Diversifying the supply strategy

When member needs outweighed current contracted supplies, Vizient approached one manufacturer about a unique way to quickly scale to meet demand.

How do you handle a demand increase of 10 times the normal amount?

For healthcare suppliers and providers, that scenario became a reality almost overnight. “In the pre-COVID industry environment, there was simply no way that the suppliers or providers could have adequately planned for this unprecedented and ongoing spike in demand for PPE,” said Margaret Steele, vice president, contract and program services for Vizient, Inc.

One example is the use of N95 respirators before and after COVID-19. Given the significant barrier protection these respirators provide, their use was limited to surgeries and other high-risk cases before COVID-19. This meant a minimal number of staff were using them on daily basis on a limited number of patients. “For the 3K+ hospitals we serve, this translated to an annual usage of ~10M/YR,” said Steele. “During COVID-19, the use of these respirators expanded through many more patient interactions and many more staff using them each day. Early indications are that in the next 12 months we will see purchase volumes of these same respirators potentially go beyond 1 billion.”

Gowns have seen similar levels of exponential surges in demand and Vizient has been working to increase supply. One of the GPO’s initiatives involves an agreement with Encompass that Steele said will bring 19 million AAMI level-3 disposable isolation gowns into the supply chain yet this year.

In March, Steele said her organization quickly recognized the rising need for AAMI level 3 isolation gowns and the lack of supply to meet the growing demand. Vizient met with Encompass executives to discuss the possibility of restarting some manufacturing lines in Mexico. An agreement was put into place enabling Vizient members to have exclusive access to millions of these gowns during this pandemic. “As member needs increased, Encompass was able to quickly scale to meet the demand,” said Steele. “This is an example of how Vizient will find ways to contract short term with suppliers who can provide supplemental product during times when member demand outweighs the ability to meet demand by current contracted suppliers.”

As a result of the supply challenges from the pandemic, Steele said many Vizient members have requested to diversify their current supply strategy to include those with U.S. or North American based manufacturing. “While many suppliers have or have committed to having manufacturing plants in North America, we are evaluating the top PPE categories to be sure we address this imperative for our members,” she said. “At Vizient, we want to offer more to members than just additional supply options. We are also focused on improving supply chain resiliency for suppliers by offering a two-sided marketplace. This new digital platform will bring visibility to the availability, consumption and need for supplies.”

Moving forward

Steele said the majority of Vizient’s members are looking to have a minimum of 90 days of certain products on hand moving forward. These products include facial protection, isolation gowns, gloves, etc. This presents several challenges including finding the product, the cash outlay for that product, finding space to appropriately store it and ensuring the inventory is turned regularly to keep the products from expiring.

“When the pandemic really hit hospitals, providers looked to their distributors to find alternative resources when supplies were scarce,” Steele said. “Some also decided to go direct with vendors that were offering products such as N95 masks which were in such high demand. To that end, many healthcare facilities were hurt by unsavory suppliers/brokers. However, I now believe they understand that their GPO partner is in a better position to identify and vet alternative sources for supplies for them. Vetting suppliers is difficult and time consuming. This is where the GPOs really can play a role in providing necessary protections for their customers.”

Healthcare providers have begun to work more closely with other hospitals, some of which were competitors for things like N95 respirators, isolation gowns and face shields. “We witnessed a lot of healthy collaboration between our members to help one another when they could.” 

Steele said she suspects we might see a return to more use of reusable products (i.e., gowns, masks, etc.). “This certainly guarantees supply however, facilities will have to be certain they have the appropriate sterilization services in place. The initial inventory investment can be substantial as well. We are hearing from many Vizient members that moving forward they will use a hybrid of disposable and reusable gowns and caps.”