Pandemic sourcing checklist

Ten questions to screen potential healthcare supply sources … and avoid fraudulent brokers

Provided by the Health Industry Distributors Association

Since COVID-19 invaded the United States, the healthcare supply chain has faced a dramatic increase in demand for medical supplies.

This situation is ripe for abuse by fraudulent brokers – individuals or businesses armed with little knowledge of the healthcare industry and its stringent quality requirements – who dive into what they see as an opportunity-rich market. The goal of these brokers is to facilitate deals between sellers and buyers in the unofficial “gray market.” Brokers do not take ownership of products. Industry acceptable transportation controls are not guaranteed, increasing the risk for lost or damaged shipments. Brokers are focused on individual transactions, not long-term business relationships with either the buyer or the seller. A brokered transaction is ripe for price-gouging, especially in times of high demand.

The media has reported multiple accounts where during the COVID-19 pandemic, brokers have profiteered from delivering high-priced, substandard or counterfeit medical supplies, or simply disappeared with the money without making a delivery at all. 

In contrast, established healthcare distributors typically serve as a single trusted source through which providers buy a full range of medical products critical to everyday operations. They are known to the nation’s hospitals, nursing homes, physician practices, home health organizations, and other healthcare providers.

Vetting a supplier is not a simple process. Even the Federal Emergency Management Agency’s (FEMA) recent efforts to screen 1,000 new supply offers resulted in only a handful of viable purchases.

So how can you understand the difference between a fraudulent broker and a professional, qualified distributor?

The 10 questions below can help buyers spot warning signs before any payment is made. Reliable distributors will be able to provide rapid and verifiable responses to vetting questions, brokers will not.

  • Are you able to demonstrate proof of product registration with the Food and Drug Administration (FDA)?
  • How long have you or your source manufactured medical supplies?
  • Can you provide current inventory levels and photographic proof of the current location of the inventory? 
  • Can you offer references?
  • Can you provide a sample?
  • Can you provide a copy of your quality manual?
  • Can you provide the company’s W-9 and/or business license?
  • Can you provide a financial snapshot, including a recent income statement?
  • Can you provide proof of 510(k) clearance?
  • Can you provide product cut sheets?

A request for advance payment should raise a bright red flag. There have been multiple reports in which the broker vanishes after receiving the funds they say are needed for the purchase. Do not be shy about requiring access to the physical items before paying for the shipment. It also will allow you to verify the quality of the supplies. 

To meet the increased demand created by COVID-19, distributors have been working diligently to identify new PPE sources. Their goal is, as it always has been, to provide quality medical supplies quickly and efficiently to healthcare providers on the frontlines of this pandemic. More information on sourcing offers for PPE from unknown sources can be found by visiting the Health Industry Distributors Association’s COVID-19 Resource Center, HIDA.org/coro