Trends, challenges, and opportunities – a spotlight on the orthopaedic supply chain

A Healthcare 21 report: Trends, challenges, and opportunities in orthopaedic supply chains

In Europe, the medical technology sector directly employs 675 000 people from 27 000 companies.[1] Though most are SMEs, the European market is seen as one of the most important (if not challenging) for larger companies to break into. In 2019, the total exports of medical products from the EU totalled around €251 billion, with total imports valued at around €128 billion.

With a wide network to cover, efficiency is one of the most critical challenges that orthopaedic suppliers need to overcome. In addition to this, recent disruptions caused by Brexit and the Covid-19 pandemic have illustrated the need for the supply chain to be agile and connected.

Why the supply chain matters

This will bring to life some key figures, such as:

  • How many people are employed within the supply chain?
  • Value of imports and exports
  • More than 110 000 hip replacements each year
  • Main EU import partners of medical equipment are Switzerland, the United Kingdom, the United States, China, and Singapore[1]

“Getting it Right First Time” and a need for transparency

The orthopaedics sector is responsible for carrying out a multitude of complex procedures. As such, it needs an efficient supply chain which not only delivers the necessary equipment, but also with the cost-saving measures that both NHS and private hospitals are consistently striving for.

The cost of musculoskeletal (MSK) conditions alone accounts for more than a quarter of total surgical interventions each year[1]. Annually, more than 110 000 hips are replaced, and the combined yearly cost of hip and knee arthroplasty to the NHS has been previously estimated to be approximately £730 million per year[2].

In 2016, following the work of orthopaedic surgeon Prof. Tim Briggs, the “Getting it Right First Time” programme (GIRFT) was introduced as a means of improving efficiencies, quality assurances, and therefore, patient care[3]. The programme later received £60m in funding in November 2016 from the then Health Secretary, and has since been implemented across various healthcare sectors, such as spinal surgery, urology, and maxillofacial surgery.

Whilst primarily introduced to reduce unwarranted variations in the surgical procedures, GIRFT has also provided insights which have benefitted the supply chain and the provision of specialist medical devices and/or equipment. Costs to hospitals are becoming increasingly transparent and there is a shift away from a specialist’s loyalty to a specific brand of device, towards a more patient-centred model which delivers the right outcome.

In March 2020, the NHS revealed the second version of its Total Orthopaedic Solutions framework, which restructures the orthopaedic supply chain into seven subgroups to provide a more local focus. The network aims to build on the £60million[4] cost saving its predecessor generated.

Total Orthopaedic Solutions 2 is built around a catalogue of 250 000 products from 95 suppliers [including ourselves at HC21]. Another key difference in this iteration is offering greater choice of products and highlighting the latest innovations each has. 

Aside from costs, a transparent supply chain process enables distributors to keep their customers informed of stock levels, when they can deliver specific devices or equipment, and, perhaps most importantly, react quickly and efficiently in the event of major disruption such as Brexit and Covid19.

For instance, the surge in demand for PPE caused by the Covid19 pandemic demonstrated the extended role of distributors. Whilst they are vital in maintaining constant supply of stock, distributors have access to critical information on local demand which can be used to inform decisions on where this stock is needed most and easing pressure on customer overheads.

This is something we at Healthcare 21 have witnessed first-hand. Having already invested in robust IT systems before the pandemic, we were well-placed to monitor PPE levels in our warehouses and provide intelligence for our customers to make cost-saving decisions.     

The relationship between a distributor and their partner(s) is fundamental in delivering the latest medical equipment and products to hospitals and their patients. Having worked with many of the world’s leading healthcare brands, and operating a robust European-wide distribution network, we are well-equipped to provide insights into a product portfolio, and optimise its offering through asset tracking and data collection.

By focussing on clear communication and transparency, we are able to build strong relationships with our customers, we are able to be reactive to their needs and maintain a quality service offering.     

Latest trends within the ortho supply chain

The UK’s population is ageing – an estimated 15million people will be over the age of 65 by 2030. However, this is the age group most in need of orthopaedic treatment. According to National Joint Registry (NJR) figures[1], the number of primary hip and knee replacement surgeries in England, Wales and Northern Ireland totalled around 92 000 and 102 000 respectively, posing the very serious question – how do hospitals meet this demand?

This is a question faced across the world and has meant that orthopaedic manufacturers have needed to innovate. Alternative materials are being considered and emerging technologies such as artificial intelligence has begun to be more commonly used within the operating theatre.

Inventory management, in which IT is crucial, ensures that warehouses and other similar facilities have a balance between maximising available space and not overstocking individual products. For the orthopaedic sector, which is device-intense and uses a variety of equipment for different procedures, utilising data to maintain a consistent supply enables distributors to have a clear picture which can then be shared upstream with partners and downstream with hospitals.

Graph to show exact trends / data[2]

·      Around 30% of a hospital’s budget is spent on supply chain activities.

·      The Carter Review suggests that in medicine cabinets, stockholding varies from 11-36 days. The report suggests that if all Trusts could reduce this to 15 days, this would save £50m each year.

·      Strategic management can reduce inventory by 25-40%

·       Deep wound infection rates from hip & knee surgery range from 0.5% to 4%. Achieving 1% will save £300m per year[3]

·       Trusts buying the most stock are not necessarily paying the lowest price

·       The Carter Report also found an average spend of £200,000 per annum is on loan kits – a reduction of 90% within the next two years would generate a saving of £108m over the next five years.

Hip systems cost variance by consultant in a UK hospital – PWC anaysis


The disruptions caused by Brexit and Covid-19

Recent years have been turbulent and disruptive for the entire healthcare supply chain. Uncertainty caused by Brexit, coupled with the upheaval in the wake of the Covid-19 pandemic, has revealed the need for manufacturers, suppliers, and other partners to share real-time information and data quickly and efficiently to strengthen their respective communications.

In the post-Covid world, suppliers of medical equipment will need to foresee demand and issues faced by their customers instantly and provide a quick solution. Ensuring they are capturing as much data as possible and understanding exactly what that data is saying is an additional responsibility that suppliers will have to take on if they are to provide the service expected of them in the ‘new world’.

Supply chains have also been called upon to be more robust, not just because of Covid-19 or the complications around Brexit, but because of the systems used to operate it. IT networks have continuously evolved to provide greater insight of stock levels and available warehouse space, however there is the added need for them to be safe against ransomware and other external threats.

Given our global reach and network, and that we can hold a partner’s stock or even TUPE staff and teams into our business, the implications of Brexit are minimal to us and the partners we work with, as a result of us having distribution centres in the UK and the European Union.

Quality and synergy leading to improved supplier relationships

Quality assurance becomes even more crucial as the supply chain moves towards a patient-centred model and affords hospitals greater choice. During the Covid-19 pandemic, there have been issues of PPE not meeting the required minimum standards of quality, such as ISO and CE accreditations.

These standards should go beyond simply checking boxes; they are at the heart of a supplier’s processes and its culture. And preparing for changes to legislation such as EU Medical Device Regulation (MDR), which we at Healthcare 21 had been doing well in advance of its initial rollout date of May 2020, results in minimal supply chain disruption.

[1]MDR is a set of regulations which aims to ensure every medical device in operation is safe for use. Data is gathered from a unique device identification code (UDI) and logged into a European-wide database (EUDAMED) so that it can be traced all the way back to the manufacturing facility in which it was made.

This synergy ensures that every individual within a distributor’s hierarchy understands the products they interact with almost as well as the specialists who will be using them. It also allows for one central ‘hub’ for all operations, resulting in a clear audit trail should any issues occur.


How Healthcare 21 led the way in minimising disruption 

Though postponed until 2021 due to Covid-19, investing in building robust IT systems ready for MDR’s implementation means that we have been able to prepare for whatever future outcomes may arise, with as little impact on our customers and partners as possible. The equipment we supply is also subject to our own internal quality assurance processes, and our customers always have the right to view our accreditation marks, including HSE and CE.

A streamlined supply chain goes beyond data and algorithms; it is more about the people at the heart of processing this information and assisting their customers in their decisions. Working teams are increasingly being merged together.

For example, sales teams are frequently being offered opportunities to have hands-on training for specific products so that they can confidently explain the safety aspects of each one and the accreditation process involved in its production whilst conducting their sales activity. In essence, they become specialists in their own right and our partners can rest assured that their products will not just end up in a list or on a portfolio.

How efficiency leads to cost savings across the supply chain

Financial pressures on the NHS are constantly being discussed in the media. It is a daily challenge that device manufacturers and their suppliers can provide solutions for, particularly with an agile system in place.

For instance, tracking stock levels held within a warehouse in a particular area gives a clearer insight into the regions with significant demand (or not) and where additional investment may be needed.

Greater visibility of stock levels has already been proven to provide cost-saving measures to NHS trusts. In 2014, Airedale NHS Trust produced a case study outlining how it was able to reduce its inventory levels by nearly a quarter (24%), in which accurate monitoring played a fundamental part. This, in turn, delivered cash releasing savings of 15%, in other words, money which could be deployed in other areas of the Trust’s operations.

Managing a multi-million pound consignment stock catalogue

Healthcare 21 worked in partnership with LifeCell for a number of years, managing the stock of hernia meshes for hospital trusts. When LifeCell became part of Allergan, our role developed further to include managing consignment stock of the company’s 650 types of breast implants valued at more than £4M.

Using Asset Track – our own app designed to replace paper copy checklists – we have demonstrated how technology and software can save time and make managing stock more streamlined. Our teams are able to track how much equipment and individual products a hospital holds using a smartphone or barcode scanner, and the information collected is then fed back into our monitoring system. This results in assisting our customers, like Allergan, to make decisions based on the most accurate, up-to-date information.

During Covid-19, restrictions made it difficult to physically enter a hospital to check consignment stock. To overcome this, we provided the hospital with an inventory of equipment to check and enter the necessary data remotely.

Asset Track and other software we use at Healthcare 21 enables us to support our customers through major disruptions such as Covid-19, and the streamlined process we’ve demonstrated throughout the years with Allergan results in our own staff members have more time to conduct the work where they are best utilised.

“Through a focused activity plan, targeted and segmented to private augmentation, the HC21 team has identified key surgeons and opportunity for growth.”  Barry Cawley, Surgical Aesthetics Sales Manager,  Allergan UK & IE


Graph / infographic to summarise HC21’s offering to go here

The Final Words

Owen Curtin

Owen Curtin Group Chairman Healthcare 21 pictured in their Blarney premises, Co. Cork.
Picture: Clare Keogh

Supply chains are at the heart of an efficient, robust healthcare system. We are fortunate to have access to IT and data which enables us to react to unseen disruptions and have steps in place to navigate through them.

Brexit, in particular, has illustrated the consequences of seismic geopolitical shifts on the supply chain. Whilst the exact results are still yet to be established, suppliers of medical equipment and their respective partners should always have the latest, up-to-date information about their supply and demand levels, to prevent costly issues further down the line. Manufacturers will need to consider whether their distributor of choice has the global networks to minimise impact on product flow across borders.

The impact of Covid-19 has demonstrated that using this data in real-time enables decision-making to be almost instant, and any disruption caused by sourcing stock from different areas of the country, Europe or the US even is kept as low as possible.

For the medical supply chain to be fully resilient and robust, distributors and their customers must remain in constant communication and have measures to prevent blockages in place at the soonest possible opportunity.

As a partner to several leading names, HC21 works closely with our customers to build a complete picture of supply and demand. Our agile way of working has allowed us to support our partners through the uncertainties around Brexit and Covid-19, delivering maximum efficiency and reduced costs where possible.