Integration vs. Collaborative Redesign Strategies of Health Systems’ Supply Chains in the Post-COVID-19 New Normal using Cross-Sectional Survey Across the United States (Preprint)

Abstract

How are health systems shaping strategies to restore the supply chain disruptions in 2021? Do they want to improve the supply chain integration? Do they want to collaborate with new start-ups to revamp the supply chain? Given the widespread disruptions to supply chains in 2020 because of the COVID-19 pandemic, these questions are essential to have confidence in health systems’ supply chain model strategies. Plausibly, health systems have an opportunity for redesign, growth, and innovation by utilizing collaborative strategies now, compared to the usual strategies of integrating their existing supply chains to reduce inefficiencies. This study is focused on teasing out the nuance of supply chain integration vs. collaboration strategies for health systems in the post-COVID “new normal.”

We focus on two research questions. First, we explore the impact of perceived supply chain challenges and disruptions on health systems’ supply chain integration (SC-INTEGRATION) and collaborative redesign (SC-REDESIGN) strategies. Second, we examine the outcomes of integration and collaborative redesign strategic choices on growth and service outcomes.

We surveyed a robust group of health system chief executive officers (CEOs) (N=625) across the United States from February to March 2021. Twenty-two percent of the CEOs (135) responded to our survey. We considered supply chain relevant strategy and outcome variables from the literature and ratified them via expert consensus. We collected secondary data from the AHRQ Compendium of the U.S. Health Systems, leading to a matched data set from the 124 health systems. Then, we employed ordered logit model estimation to examine CEO preferences for partnership strategies to address current supply disruptions and the outcomes of strategy choices.

Health systems with higher disruptions would choose integration over redesign, indicating that they still trust the existing partners. Integration strategy is perceived to result in better service outcomes while collaborations are perceived to lead to greater growth opportunities; however, the role of integration on growth is not completely ruled out. Plausibly, some health systems would choose both integration and collaborative redesign models, which have a significant relationship with both service and growth, establishing the importance of mixed strategies for health systems.

The cost of healthcare continues to rise, and supply-related costs constitute a large portion of a hospital’s expenditure. Understanding supply chain strategic choices are essential for the success of a health system. Although collaborative revamp is an option; but still focusing on and improving existing integration dynamics is helpful to foster both growth and services for health systems.