COVID-19 Webinar Series Session 5 – Health System Capacity: Mobilizing the Supply Chain

(This is an unedited transcript. For accurate quotes and presentations, please refer to the full-event video.)

 

Good afternoon. I am Sarah – president and CEO of the Alliance for Health policy. Welcome to today’s webinar on covid-19 for those who are not familiar with the alliance welcome. We are non partisan resource for the health policy Community dedicated to advancing knowledge and understanding of Health policy issues. The alliance gratefully acknowledges the National Institute for Healthcare Management foundation and the Commonwealth fund for supporting today’s webinar. You can join today’s conversation on Twitter.

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It has become painfully clear that we have severe shortages of medical supplies, particularly the personal protective equipment that is critical to keeping health workers safe as they treat patients with covid-19 today. I am so pleased to be joined by Michael. Kyle. Mike is the president of Premier ink the largest global Healthcare supply chain in the u.s. In 2018 modern Healthcare named him one of the top 25 kilos and Healthcare and you can read his full bio on our website. I can think of no one better.

2:04

To shed light on the state of the healthcare supply chain as we respond to the covid-19 outbreak my welcome.

2:12

Thank you, Sarah for having me.

2:16

Great. So Mike, you know, the shortages of medical supplies has really reached a fever pitch. Can you tell us a little bit about what the situation is on the ground right now? And what’s your day-to-day look like as far as trying to remedy it? Yeah. Thank you Sarah. So, you know just very very quickly. Let me give your listeners just a quick overview of who Premiere is and and then I’ll jump right into what’s happening on it from the day-to-day perspective.

2:44

And and what the XR that are in short supply so Premier is as Sarah describe a global supply chain company. We have a number of functions that we provide for about four thousand hospitals in the US and about a hundred and seventy thousand non-acute settings. First function is we help our Health Care Systems negotiate contracts to get you know, great pricing for products that they utilize to care for their patients second.

3:14

We have a significant part of our health of our organization that actually contract manufacturers product all across all across the globe and and this includes producing exam gloves and Malaysia to personal protective attire in Cambodia to producing, you know face masks and China and Taiwan.

3:40

So we have a very very significant capability to support our Care Systems as they you know are trying to provide care for their patients by leveraging our supply chain capability. We also have a clinical decision support capability, which is also being utilized at this point in time. We’ve got some technologies that can flip on a learning mechanisms and the real-time to help Healthcare systems and other clinicians identify when a covid patient is entering into you know, they’re they’re sort of their work stream.

4:14

We also have the capabilities to set up, you know best practice sharing around capabilities to you know, help clinicians as they’re sort of thinking through what are the right kind of treatments and those kinds of things we have a we have a technology infrastructure that allows for that kind of knowledge of that kind of knowledge and in and best practice sharing so just serried answer your question very specifically obviously for the last few weeks. Our lives have been pretty crazy.

4:46

And and I will tell you how this sort of problem started to present itself is no different than the way that I think many of your listeners, you know have seen what’s happened in their everyday lives.

4:58

So like if they go to their, you know neighborhood Costco or they’re going to they’re, you know, neighborhood retailer, they go to find products and what often times they have found is those products are no longer on the shelves and and what’s occurred is very naturally, you know, The issue associated with I would collectively call it human behavior. So when you know, the the the Press starts to highlight the issues associated with the this virus covid-19 people rightfully are concerned and they go out and they buy more product than they normally buy and you know, we have these very narrow Supply chains. And what happens is when when all that Everett buying happens it puts this incredible pressure on this upon the supply chain.

5:46

And it creates shortages. So, you know because people have gone out and bought outside of their normal outside of their normal purchasing. I think the same thing actually happens within the healthcare setting and I’ll give you some very very specific numbers Indian in 95, which is a face mask that you hear about talked about in the Press, which is a very important piece of personal protective attire.

6:15

In the steady state on an annual basis our Healthcare systems by about somewhere between 22 and 24 million masks a year in January and February before this virus even became significantly prevalent in the US are consumption of those in 95s with the 56 million.

6:38

So that was almost the three-fold increase in the number of in 95 and Now we you know, we think right now there’s you know, this this this ordering for probably somewhere between a hundred and ten and a hundred and fifty million masks and that’s based on a supply chain that’s built, you know Bill to create 22 to 24 million.

7:02

So you can imagine, you know, the the sort of the this significant steps that organizations like us and Distributors and manufacturers are going through the sort of meat that that that’s Supply Challenge and and then ventilators is another area that is a you know, an area where we’ve got pretty significant shortages in any one year and we represent probably about 40 percent of all us Healthcare Systems in any one year our Health Care Systems order about 2,000 ventilators a year. So per year the our Health Care Systems order about 2,000 ventilators.

7:43

There was a Day period last week that one supplier just one supplier had an order for six hundred ventilators right now, you know, there is probably you know a demand for I don’t know tens of ten tens of thousands of ventilators. And so, you know, obviously, you know, our Focus really is is how do we absolutely you know increase that supply chain?

8:15

Jane get others get get first of all, but the known manufacturers up and producing it full capacity and then get other entities that you know have adjacent manufacturing capability. How do we actually get them producing products as well? So all those conversations have been happening for weeks. And so if you don’t mind sir, I’m going to I’m going to keep highlighting a couple of the other issues. So other you know PPE so things other than n95 80% of that.

8:45

Product comes from Asia and India and you know when you have the virus that impacts, you know, those countries obviously manufacturing shuts down which only exacerbates the issue fortunately China who manufacture signal a significant portion of that 80% is back up and running as of March the 13th. So we are getting product out of China. Unfortunately, Malaysia is you know, sort of a scenario.

9:15

So right now where they’re sort of doing the shelter at home, which you know is potentially could put some constraint on the supplies that they provide now they do have you know some outs on that policy to allow, you know employees to go to you know work at some of their large factories that provide some, you know, very critical products.

9:37

But the point is when this virus spreads across various communities, you know, not only not only does it it you know of Act Us in in the US but it also affects us as you know, the organizations that rely on from a global standpoint to provide product and that and the virus hits them. It actually has a tremendously negative impact on the supply and then one other example, I’ll use and I’m sure you’ve heard a lot about this but covid test kits, you know, you know, I guess there’s you know, the CDC had one primary.

10:15

We provider of the swab that actually collected the sample for the virus. And unfortunately that that swab was actually produced or is produced in Northern Italy and you know, the significant issue that Italians are facing as a result of this virus fortunately that factory is still up and running and fortunately the US government is sort of stepped in to use military aircraft the ferry product back and forth from Northern Italy.

10:45

The u.s. So I think they’re on a schedule is two to three years. I’m sorry two to three times a week to bring that product back at the u.s. So that kind of gives you a backdrop of you know, what the scenarios are that we’re facing. Oh, by the way, one other large obviously item that, you know were in short supply on as hand sanitizer fortunately.

11:07

There’s a lot of domestic, you know capability and capacity to create that so, you know, I we’ve got you know, A lot of irons in the fire to get you know production up and running it domestically as quickly as possible. So I hope over the next few weeks. We’ll see, you know, we’ll see we’ll still have shortages but we just want to shortages to the acute nature that they are today.

11:46

Given the dependence that we have clearly shown to have on manufacturing from other countries that have have been hit obviously the outbreak started in China you mentioned several others.

12:03

Hours, what are the challenges going to be with getting manufacturing up and running in the US and do you think that going forward the supply chain is going to be more Diversified. I mean, are you worried about further breaks in the supply chain given that this is a global pandemic. Can you just share some of your perspectives on that International Supply Chain?

12:27

sure, so a couple of things I’ll give you some facts and then we sort of have you know, sort of these I guess five areas that we think we need to focus to sort of fix this issue long-term and to answer your question about, you know, producing things more domestically, but let me give you one other perspective that is as we’re having conversations with, you know, folks in the industry and just you know, What’s out in the media? India? Actually just stopped exporting 30. This is last week 13 active pharmaceutical ingredients and 13 finished goods to of those products include erythromycin as well as vitamin supplements.

13:14

And obviously those products are absolutely critical, you know in the you know, when you have patients that are fighting a virus and so, you know where you know, That is those those kinds of activities that occurred just put a heck of a lot of stress and strain, you know on the supply chain.

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So what way or what Premier fundamentally believes, you know needs to happen going forward one is obviously in the short term, you know, our focus is to get as much product over here as possible and working with manufacturers globally that you know, we have you know, some form of a relationship and Have a level of comfort that they produce high-quality products to try to get as much of that product and as probably many of an unnatural ways as possible to get it here. And so and we’re in discussions with you know, it’s unbelievable, you know, the support that we have been, you know, given from you know, huge players in the u.s.

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That are major employers, you know from commercial airlines to Automotive companies to Apparel manufacturers that you know, we’re offering up support and help to get product here and the manufacture product.

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So, you know they if there is one silver lining in this this thunderous Cloud it is this this incredible American Ingenuity and support for you know, you know, the the, you know the community at large and so that that is the the Silver Lining but there are five areas that we think we absolutely you know need to focus on longer-term one is we need to increase to increase transparency, you know to increase the confidence that you know, these Supply chains can maintain some level of resiliency the issue we’re dealing with if you think about a commodity good or you think about a generic drug, definitionally, these products are going to have narrow Supply chains because the public at large the consumers are expecting a commodity price to be priced like a commodity and they’re going to expect The generic drug to be priced like a generic that means it was produced for $10 or $15 at some point in time. And now they expect that they be produced at five cents. When that happens. You have to create these unbelievably efficient and narrow Supply chains that have no redundancy and they have no resiliency.

15:48

And so I think that from an industry standpoint We’ve got to do a better job of understanding where these other these products a are being produced the country of origin and then in the end the case of pharmaceuticals where the act of pharmaceuticals are being produced are actually being manufactured and also the excipient so the excipient SAR the other ingredients. So if you look at your label of your pharmaceutical, you’ll see active pharmaceutical ingredient and then you’ll see the other guy.

16:23

Against and for a lot of the products that we use in the Healthcare System. These are products like, you know stabilizers. These are products that are infused and patience.

16:34

So they’re stabilizers there they help to there’s antimicrobial products, you know, there are a number of products that are the other ingredients that are used in these finished goods and we have no transparency as to where those products are being produced and we’re worried that at a majority of these are produced and just a couple of countries to include China and we want to make sure that we bring total transparency, you know to you know, all of those products to we’ve got to diversify both globally and regionally where production is occurring. So I’ll tell you, you know, there are certain products that we know we need in the event of an epidemic.

17:19

I fundamentally believe a number of My Health Care Systems fundamentally believe that we’ve got to Is more of these products domestically and near shore? And so I think you’re going to see a significant Focus for probably about 20 to skus of products to include, you know, masks and and visors and and covers and those kinds of things.

17:41

I think you’re going to see a lot more Focus being produced those products being produced near shore and and on Shore so number that number two is really all about the diversity of the supply chain number three is Basically leveraging the technology that premieres been building out over the last couple of years with our Healthcare Systems to create this one point of understanding the the you know, how orders are occurring across all of our Health Care system. So and we’ve got to be able to aggregate that data. So all the orders that are occurring because what that will allow us to do is to be Hyper Vent that hyper Vigilant in terms of identifying where shortages are happening early.

18:23

No, it just like, you know, most of us we’re sort of creatures of habits. We know when a shortage begins to occur when there is an aberration in ordering of a product that doesn’t naturally happen. And so we’ve got to leverage our technology to understand the Nuance of what’s happening and why people are ordering differently and for the most part they’re doing that because obviously there’s a shortage of their struggling getting access to a product.

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We also know that you know, we’ve got to start and we’ve done this with very very very critical drugs in blood products and iba-jee and albumin, but we know we’ve got to Source product and then dynamically allocate those meaning source for a bolus of the Healthcare Systems create five, six seven Global suppliers and put that into one large pool and then dynamically allocate that where appropriate to Healthcare systems.

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And then you know those that need extra they can pull from that pool those that don’t need their allocation. They can put those back in the pool. And then you know number 5 is it is won’t be a surprise. We need to make sure that you know, we financially invest in these long-term strategies that you know, this is going to require some pretty significant infrastructure.

19:41

If we if we build this capability or I should say not if when we build this capability domestically and we’ve got to you know, take a view of this as a very long-term term investment. So sir, I hope I answered your question. You didn’t like that. These are great points and and good future Lessons Learned and we’ve already gotten some questions coming in from the audience. And so again, I want to remind everybody to send us your questions for Mike any time using the questions pane on your attendee interface. So just we’ve had a couple of questions about this just in time Supply and I want to ask you, you know, can you tell us to what degree hospitals are?

20:21

Or are have them and hitting stores of supplies just in case do we think that the Justin times the five strategies said undermine providers access to PPE tell us a little bit more about that and how that even works in the health care sector.

20:38

Okay. So this is this is like crazy complex because it’s different by every every literally every skew of every product, you know, within a category lace like personal protective attire.

20:49

So there’s you know, imagine thousands of skus but in general a healthcare system will keep a couple of weeks of Supply in their career, you know in their stores if they have warehousing capabilities are some skews that they’ll keep, you know, maybe three or four weeks of supplies of products, but it’s It’s you know, it’s dependent by the Healthcare System. It depends on the services that they’re providing to their communities and that goes all into how they determine how much to hold.

21:18

So the reason that this was you know, this is so profound is there there is not significant amount of inventory, you know, either in the local Health Care system in their distribution capability or with their core the distributor’s that they work with so you’re talking Max couple of weeks and you know, two to three Or four weeks. It’s different and Pharma. So we have a program called provide GX where we’d literally work with for the most part domestic.

21:47

But we do have some International Players but domestic suppliers that provide high-quality generic drugs and we got into this space because we wanted to create more suppliers in these areas because oftentimes when you have one supplier or to supplier it sort of exacerbates as you would expect the issue of a If somebody has an issue with quality and you only have two supplier that it goes to one supplier. Then often times you see stress put on that supplier plus obviously you’ll see prices huge pretty significant price increases. So the focus of provide GX really is to create more suppliers for you know, generic drugs that are in short supply and our program. We expect the suppliers that are that are part of that program.

22:33

They have three or four months of active pharmaceutical ingredients in any In and other ingredients, so it’s a little bit longer tail for you know, those those drugs than it is for the PPE. So you have a few months of supply and those areas but as we have seen with Cola Quinn, right, I mean who would have thought that a malaria medicine would have had anything a potential positive indication? I’m not suggesting it has but there seems to be a lot of press around Cola Quinn.

23:04

Well, you know, there is Kitt amount of supply of coal Quentin it’s actually done it or there’s produced in England and that went on sort of embargo or that sort of that.

23:17

They reduce the amount that they were exporting of that but you know, fortunately enough we started, you know started to work with some of our domestic manufacturers to get that product up and running a few weeks back but it’s things like that that these products are out there and they’re used for other like: A juice for it from malaria and there’s not a big demand of that. And so you have a very very small ability, you know small to you know capability to produce it but when it’s so when events like this occur, there’s obviously just not enough capability to meet the meet the needs of the demand.

23:57

So I hope that answers your question, but the net of all of it is short, you know that we have very very limited product and inventory for Personal protective apparel and and some of those medical products and then it’s a little bit longer for pharmaceuticals.

24:16

Right, that’s helpful. Okay, we have work time is flying and we have a few questions here about the federal response. So question around, you know, how does Federal involvement affect the supply chain our FEMA and other Federal groups competing for the same supplies of your customers are better trying to buy.

24:35

How does your company handle that there was another question around Federal oversight and I think to your point number four about sort of dynamically Distributing supplies as their Good. Is there sort of a federal role in figuring out who needs what most and then finally if you want to kind of comment on the defense production act and whether that would help her hamper your efforts to streamline, you know getting the supplies in the right hands and you know, and as you mentioned earlier getting some other domestic producers up and running like some of the non Healthcare companies, so a lot of different questions mixed in there, but talk about the federal response and how that’s going.

25:17

All right, Sarah and you jump in and interrupt me if I go too long. So we created a couple of weeks ago. We created a coalition of all the gpos all of the Distributors of medical products and then manufacturers to include ventilator manufacturers and some ass manufacturers. It was it truly was sort of this unprecedented collaboration across all gpos all these distributors in these manufacturers.

25:46

Sirs, we as part of that Coalition. We are working with FEMA and what they HHS and and from you know, the way that I sort of interpret the the meetings over the last couple weeks. It seems like FEMA is taking point on sort of the government’s response to all this, you know, they have their strategic stockpile and they’re thinking through the appropriate utilization the Strategic stockpile of these medical Goods.

26:15

They have created some I don’ts in terms of the answer question around, you know, the what they’re doing they’ve created models to show sort of, you know, the progression of the disease. So where the where the surges are. We’re providing data. We have all that data from our clinical tools.

26:32

We have about 1400 hospitals that subscribe to our clinical data that has all this discharge data and you know data that really shows, you know, what’s happening for my health care you dolor Hospital utilization standpoint. And so we’ve been building out models. They’ve been building up models were sort of coalescing. What are those right models and the point of all that and the reason that’s so critical is it helps us with, you know, sort of the you know, where we’re we’re supplies are needed and where they’re going to be needed next. And and and how do we make sure that your we’re trying to stay, you know, you know on top of it a today we’re sort of is happening in real time.

27:16

And then try to stay if we if possible stay ahead of it, you know and other areas. So the net of all of it is yeah FEMA is the middle of it. You know, they are they, you know, they built those stockpiles obviously for shorter term disasters. And so, you know, I think they’re focused on how do we build up more, you know capability at this time. I think team has been pretty clear they went up they want to the private.

27:46

Sector to sort of really drive this through this Coalition and and you know work through this issue. They are they are here to support us.

27:56

They are here to provide logistical support meaning, you know, if we need to get products that historically have come in on ships to be flown over they have been, you know, in the middle of all this and doing a very very effective job, you know supporting this Coalition that was created so I think that old defense put the the defense act. So just real quickly. I think what that has allowed is for a lot of innovation to occur very quickly.

28:26

And so that act as a number of sort of arms to it, but one of them is to allow for, you know, the very, you know allows for entities to produce products very very quickly and with you know, without having to go through significant FDA approval in you know, you know typically Lee which takes a long time in a very very short period of time so I think by enacting that allows us to get a heck of a lot more production up and running, you know as quickly as possible.

29:00

Thanks, Mike. So just in the minute or two we have left. Can you tell us just what do we need to be looking for in the next week? We you mentioned a little bit about sort of the social distancing and kind of how that might affect the supply chain. What do you think?

29:19

It’s realistic that emergency nurses doctors and other Frontline providers are going to actually get the equipment that they need and not have Have to ration or reuse it like what do you think is going to happen in the next week?

29:36

It’s so hard to tell Sarah II I will tell you there. Are you just have to think about there are different parts of our supply chain that normally never even had these products. We’ve been talking about the acute settings, but you know these poor people in Seattle that you know, we’re in these non-acute settings, you know, they didn’t even have these, you know gowns, they don’t have the access to the gowns in the n95 sand.

30:02

So, you know, we have been like Full-on trying to ensure that you know, these these entities that traditionally had not used these products, you know get access to these products.

30:14

So I think you’re going to just see a lot more of that kind of activity and I think you’re going to start to see it unbelievable Partnerships formed between you know, organizations that don’t historically provide product getting into the business of providing product flipping it on and then and so that you know, it may not be you know, mmm But within a you know a few weeks, you know, you’re going to start to see, you know, some pretty good info right now and as the president of this organization that you know, that that runs our direct sourcing business and he kind of story he constantly reminds me right now China is turned on production and that is a huge that’s a huge relief but stuff changes every minute and so Sarah I’m afraid that whatever I would pray.

31:05

Masticate right now with change probably by the end of the day, but that suffice it to say, you know, there is an incredible focus on getting as much product as possible to you know, those Frontline clinicians that are absolutely incredibly, you know, fighting this disease on behalf of these patients.

31:26

Well, thank you and speaking of minutes. Unfortunately, we are out of them. We join you and thanking all of the Frontline clinicians both in the acute care settings as well as throughout the Healthcare System who are fighting so bravely to manage and cope with the fifth pandemic. Thank you for all of your efforts and for joining us and thank you to our audience for asking such great questions. We’re sorry we didn’t get to all of them.

31:54

Them, but please feel free to stay in touch with us at the alliance. We will do our best to answer them or to get you the information that you need going forward. For those of you who want to take another. Listen. I just as a reminder, we recorded this webinar and you can view the full event webinar in transcript at our website along with all of the other webinars in this series stay tuned for more in the next week. And tomorrow, we will have a legislative and Regulatory.

32:24

And up to walk through the bill that is that is currently under consideration. We want to thank Mike again. Thank you for joining us and taking time out of your incredibly busy 18 plus our days for joining us on this webinar and sharing your perspectives. Thank you Sarah. Thank you for having me.

32:48

Great, and thanks again to our audience. This concludes the webinars.