The Modern Supply Chain Is Snapping

As the coronavirus crisis unfolds, US health systems are turning to the government to address shortages in health-care supplies.

In February 2020, due to a contamination issue unrelated to the coronavirus, the Medical University of South Carolina’s health system did not receive surgical gowns it had ordered from a Chinese manufacturer. As the coronavirus began to spread and demand for protective equipment surged, the health system struggled to find a supplier to fill the gap.

Hospitals in the United States usually order supplies in bulk through a group purchasing organization (GPO). Such GPOs – which “aren’t nimble” – can’t quickly find substitute vendors for their huge bulk orders. Vendors, in turn, operate with a narrow profit margin, so they don’t retain large backup inventories. Consequently, the South Carolina health system had to turn to the federal government for help. The national government has the power to invoke the Defense Production Act, which authorizes it to ramp up manufacturing and to tap the country’s strategic reserve of health-care supplies.

The coronavirus...