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The U.S. Healthcare System Gazing Down The Barrel Of The Gun

By Anna Peel. Originally published at ValueWalk.

Healthcare Krensavage Partners

Plagued with rising costs, the US healthcare system is experiencing immense pressure, as supply chain worries, inflation, labor shortages and geopolitical tension right on the heels of the COVID-19 pandemic is quickly starting to wane its resilience.

After experiencing a two-year health crisis, which saw both private and public health care facilities deal with an exodus of anxious-driven patients, a constituent of added concerns is now weighing down on healthcare officials to look for alternative solutions to increasing problems.


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Data revealed that in 2020, health spending per person was on average $11,945, with the total national health expenditure increasing by 1.9% in the same year. Even with the high spending bill being $4,000 more compared to other OECD and high-income nations; the government is now struggling to keep a grip on growing problems.

As tensions both at home and abroad escalate, healthcare costs from basic insurance premiums to medical equipment are projected to increase by 6.5% according to PwC’s Health Research Institute, as the pandemic has yet to subside completely.

“The U.S. healthcare system is reaching a transition period, where we need to rather focus on how we can solve current problems, instead of hammering on what’s in the past. We’ve seen where our mistakes may lie, and whether it’s the medical equipment we use, to the way we administer patients – we need faster and more reliable innovation practices,” told a spokesperson from Soma Tech International, a leading medical equipment vendor.

With healthcare facilities facing increasing tension, US public health officials are now turning towards the federal government looking for support. But with the disruptions already taking off well into 2022, how will the coming months play out not just from the consumer perspective, but more so for medical professionals dealing with healthcare constraints.

Russia And Ukraine

Several weeks of ongoing tension between Russia and neighboring Ukraine since the invasion started on February 24 has now become the backdrop of continuing medical supply chain problems which has led some experts to anticipate it will gravely impact the US healthcare system in the coming months.

Transportation of medical goods, equipment, and other supplies has hit a dead end, after Russia closed its airspace to more than 36 countries, including the US. With some medical goods being exported from western China, the closed airspace could mean that raw materials for medical supplies would need to be rerouted.

Rerouting freight could mean extended travel periods, longer transportation times, increased costs, and increased delays. Even with some countries, including the US looking to develop and manufacture most of their medical supplies, raw materials required that aren’t extracted within the country can impact final costs.

A report by Premier found that aluminum, nickel, titanium, neon gas, and iron are the most used materials in surgical elements and medical equipment. As sanctions imposed by the Biden Administration have piled up, steel extracted from Russia has seen major delays for manufacturing plants.

Reliance on materials and goods extracted and imported from China, Russia, Ukraine, or neighboring countries have started to impact supply and demand, putting healthcare officials in a tight squeeze.

Labor Shortages

While it’s not just been smaller less influential industries that have been experiencing labor shortages throughout the last couple of months, healthcare advisors are now strapping themselves for an even tougher year concerning labor shortages and rising costs.

On average, the cost of medical labor expenses in respiratory departments has increased by 22% as of September 2021. Despite lower volumes, surgery departments have also experienced labor cost increases, with hourly rates for respiratory therapists and lower staffing levels have pushed overall healthcare costs to new highs.

The demand for healthcare staff in many departments has reached an almost crisis level in the last few months, as the staff has expressed concerns regarding extended work hours, emotional and physical burnout, and the fluctuations in COVID-19 related hospitalizations and treatment.

Healthcare facilities have yet received any indication of relief as mounting issues have now plagued staff to resign en masse, with nearly 1 in 5 health care workers quitting their job during the pandemic.

Labor and staffing issues aren’t the primary reason why healthcare workers are leaving their jobs, but rather low pay. In 2020, Kaiser Permanente nurses planned a mass strike, as the company looked to implement salary and benefits cutbacks.

Coronavirus vaccines have also been the case of mass resignations, with some local hospitals in New York pausing maternity services for dozens of staff members who resigned after refusing to receive inoculations.

All over the industry, labor shortages have bashed the healthcare system, and while it may not stem from a financial viewpoint, as per se, additional injunctions have caused staff to up and leave the workforce entirely.

Pharmaceutical Supply Issues

Perhaps the overbearing issue regarding supply chain issues has been missed when it comes to the supply and demand of pharmaceuticals.

A survey conducted by the United States Pharmacopeial Convention (USP), which sampled roughly 500 healthcare professionals from all 50 states found that 83% thereof have claimed that drug and medicine supply has become a growing issue in recent years.

More so, of the 500 surveyed, 90% shared that the global medicine supply chain is not reliable at all during times of crisis, with more than 70% stating their trust in the supply chain has completely eroded in the last few years.

It’s not just recently that we’ve experienced supply chain constraints when it came to pharmaceuticals and the distribution thereof. These issues have been staring the US healthcare industry in the face for years.

The pandemic wasn’t the only thing that completely ripped the US drug supply issue open, but it was rather the increased demand for low-quality and cheap drugs a decade earlier which left manufacturers with the source of the problem.

Now, even during the last 24 odd months of the pandemic, issues have simply worsened, as depleted resources and reliance on suppliers have pushed healthcare workers to prescribe alternative solutions or decide which patients are more suited to receive pharmaceutical treatment first.

Even with the US implementing new policies and regulations for manufacturers regarding the expected medical supply shortages – a detailed risk management assessment has yet to mitigate the problems some healthcare workers are faced with.

Government Aid And Intervention

To date, the government and its network of subsidiaries have managed to take several actions in an ongoing effort to have a better grip on the current state of things.

The Food and Drug Administration (FDA) has issued various regulatory and technical guidance for drug and medical equipment manufacturers to ensure a shortage list is constantly being updated.

The FDA has also now started looking for innovative ways in which it can establish a more transparent channel of communication between manufacturer, supplier, and consumer. Regulatory policies regarding the communication between manufacturers and staff were one of the major gaps the FDA was recently able to plug.

Back in D.C, The White House has also been able to make a few adjustments to its plans, expanding the domestic production of critical and high-demand medication. Other procurement plans from the White House under the guidance of the FDA have seen some suppliers purchase medical goods and pharmaceuticals from domestic manufacturers rather than importing.

The Bottom Line

While the government has gained some momentum to make adjustments, progress has been relatively slow. Ongoing issues both from a domestic and international stance have pushed the US healthcare system to the brink.

Unless there is actionable intervention, consumers, manufacturers, and suppliers will see costs sharply increase in the coming months, perhaps running well into 2023.

There’s yet no clear sign of how the year will unfold, with the ongoing war, and the global supply constraints squeezing all markets – the ball is now up in the air, and it’s up to the government to decide how, and when it will drop.

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