Repertoire Magazine – June 2021
COVID was new. But the economic principles it stirred up were not.
Suppliers and providers in the physician market have learned much about pandemic-era logistics since March 2020. But many challenges remain, and the learning will continue.
“The situation for physician practices has improved compared to the massive demand spikes that characterized 2020,” says Cynthia Radford, senior vice president, alternate site programs, Premier Inc. “Alongside PPE conservation measures, ongoing stockpiling efforts and a greater visibility into inventory, providers today are better equipped – but the supply chain remains fragile.”
Access and pedigree
Throughout the pandemic, Premier worked closely with its members, including those who operate physician practices, to understand and address their supply chain challenges, she says. “Via direct interaction and numerous member surveys, we uncovered two main issues these providers have been facing with regard to PPE: access to product, and product pedigree.
“On product access, many organizations reported major challenges due to allocation. Since many physician practices and other alternate site providers do not have an extensive history of ordering PPE, their access to product through traditional channels has been limited.” In a survey conducted late last year, most (61%) alternate site providers reported not having their PPE needs met by their traditional med/surg distributors, down from 83% in June 2020.
Premier surveys also found that a significant number of non-acute providers were turning to PPE sources such as online retailers (77%), nontraditional distributors (56%) and retail stores (44%). “In many cases, providers had to contend with uncertain sourcing and the possibility of gray market items – heightening their concerns about product quality and pedigree.”
Premier took several steps to address such challenges, says Radford, including:
- Implementing a process to bring new suppliers to contract in 14 days or fewer for categories with product allocation or shortages, and signing more than 100 new contracts with manufacturers and evaluating supplies from more than 2,500 brokers.
- Working with traditional and nontraditional distributors to make PPE available to physician practices. “Trusted distributors in categories such as office supplies have been able to fill gaps in PPE access,” she says. “And we’ve negotiated supplemental sourcing programs with traditional med/surg distributors in which they can provide and store PPE for non-acute providers.”
- Implementing an expedited process to vet gray market suppliers, determining fewer than 10% were legitimate and alerting authorities to hundreds of fraudulent sellers.
- Working directly with new and untapped manufacturers around the globe. “For alternate site suppliers, Premier engaged in a forward buy specifically for this market and created a channel for product where it didn’t exist, delivering over 2 million masks, face shields and gowns.”
In addition, Premier’s e-commerce marketplace – stockd® – “closed a critical gap in the traditional med/surg supply chain and serves as a trusted, 24/7 resource to access vital PPE,” she says. (Launched in October 2019, stockd is available to any physician or physician practice – not just Premier members.) “Despite the supply chain shockwaves, product pricing on stockd avoided large spikes. The online platform is seeing significant growth, with visitors up three times, sales up 29 times, and the monthly number of orders up six times since March 2020, as compared to the pre-pandemic baseline.”
Where we stand
Many PPE categories are in recovery, said Steve Martin, senior vice president, supplier management for NDC, in mid-April. “Today, we are definitely seeing improvement from the beginning of the public health emergency. We have experienced similar cycles among most of the expected PPE categories: Demand spikes and supply is unable to keep up. Prices shoot up. Supply is ramped up to accommodate demand. Prices come back down. Many categories are in recovery and we are finally coming out of the hole on products such as masks and respirators.
“We saw these same general cycles, just with varying lifespans, with gloves and infection control products experiencing the longest cycles. With surface wipes and hand sanitizer, supply is now finally catching up with demand, and demand is starting to soften a little bit,” he says. “Glove prices are just starting to peak. Supply still cannot meet demand, but it’s getting closer, even as other products flood the market since the FDA softened requirements for gloves. We expect supply and demand to equal out towards the back half of this year, with price degradation beginning in Q2 or Q3 of 2021.”
NDC Vice President of Sales John Cook says, “Thankfully, we’re seeing fewer brokers in the market now. This subsided with larger spot-buys – and government entities with large purchases allowed product to flow more freely in the market. Healthcare providers that got into the sourcing and supply business skipped normal distribution channels to try to take care of their own. This helped NDC get more products back in our warehouse. That is starting to go away, and we are now seeing more volume pulling through distributor warehouses.”
What happens now?
“We don’t know what flu season will look like later this year, or even the next COVID season, for that matter,” says Cook. “There is going to be continued demand for PPE and infection control products, including back-to-school demand, as many states hopefully prepare to return to school in the fall, so it’s going to be extremely challenging for distributors to plan.”
Many manufacturers implemented strategic SKU consolidations during the pandemic to focus on high-demand, high-volume products in categories such as gloves, wipes, and sanitizer products, he says. “For many distributors and their customers, there wasn’t a big impact at the time, but now, as elective procedures are ramping back up, it could prove to be challenging. And we’re not sure how quickly it will ramp back up to normal, but I expect increased velocity will meet demand, making room for product availability in those areas that we don’t even know yet.”
How will manufacturers keep up with capacity as things get back to normal? “That depends on how quickly everything gets back to normal, how many patients physicians are being seen via office visits, and how manufacturers have handled the off-season of those products as they ramp back up,” says Cook.
Martin believes distributors will face challenges predicting product demand after the public health emergency ends. “The biggest challenge from my perspective is that for product impacted by the pandemic demand, we can’t forecast our future demand based on anything historical, because this year’s demand is going to be something different. Historical demand used to be our guide for future stocking and supply levels, and we know that is not always going to be an accurate baseline in 2021.” Other factors likely to play a role include a resin factory fire, which affected the availability of sharps containers, as well as the Suez Canal blockage in late March.
“In addition to the bottleneck effect from the canal blockage, we are experiencing a shortage of shipping containers due to the trade imbalance between China and the rest of the world,” says Martin. “Now we are seeing containers returning empty and shipping containers sitting in the wrong places around the world. There’s really this perfect storm – supply constraints, the reduction of workforce during shutdowns, equipment in the wrong locations and an increased volume associated with COVID – all contributing to delays in getting product where it needs to be.”
PPE clearinghouse for small purchasers
Project N95 identifies itself as the national clearinghouse for personal protective equipment, COVID-19 tests and medical supplies – particularly for small purchasers.
Based in Brooklyn, New York, the nonprofit organization was founded in March 2020 as a rapid-response to the COVID-19 pandemic, says Executive Director Anne Miller. “Our volunteer-led team has deep experience in procurement, healthcare, government and technology. We have more than 100 volunteers and team members from throughout the U.S. and abroad who have worked to provide more than 6.7 million units of PPE to all 50 states.” PPE is sourced from manufacturers and authorized distributors who undergo a rigorous vetting and verification process, she says.
“To allow small healthcare providers, community clinics and individuals to access masks, COVID-19 tests and other critical items in the smaller quantities they need and at prices they can afford, we work with several partners (varies by product) to break down bulk orders, then pick, pack and ship. We stand behind each purchase, supporting last-mile delivery for even the smallest deliveries.”
Project N95 has formed partnerships with more than 20 medical associations to make PPE accessible to their members, says Miller. Partners include the American Medical Association, American College of Physicians, American Academy of Family Physicians, American Association of Nurse Practitioners and the Medical Group Management Association.
After the pandemic?
“The issue of health equity won’t end with the pandemic,” says Miller. “Barriers to access will unfortunately persist. As we’ve helped healthcare and frontline workers navigate the search for quality PPE throughout the pandemic and stepped in to assist vulnerable communities access the masks and PPE they needed to stay safe, we’ve learned that they are locked out of access to many services and critical supplies.
“Our organization was born out of the question, ‘How can we help?’ If there is a way Project N95 can serve post-pandemic, we will continue to fill that role. Right now, we’re focused on the immediate need in front of us, which is protecting people by opening access to quality PPE and COVID-19 tests.”
Still In Short Supply
Even as recently as March 19, 2021, the U.S. Food and Drug Administration listed the following PPE to be in limited supply and expected to remain so throughout the public health emergency:
- Latex, non-powdered exam gloves.
- Vinyl exam gloves.
- Polymer, non-powdered exam gloves (including nitrile).
- Specialty, non-powdered exam gloves (including nitrile).
- Exam gowns.
- Surgical gowns.
- Non-surgical isolation gowns.
- Surgical masks.
- Surgical respirators.
Regarding surgical masks and surgical respirators, the agency added this note: “While there is currently limited supply available, public and private mitigations appear to be reducing constraints on the supply chain.”
Source: Medical Device Shortages During the COVID-19 Public Health Emergency, U.S. Food and Drug Administration, March 19, 2021.