying

Imagine placing an order in late 2021 that won’t be delivered until mid-2023.  

Yes, there are points where the world’s current shortages and supply chain snarls have gotten that bad. A staggering array of goods and materials have become expensive, delayed, or impossible to find—some of them essential for the delivery of emergency medical services and other healthcare. The reasons are complex and interrelated but include demand, shortages of raw materials, and transport delays and capacity shortfalls. And, sorry to say, their cumulative impact and the headaches they’re causing aren’t likely to ease soon. 

“From what we’re hearing, this issue is not going to clear up until toward the end of 2022,” says Tim Rubert, vice president of government affairs for major EMS supplier Bound Tree Medical. “Unfortunately, we’re going to be in this pickle for a while.”

“It’s going to continue, from what we can see, well into 2022,” agrees Todd Fagley, founder and CEO of Minnesota-based MedSource Labs, which develops and sells products for a range of healthcare uses. “How far is unclear, but the one certain thing you can expect is uncertainty. That’s what we’ve navigated through for the last few years, and it’s still the name of the game.”

Domino Effects

A November report from MarketWatch attributed the bulk of the shortage problem in the U.S. to demand.¹ It cited data from America’s nine largest ports showing that through September, total container volume entering the country had increased by 25% in a year and almost 20% over pre-COVID numbers from 2019. The ports are managing 34% more container volume than just five years ago. 

Some big ports haven’t kept up, resulting in the record backlogs seen in the fall, but the problems don’t stop there. Once goods get ashore there have been troubles getting truckers to take them to distribution centers. Rail is backed up too. And across the board worker shortages and the continued presence of COVID impede full-capacity operations. 

“There’s a domino effect because the world economy and supply chains are so hooked together,” says Fagley. “Everybody’s interconnected. So one domino falls, and now, rather than just gloves being short, the materials that go into the gloves are short. And those materials also go into these other products, so they become short. And then the supply chain slows everything down. So it’s just a multiplier that happens once the first thing tips. 

“Globalization has great benefits in some ways, but it also has this downside we’re feeling right now.”

A two-year pandemic has also twisted equations in unprecedented ways and contributed to current woes. Global demand for PPE exploded in spring 2020, and key items like gloves, N95 masks, and ventilators quickly ran short. Nitrile gloves proved a particular vulnerability: 99% are made in China and Malaysia, and the synthetic rubber they require comes almost wholly from Asia. As global demand soared from 290 billion to 585 billion units, it outstripped global production capacity, which is about 370 billion a year. That ramped up by another 50 billion in 2021 but still fell short of need.² 

That’s one example, but far from the only. Shortages have been broad and unpredictable, like spot fires popping up. 

Mike Wenshau, MedSource Labs’ VP of sales, is also assistant chief of the Hopkins Fire Department in Minnesota. 

“We don’t run ALS at our department, but I hear from colleagues in ALS departments that they’re seeing rolling back orders on stuff like IV administration sets and catheters, things like that,” he says. A rolling back order is glibly described by supply-chain expert Les Grant as “shorthand for ‘something went wrong between here and wherever this item was made, and we don’t want to publicly announce there is a shortage, but you are not getting your product, and we don’t know when you will.’”³ 

“Those are everyday products, too,” adds Wenshau. “It’s not like a 12-lead monitor. You can live with an old 12-lead monitor. You can’t live without IV supplies.”

He also notes COVID shortages drove up glove prices by 30%–40%. That has a mighty big impact when you use them on every call. “Your supply budget’s gone before the year’s even started,” Wenshau observes. “That’s really tough, especially for big, busy agencies.” 

Feeding Frenzy

Then there are ambulances. Those problems begin (but don’t end) with microchips.

Microchips, or semiconductors, help power everything from your phone to your car. Most are produced in Taiwan and Korea; just 12% are made in America. Even before COVID they were in short supply. Then came some bad decisions and bad luck.⁴  

COVID forced the shutdown of factories making chip components. Electronics demand by homebound consumers grew, and orders began to stack up. Asian port shutdowns bottlenecked things further. 

Auto manufacturers had canceled orders with COVID, fearing a long impact, so chip companies pivoted to making chips for consumer products. That led to a shortage of vehicle chips when demand rebounded. As icing on the cake, Japan’s Renesas plant, which makes almost a third of the chips used in the world’s vehicles, suffered a debilitating fire, and some of America’s only chip plants were waylaid by last year’s winter storms in Texas. 

Some results: Nissan produced half a million fewer vehicles in 2021 than 2020. GM’s truck production was interrupted. And Ford, which provides around 70% of ambulance chassis used in the U.S., stopped that production at some plants last spring. 

Ford’s move had predictable downstream effects. 

“We didn’t get any Transits at all, I’d say, from April to the first of September, and that shut our Type II line down completely,” says Paul Marshall, national sales manager for Missouri-based Osage Ambulances. “It got real tight on the E-series cutaways; they quit producing for a while. And then F-series, they’ve kind of trickled in.”

Other parts and pieces are in paucity too. “We’ve seen the same type of availability issues in a number of areas, whether it’s HVAC components or electrical wire, circuit boards, and even delays or shortages in lights, sirens, and windows,” says Anoop Prakash, president of the REV Group’s Ambulance Division. “Those are components you might think would be easy to get, but in many cases it's delays impacting the materials those suppliers need to make the final product.”

Things got so precarious last summer that Osage shifted briefly to 30-hour workweeks, though it quickly moved back to 40. Throughout the year the company worked closely with Ford and its fleet dealer in Olathe, Kan.—the largest in the country—on getting prioritized. Leaders now feel better about Ford chassis availability going into 2022. 

“Things got better because our suppliers really tried to work hard at figuring out what we absolutely had to have,” says Marshall. “I think they’ve done a better job of allocating and trying to spread things out. We were actually able to buy ahead and get early shipments on a few things last summer and had room to store them because our Type II line was down. But we are still concerned about the availability of many of the parts and components we need going into the new year.”

The REV Group has moved similarly, working closely with partners like Ford and GM to communicate its needs and maximize allocations. And the ambulance industry as a whole produced a joint letter in 2020 to the OEMs outlining its need for chassis and asking for prioritization. 

“I think that level of coordination in the industry is unprecedented,” says Prakash. “We’ve built some clear lines of communication among manufacturers like us and with groups like the American Ambulance Association, NAEMT, and NASEMSO as we talk about the issues facing EMS capacity in general, whether it’s chassis or the availability of EMTs and paramedics. It’s important to keep all of that top of mind for those who can help influence it.” The company has also sought help from members of Congress in the states where it operates. 

Like the small electronics, demand is now spiking for ambulances despite the delays, thanks to factors like federal grant money. But ironically, the influx of cash is worsening the spiral. 

“It’s kind of a feeding frenzy for new orders,” says Marshall with a grim chuckle. “People don’t have [a vehicle] in the budget, but they get grant money and decide, ‘Let’s get one.’ Then with the lead times, they say, ‘Well, if it’s getting that long, that puts us into next year’s budget cycle, so we might as well order two—let’s double it.” 

A Different Way to Buy

For both EMS organizations and the companies that supply them, today’s shortages herald some new ways of doing business. Priorities are flexibility and maximizing your options. 

Vendors and distributors have by necessity become closer with their legislators. “I’ve spoken to at least 60 Congressional offices around the country and have 2–3 calls each week to talk about the challenges impacting EMS,” says Rubert. Same goes for the executive branch: “If there’s a key issue or something we need immediate action on, we have an open line with FEMA to help if they can,” he adds. “It’s not only Congressional contacts, it’s also keeping agencies like HHS, the FDA, and FEMA up to speed. They reach out to us as well for a pulse on what’s going on with EMS.”

That’s also the case for MedSource, whose marketing and communications chief, David Wargin, has similar calls daily. “We’ve tried to be strong advocates for the need to prioritize medical supplies and help educate key policy-makers,” Wargin says. “We’ve been working closely with partners and customers in the EMS space to advance that voice. And on their end, policy-makers have been very receptive in trying to identify public-private partnerships and collaboration where we can work together.” 

A tactic Bound Tree has used is inviting members of Congress to its facilities around the country. They get to observe a slice of the EMS supply chain in action and meet with EMS leaders and providers the company invites for mini-town hall sessions. That firsthand perspective has a huge impact. 

As an end user your best practices are to optimize inventory management, order early, work with your vendors, remain open to others (but cautiously; see sidebar), and most of all keep your options open. 

“If you’re doing just-in-time ordering, you have to pivot on products all the time, because there are back orders coming in all over the place with different suppliers,” says Wenshau. “If you want to get ahead of that, you need to get three months’ stock and hold it. Instead of just-in-time ordering, that’s a big ask.”

“Purchasers have to be multifaceted, multisupply-oriented, and very flexible,” says Fagley. “It’s a different way of purchasing and procuring. If you always bought a certain brand, well, you may have to change now. Flexibility isn’t an easy solution, but you have to do what you have to do.”  

Sidebar: Florida Agency Creates Innovative Supply Relationship to Avoid Shortages

Florida's Lee County EMS has mitigated supply issues by entering a collaboration with LeeSar, a hospital partnership group and healthcare supply chain management service, which also helps track medication use.
 
“About 10 years ago we did a lot of our own logistical work with acquiring,” says Colin Johnson, Lee County's deputy chief of public safety. “We would order our own medications and do our own kitting—we had a whole internal process to accomplish that. We found it was increasingly difficult to manage that process, and right in our own backyard we found a company, LeeSar, that could help.”

LeeSar handles supply of both pharmacy and logistical products for hospitals; Lee County EMS approached the company about transitioning their supply to them, and LeeSar in turn created a new channel for their products. 

The collaboration put Lee County EMS on par with hospitals in terms of prioritization. Typically, hospitals receive medications first, meaning in times of short supply, EMS services might struggle to meet demand. “We essentially became partners with LeeSar and were treated as if we were a hospital,” says Johnson. LeeSar also sources from multiple vendors, making it less vulnerable to supply changes.

Over time the relationship between LeeSar and Lee County EMS created an opportunity for long-term planning, improved tracking of medications, and the potential for supply without waste or shortage. Initially the company focused on supplies for a week’s time, explains Johnson, but that eventually became orders for three months’ worth of medications as LeeSar tracked usage. The lengthy view on supply also meant the service was less likely to run into shortages, as it could plan ahead. 

Tracking Medications

As the companies continued to collaborate, LeeSar was able to view Lee County EMS’ usage of medications over long periods. 

“With software and their expertise, LeeSar could track use of medications and what was near expiration to adjust supply,” says Johnson. “They could make direct recommendations based on our historical usage. They started looking at epinephrine and made suggestions on changes like switching from prefilled to a kit that can be created onboard.” Smart tracking and management of supply on EMS vehicles meant there could be adequate meds without unnecessary waste due to expiration. 

EMS services looking to mirror the Lee County EMS collaboration with LeeSar are advised to seek out a vendor that can access diverse sources and offer services like kitting and management of supply. 

“The important part is to understand historical usage and have a plan for shortages,” says Johnson. “It’s important to have relationships with multiple vendors to be able to source different products.”

—Katie Pfaff

Sidebar: Drug Shortages

Oh, yes, by the way, the drug shortages continue too. Bound Tree keeps track of those for EMS at www.boundtree.com/pharmaceutical-advantage, where it provides a current list, anticipated release dates, when makers expect back orders to clear, and possible substitutes. In late November it included key EMS drugs like epinephrine, fentanyl, ketamine, midazolam, naloxone, and TXA. 

Short expiration dates have also been a problem. “A number of our customers are seeing those,” says Rubert. “There are certain drugs they have to carry but don’t use all the time, and with short expiration dates that can lead to waste.” 

Talks with the FDA about it are ongoing. In the meantime Bound Tree offers strategies to cope with drug shortages and inventory management solutions to avoid shortages and expired drugs.  

—John Erich

Sidebar: Choose Your Partners Well

With 2020’s initial COVID PPE shortages, all kinds of new potential suppliers emerged for needed items like N95 masks. Determining whom you wanted to work with was challenging. 

“We were flooded with all kinds of potential suppliers and questionable products,” says Rubert. “We stuck with our primary suppliers because we had to ensure things were vetted properly for quality purposes. We turned away about 99% of those we hadn’t worked with in the past.”

A CNN investigation in October found tens of millions of counterfeit and second-hand nitrile gloves had reached the United States, including visibly soiled, reused gloves from a Thai company.⁵ Some buyers lost millions on the unusable product. U.S. Customs also told CNN it had seized around 40 million counterfeit face masks and hundreds of thousands more PPE items. 

And quality isn’t all you should worry about. “When we vet our suppliers, we have a detailed five-page questionnaire they fill out,” Rubert says. “We’re also very cognizant of things like sustainability. We won’t buy from suppliers that use child labor, for instance. You’ve probably seen reports where CBP has shut down certain medical products that were manufactured using child labor. That’s part of our vetting process and where we stand firm.” 

—John Erich

Sidebar: A Long Tail

Some good news is, with the possible exception of COVID, all these problems should ultimately be fixed—too much money’s being missed out on not to. But the downstream effects for EMS may flow a bit further.

“There’s such a huge amount of resources that have to be dedicated to logistics and procurement now—it’s disproportionate to what it was before,” says Fagley. “So rather than innovating new devices and creating new solutions for the end user or the caregiver, we’re spending our time trying to get freight here and out economically. That’s a big change. 

“Innovation is definitely being compromised. People may not see that—they see skyrocketing costs and delays in all these goods. But the next ripple effect is going to be in innovation, and you’re going to see solution delays. And then, of course, budgets are going to be a huge issue for everybody.”

—John Erich

References

1. Marriner K, Vardi N. This is how America’s booming demand for goods shattered the supply chain. MarketWatch, 2021 Nov 18; www.marketwatch.com/story/this-is-how-americas-booming-demand-for-goods-shattered-the-supply-chain-11637242353.

2. Defender Safety. Navigating the Nitrile Gloves Shortage, 2021 May 3; https://defendersafety.com/articles/navigating-the-nitrile-gloves-shortage/.

3. Grant L. A problem in need of solutions. Healthcare Purchasing News, 2018 Sep 22; www.hpnonline.com/sourcing-logistics/article/13001342/a-problem-in-need-of-solutions.

4. Feder S. Understanding the global chip shortage, a big crisis involving tiny components. Popular Science, 2021 Oct 12; www.popsci.com/technology/global-chip-shortage/.

5. McLean S, Davey-Attlee F, Olarn K, Lister T. CNN Investigation: Tens of millions of filthy, used medical gloves imported into the US. CNN, 2021 Oct 29; www.cnn.com/2021/10/24/health/medical-gloves-us-thailand-investigation-cmd-intl/index.html.

John Erich is the senior editor of EMS World.