The laws of economics — supply and demand — state that as items become scarce, prices go up. The law of unintended consequences states that the outcomes of human actions are unanticipated – sometimes to disastrous effects.
Thus: $80 bottles of hand sanitizers. And $99 for a pack of 10 face masks. Stockouts across real and virtual shelves, everywhere you look.
The medical supply chain — especially across digital platforms — is exhibit A for the intersection of those two laws. The frenzied buying (and selling) of everything from thermometers to masks to rubbing alcohol is driving prices well beyond normal (maybe even rational) levels. The frenzied buying is also keeping those same supplies from getting where they need to go, namely, into the hands of healthcare providers who are treating the coronavirus, yes, but a whole host of other conditions.
And as Steven Zeldes, CEO of AvaCare Medical, an online marketplace for medical supplies, told Karen Webster in an interview: Things are not likely to get better anytime soon.
Zeldes noted that his platform serves private-paying, homebound customers who, perhaps having left a nursing home or assisted-living facility, need medical equipment such as wheelchairs or supplies running the gamut from catheters to thermometers to disposable latex gloves. The company’s customer roster spans the patients and caregivers such as nurses, home health aides and physical therapists.
“Over the last few weeks,” he told Webster, “demand for a lot of items that we sell — the masks, the thermometers, the sanitizers and gloves — has exploded in every way.” He told Webster, too, that as an online company, AvaCare’s customer base has been global in scope — and the company has, by his estimate, been fielding thousands of requests via phone calls and e-mails from around the globe. The inquiries have come from fire and police departments, from schools, from hospitals and government agencies.
All of this goes against type. The medical supply industry is not seasonal in scope — after all, no one buys wheelchairs as Christmas gift — and the demand has been so high that most of the aforementioned items are out of stock, or getting to that point.
As Zeldes told Webster: “What’s been very popular the last few days, believe it or not, has been rubbing alcohol. People are now realizing they cannot buy sanitizer anymore, and they make it themselves.” He said across the supply chain (AvaCare deals with some of the largest manufacturers and distributors in the country) firms are selling items faster than they can process the orders (for what’s in stock, of course).
Against the backdrop of roiling demand, and perhaps less-than-optimal visibility, Zeldes said that he has directed several AvaCare employees to contact all of the firm’s distributors and manufacturers to pinpoint exactly what they have on hand.
The Ripple Effect
As for the unintended consequences:
“Ultimately what’s happening,” Zeldes said, “is that the healthcare providers are the ones that are suffering from this because they’re the ones that are caring for these patients and these hospitals and the clinics. They’re the ones that are not being protected correctly and they’re being exposed to any type of germs, whether it be the coronavirus or not. They’re the ones that have to be protected from all these different viruses.”
He said the company has been focusing on selling to core customers, namely, the healthcare professionals and their patients. To avoid being at the mercy of manufacturers and distributors stock outs (there has thus far been no price gouging, according to Zeldes), AvaCare, having anticipated demand as the coronavirus started making headlines a few weeks ago, began to stock its own warehouse.
Generally speaking, with a nod toward everyday operational processes that might be expected with an eCommerce model, he said orders are processed within minutes and typically are delivered the next day. And, asked about the potential impact of fraud, via chargebacks, he said that there’s been no uptick in the wake of the epidemic/pandemic and that rigorous processes remain in place to match card data, for example, to appropriate billing addresses.
Looking ahead, he said, with an eye toward the manufacturers that dot the supply chain internationally, (and where supply chains are rooted in China), Zeldes said that they are “still sitting on stock that they’ve made the last few months. But I am sure that over the next few months it’s going to be a trying time,” with items on backorder.
You can’t, after all, create a “pop up” manufacturing shop to crank out masks and thermometers. That might make providers such as hospitals and health care facilities, long accustomed to using a particular brand of face mask or glove, have to settle for an unfamiliar substitute.
“We do have customers now who are simply scrambling where inventory is zero or close to zero,” said Zeldes, who stated that “It’s been a crazy ride. We’re just trying to do our best.”