Months after Hurricane Helene devastated parts of the Southeastern US in late 2024, its impact was still being felt at US hospitals coast to coast. Baxter International’s plant in North Carolina, which produces 60% of the nation’s IV fluids, halted operations due to flooding damage. The Food and Drug Administration was forced to import IV fluids from other countries, and 86% of providers reported shortages. It took until February 2025 for the plant to return to pre-hurricane production levels.
This is not an anomaly. It illustrates how quickly operations up and down the supply chain can be disrupted. Risks ranging from natural disasters and cyberattacks to rising geopolitical tensions expose the fragile nature of the healthcare supply chain. When resiliency has not been prepared for and practiced, an incident or disruption has the potential to explode into full-blown crises. Notably, the FDA, has laid out dire warnings regarding the nature of supply chain vulnerabilities across medical devices, especially for pediatrics, and the potential implications for public health.
The deeply layered healthcare supply chain not only creates interdependencies but leads to limited transparency that then elevates risk. Transportation, storage, logistics, and controls all have potential flashpoints. Conversely, concentration risk arises in scenarios where there are few critical areas or underlying infrastructures. If these areas are compromised, it can have a widespread impact. According to data from our colleagues at Marsh, 65% of organizations across different industries have at least one single point of failure in their supply chains.
While leading healthcare organizations are at the forefront of exploring local solutions to mitigate supply chain threats, they often lack the data, supplier insight, and tools to confidently identify and gauge the interconnected risks. This complexity makes preparedness challenging. Only by understanding the full range of supply chain risks and mitigation strategies can organizations be prepared to handle both minor and significant disruptions.
The Growing Expanse of Supply Chain Risks
A host of hazards can, at any point, imperil and impede the supply chain. We’ve zeroed in on four prominent threats, each of which is rising in frequency and intensity.

Natural disasters: As we noted above with Hurricane Helene, natural disasters have a far-reaching effect on the supply chain. Closer to home, they lead to critical shortages that compromise patient care. Last year’s wildfires in Los Angeles exposed significant vulnerabilities in the supply chain, particularly in respiratory care. Hospitals faced overwhelming demand for oxygen tanks, inhalers, and ventilators from patients, while road closures, power outages, and air transport delays all slowed resupply efforts.
Cybersecurity threats: The healthcare sector is increasingly targeted by cybercriminals, not only compromising sensitive data and causing financial damage but also exposing healthcare supply chains to widespread operational disruption. From 2022 to 2023, ransomware attacks on the healthcare sector in the US more than doubled, affecting over 250 organizations. In 2024, a ransomware attack on the nation’s largest claims processor breached the data of a record-breaking 190 million people, crippling billing systems, delaying reimbursements, and disrupting operations for thousands of providers. This attack not only threatened financial stability but also compromised patient care, as healthcare providers struggled to access critical patient information. In another incident last year, a cyberattack on a blood center forced providers in several southern states to initiate blood conservation and prioritization protocols.
IT system outages: Malicious attacks aren’t the only threat to IT systems. With vendor concentration in critical technology markets, unintentional incidents involving a single point of failure can spark widespread interruptions. That was the case with a massive 2024 outage sparked by a misconfigured update to a widely used cybersecurity tool, leading to operational disruptions across multiple industries. In addition to experiencing financial losses, healthcare providers around the world canceled surgeries and operated under emergency downtime procedures, and everything from patient transport to the delivery of essential medical supplies was affected.
Geopolitical tensions and tariffs: The urgency for healthcare executives to address supply chain risks globally has reached a critical juncture. Tariffs could significantly raise the cost of medical supplies and, potentially, pharmaceuticals. We project that tariffs, combined with other policy considerations in Washington, D.C., could eliminate margins for most health systems. Margin compression not only increases operational costs but also heightens the risk of shortages for essential supplies, particularly if a broader trade war is ignited.
We’ve seen that nations will not necessarily cooperate during a crisis when supply chains are already under strain. During the COVID-19 pandemic, because of export restrictions, companies struggled to transport their own goods including face masks, tests, and other supplies from the nation where they were manufactured to nations where buyers were waiting on them; such policy constricts supplies everywhere as no nation produces all the supplies its healthcare providers need.
Recommendations for Mitigating Supply Chain
Risks Navigating these challenges necessitates adopting a comprehensive approach to risk assessment and management, including these six critical actions:
Conduct a digitally-enabled risk assessment: Use digital tools that help uncover, quantify, and monitor risks. MarshMcLennan’s artificial intelligence-powered platform Sentrisk reveals connections up to tier-n and contextualizes risk with geospatial data for geopolitical and natural hazard risks. Other tools approach cyber risk in an analogous fashion, surfacing risks in your digital supply chain to address and monitor.
Implement risk-based inventory management: Categorize inventory based on risk levels, maintaining strategic safety stock for mission-critical products while automating replenishment for non-critical items to arrive as needed. For example, a health system could maintain a higher safety stock of essential medications like insulin or antibiotics, while using automated systems for less critical supplies such as disposable gloves, syringes, and basic wound care supplies. This approach helps balance budget constraints with preparedness for unexpected disruptions. As healthcare executives assess their risk tolerance, it is crucial to consider both the financial ramifications and the potential human costs associated with supply chain failures, as these factors are inextricably linked to the overall effectiveness of healthcare delivery.
Proactively adapt using supply chain management technology: Invest in integrated digital supply chain management systems that provide real-time tracking and analytics to optimize the flow of goods and services through your supply chain, enabling proactive risk management and rapid response to potential disruptions. For instance, organizations can use predictive analytics to forecast demand spikes and adjust inventory levels accordingly, ensuring that critical supplies are available when needed.
Prioritize supplier relationships: Foster strong partnerships with local suppliers to ensure reliable and timely deliveries, especially during supply chain disruptions. During the COVID-19 pandemic, many healthcare organizations that had established relationships with local suppliers were able to secure personal protective equipment and other critical supplies more effectively than those reliant on global supply chains. Collaborative purchasing groups in which multiple organizations pool their purchasing resources can also enhance bargaining power and access to essential supplies, allowing smaller health systems to compete with larger organizations.
Establish a crisis management team: Form a dedicated team responsible for supply chain risk management and crisis response. This team should include functional representatives from various departments, including procurement, IT, and clinical operations, to ensure a comprehensive approach to risk mitigation. Regular training and drills can help prepare the team for real-world scenarios.
Develop contingency plans: With leadership from the crisis management team, regularly conduct scenario planning to test response capabilities and identify areas for improvement. This proactive approach ensures operational continuity during potential disruptions and builds organizational resilience. By simulating various crisis scenarios—such as natural disasters, cyberattacks, or supply shortages—healthcare organizations can evaluate their response strategies and operational workflows in real-time. These exercises should involve cross-functional teams to ensure diverse perspectives and expertise are integrated into the planning process.
Identifying and mitigating supply chain risks requires attention at every level of a healthcare organization. As a result, leaders must act to protect operations but also foster trust with those who provide healthcare on the front lines, patients and partners. This commitment to resilience positions them as the preferred choice for those they serve - in the face of current and future uncertainties. In an increasingly complex healthcare landscape, demonstrating reliability and responsiveness is essential for maintaining competitive advantage and ensuring the continuity of high-quality care.
Oliver Wyman’s Dan Shellenbarger contributed to this article.