The Art of Pediatric Supply Chain Management: Balancing Care and Costs

Turner said, “In healthcare, there’s always a delicate balance between cost and patient care, with hospitals continuously trying to manage expenses while ensuring quality outcomes. However, in pediatric settings, there's a greater tendency to let cost considerations take a backseat more readily compared to the emphasis on delivering high-quality care. Ensuring that every procedure is equipped with the right supplies tailored to each child’s specific needs becomes the absolute priority.”

He added, “From my perspective, the biggest differences between supply chain operations in children's hospitals and regular hospitals stem from the specialized needs of pediatric care. With a patient demographic that ranges from neonates to adolescents, children’s hospitals face added complexity in managing supplies because of the range of supplies needed for this population. The wide variety of SKUs needed for different ages, sizes, and medical needs means our supply chain has to be more versatile and precise compared to an adult hospital. This creates unique challenges, especially in departments like Cath labs, where limited space must accommodate a wider variety of SKUs than in adult facilities due to the range of equipment sizes required.”

Hospital design

Graham largely agreed and began at the facility itself. She said, “Firstly, there are definitely differences in the way that we approach value analysis—how we look at and make decisions around supplies and equipment that are purchased for the hospital. This even goes toward when we are looking at building a new facility. We have to think about how rooms are designed in order to accommodate a family member being there 24/7 because there’s typically someone who stays, whether it is the mother, the father, the grandmother, whomever, someone that typically stays in the room overnight with the patient. So, even with room design, we have to think about that. And even just walking down the hallway to go from one place to the next, it's a kid friendly environment, pictures on the walls, different interactions.”

“Additionally, most children’s hospitals have a family resource center. This is so the family can maybe step away for a little bit,” she continued. “This area has computers and different things that are just a respite kind of area for the family. We also have to have laundry machines available, washers and dryers, for the family to use while they are staying.”

Graham commented, “And this is just design. When we look at what we purchase, we have to look at it from a different lens in order to ensure that the products that we are purchasing are safe for the pediatric patient as well as for the adults. For example, products that come with a cap, like a syringe that you’re using to administer medication, if the cap is accidentally left in the room, what is the first thing the child is going to do? They see it in the bed and think it is a piece of candy, so the cap is going into the child’s mouth.”

Supplier relationships

When asked about vendor relations, Turner noted, “A key element in handling these complexities is strong communication with vendors. For any hospital, the key is adopting the right blend of self-distribution, safety stock and just-in-time inventory management. With pediatric hospitals, solving for that just-in-time component only works if the supply chain leaders and vendors are in sync, sharing information on consumption trends and understanding the unique demands of the pediatric population.”

He added, “From a supplier's side, it’s not just about fulfilling orders; they need to understand the seasonal variations and consumption patterns unique to pediatric care. Strong data visibility is crucial here, allowing both hospitals and suppliers to forecast demand accurately and avoid disruptions.”

Graham noted that other things that have to be taken into consideration are essential care items for an infant or toddler, such as a highchair. Specifically, she said, “We even have to think about potty training chairs for those children that are in that developmental stage. And bedside commodes. Typically, in an adult hospital they have one size. Well, we need different sizes for children—the adult size is just way too big. And it's difficult obviously for them to use the adult size. Children are not small adults. A lot of people and a lot of suppliers think they are, though. We truly want to educate people that a pediatric patient is not just a small adult.”

“For example,” she continued, “due to our diverse population, we define certain age groups as follows: neonates are from birth to 28 days, infants are 29 days to 2 years, children are 2 to 12 years, adolescents are 12 to 21 years, and adults are over 21 years. We must accommodate sizes for every age group, which can get complex.”

Graham said, “For instance, we need specialized lancets (the devices used to prick your finger for blood tests) in different sizes. For neonates, particularly very small babies like preemies, we need the smallest lancets to collect capillary blood samples. Although blood tests are typically done on their heels, these babies are so small that it requires the tiniest lancet available. On the other hand, we also need lancets for adolescents and adults. This means we have to maintain a range of products for all age groups.”

Graham explained that the challenge is that in pediatrics, we often face limited product options, especially since our purchasing volume is much smaller compared to adult hospitals. This forces us to rely on multiple suppliers for the same product, as one supplier may only offer neonatal sizes, while another might carry the regular or adult sizes. This creates complications in standardizing products across our facilities.

She continued. “Additionally, supply chain issues, such as backorders or product discontinuations, can exacerbate these challenges. For example, last year, one company that manufactures neonatal peritoneal dialysis sets went on backorder for over four months. This left us with no ready-made solution, so we had to manually gather 11 separate items from different suppliers to create a similar set. This process added extra work for both the supply chain and clinical staff, as they had to assemble these components, which can lead to errors or safety concerns.”

“Another example involves a specific type of catheter used by our cardiothoracic surgeons,” she said. “There was only one supplier, but due to low volume, they discontinued certain sizes of this catheter. This forced the surgeons to change their practices, which affected procedures and added complexity to patient care.”

Graham asserted, “These are just a few examples of the unique challenges children's hospitals face daily. We have to account for so many variables when making decisions, unlike our adult counterparts who generally face fewer complexities."

Technology

When asked about advancements in technology in this space, Turner said, “One of the ongoing challenges in pediatric hospitals, like many others, is the lack of visibility in the supply chain due to legacy systems and outdated item masters. Managing the item master effectively can be a huge task, especially when dealing with outdated data, multiple SKUs, and fluctuating inventory needs. That’s why I believe the solution lies in leveraging technology — particularly AI and data analytics. At Tecsys, we’ve been actively working on AI-enabled tools that help healthcare systems clean up their item masters and improve inventory management. This means better data, more accurate forecasts, and fewer manual interventions.”

“Across the supply chain spectrum, inside and outside of healthcare, I see a growing reliance on data-driven solutions,” he said. “As more pediatric hospitals begin to work together with peers and technology partners, the entire healthcare supply chain will benefit. It’s not just about the technology — it’s about the community of supply chain professionals coming together to solve these challenges. I’m particularly impressed with the user network we’re building at Tecsys, because we’re combining the human element of collaboration with advanced technology, all with a clear-eyed focus on the CQO tenets. This is what I believe will drive better outcomes for patients and greater efficiency in supply chain operations across the board.”

As for teamwork, Graham said, "You quickly learn who your key personnel are when managing situations like this. In value analysis, I work closely with my partners in materials. So when we discover an issue, like a neonatal set being on back order, I immediately reach out to them. First, we connect with the clinicians to inform them about the situation. We also work with materials to check how many days of stock we have left since we can’t get any more of the product. This initial step helps us understand the urgency.”

Further, “Once we know how much time we have left, we engage with the clinicians to determine what they need to continue the procedure. Over my 35 years at Children’s, I've built strong relationships across different departments. For example, if it’s a dialysis product, I know exactly who to contact. We then work closely with the clinicians to identify alternative components that would allow them to proceed with the procedure.

“In this case, we had all the necessary components available. So, I went back to the materials team to ensure they ordered enough of these components to prevent shortages. The materials staff then set up the items, bagged them together, and delivered them to the clinical team. The clinicians also put together educational materials to ensure the process was clear.

“This back-and-forth is typical in value analysis. It's about knowing who to connect with to resolve problems effectively. Even if you're new to a situation or department, it's important to reach out to your network to find the right person. For example, while I’ve never worked directly with dialysis, I’ve learned over time to rely on others who are experts in those areas. This collaborative problem-solving is something we do every day."

The bottom line

When Graham was asked about budgets and the bottom line, she said, "We often run into situations where a product is no longer on contract or has been discontinued, which is where we rely on our GPO for support. For example, if a product falls off contract, we work closely with our Vizient representative to explore the possibility of getting that supplier back on contract. In some cases, suppliers are willing to rejoin, but it really depends on the supplier.

“If they’re not willing to participate, our sourcing team steps in. This is where having the right people involved in value analysis is key to success. The sourcing team works with the supplier to negotiate a local contract. They’ll focus on securing the best pricing available to help mitigate the impact of losing the previous contract pricing.

“Our sourcing team does an excellent job of handling these negotiations, ensuring we get the best deal possible."

It is clear that navigating the complexities of the supply chain in children's hospitals requires a strategic and collaborative approach. From managing specialized product needs to negotiating contracts with suppliers, value analysis and sourcing teams play a crucial role in ensuring that hospitals can provide the best care possible, even when faced with shortages or disruptions. By leveraging partnerships with GPOs and working closely with suppliers, these teams help mitigate challenges, reduce costs, and maintain a steady supply of essential products. While the road can be challenging, the commitment to adaptability and problem-solving ensures that pediatric care continues uninterrupted, no matter the obstacles.