1 Pandemic PreparednessIndustry Efforts to Build Elasticity into the Supply Chain [Linda]
2 Linda Rouse O’Neill Marshall SimpsonVice President, Government Affairs, HIDA Marshall Simpson Executive Vice President & Chief Commercial Officer, Owens & Minor [Linda]
3 Learning Objectives Learn how pandemics impact the supply chain, including the risks of under- and over-ordering, duplicate ordering, and hoarding behaviors Identify opportunities to improve communications with suppliers and public health officials prior to pandemics, ensuring available product when needed Learn how suppliers manage and allocate products, and what best practices can help prevent demand spikes and shortages [Linda]
4 Triple Aim Triple Aim areas affected by proper pandemic preparedness:Improving the patient experience of care (including quality and satisfaction) Improving the health of populations Reducing the per capita cost of healthcare [Linda]
5 Overview of HIDA & HEF Distributors Manufacturers100 Distributor Members Manufacturers 130 Manufacturer Members [Linda] What is “HIDA”? HIDA provides resources that enhance the business performance of medical products distributors HIDA Educational Foundation Associates support distributor members through contributions to education and business intelligence initiatives Many people think it’s synonymous with the tradeshow – but it’s a trade association with lots of resources Increases supply chain efficiency by serving distributors and manufacturers
6 Pandemics Occur RegularlySARS (2003) H1N1 (2009) Ebola (2014) 29 countries affected 8,096 international cases 4 U.S. cases Every country affected 1/5 of the global population had H1N1 60.8 million U.S. cases 9 countries affected 22,938 international cases 2 states affected 4 U.S. cases [Linda]
7 Pandemics and the Connected World[Linda]
8 Chain of SARS transmission among guests at Hotel M (Hong Kong, 2003)2 close contacts 2 family members Guangdong Province, China 4 family members 10 HCWs 4 HCWs* Hospital 2 Hong Kong F Canada A A F G † G † 3 HCWs K † K † 156 close contacts of HCWs and patients Ireland Hospital 3 Hong Kong A H H I Hotel M Hong Kong L§ J I 99 HCWs (includes 17 medical students) E United States J D Hospital 1 HK B M§ C C D E [Linda] B Germany 0 HCWs Singapore HCW HCW Hospital 4 Hong Kong B Vietnam 34 HCWs 28 HCWs 2 family members HCW 37 HCWs 37 close contacts 4 other Hong Kong Hospitals Unknown number close contacts HCW * Healthcare workers; † All guests except G and K stayed on the 9th floor of the hotel. Guest G stayed on the 14th floor, and Guest K stayed on the 11th floor; § Guests L and M (spouses) were not at Hotel M during the same time as index Guest A but were at the hotel during the same times as Guests G, H, and I, who were ill during this period. Bangkok Data as of 3/28/03
9 Framing the Pandemic ProblemOver-ordering (allocation triggers providers placing multiple orders with multiple vendors) Nontraditional demand (public) Non medical products (Tyvek suit recommendation created confusion. No existing business agreements in healthcare supply chain) [Linda]
10 2009 H1N1 N95 Mask Usage *500% usage increase! [Linda]Source: Johns Hopkins University Health System
11 Ship Traffic Worldwide: Wednesday, March 23, 2016, 9:55 AM EDT[Linda] World container ship traffic has doubled since 1997 Ship Traffic Worldwide: Wednesday, March 23, 2016, 9:55 AM EDT
12 The Role of Distribution in Preparing for & Responding to a PandemicConnecting the World of Medical Products to the Point of CareSM [Marshall]
13 Owens & Minor Overview A Global Healthcare Services Company$9+ billion Fortune 500 company Top two global healthcare markets 8,000 teammates A Global Healthcare Services Company 60+ facility network across 15 countries Services support 5+ million procedures annually 4,400 provider and 2,000 manufacturer customers Connecting the World of Medical Products to the Point of Care Attacking complexity and cost for both providers and manufacturers Enhancing the delivery of care Unique Position [Marshall]
14 Domestic Network – Extensive U.S. Coveragel Detroit Omaha Kansas City Des Moines Chicago Minneapolis Indianapolis Louisville Cincinnati St. Louis l Jackson Jacksonville Ft. Lauderdale Raleigh Atlanta Boston Baltimore Richmond Home Office Charlotte Knoxville Tulsa l Houston Harlingen Allentown Nashville Gainesville Denver Salt Lake City San Diego Honolulu Los Angeles Redlands San Francisco Portland Seattle Cleveland Pittsburgh Memphis New Orleans Dallas Philadelphia Austin Phoenix Albuquerque [Marshall] This represents O&M’s coverage across the U.S. -- 40+ service centers across the U.S. Leader in healthcare provider distribution Distribution Centers located within 250 miles of every major U.S. city Comprehensive value-added services 5,700 US teammates serving 600 major healthcare provider customers LDC MDC SLC RDC Distribution Center Home Office
15 Medical Products DistributorsSupply chain role is to assure the uninterrupted, efficient movement of medical products to hospital customers: Maintain high service levels, access to branded supplier products Experts in logistics, driving out supply chain inefficiencies Manage inventory to reduce hospital carrying costs for disposable medical products Continued pressure on the cost to acquire and distribute medical products has forced distributors to develop more streamlined models Inventory has been reduced and inventory turns increased to lower “on hand” supply chain inventory cost Hospital customers are also reducing inventory in favor of “low unit of measure” purchasing with more frequent delivery of products Pricing pressure as more rapid product commoditization forces disposable products manufacturers to reduce inventories and source outside of U.S. to cut cost – longer lead times [Marshall]
16 Steps and Processes Used to Manage an EventUtilize customer-level forecasting capability to establish baseline allocation demand Utilize “Available to Promise” customer hierarchy and ERP reservation system to allocate inventory to orders on a weekly basis Sequestered inventory (client-funded inventory held and rotated in case of emergency need) is added to ERP reservations and released as directed by client “Available to Promise” keeps track of hospital purchases and decrements reservations as orders are filled Stockpiling capability identifies any customer orders in excess of a pre-defined % of past activity so they can be reviewed by Customer Service [Marshall]
17 Distributor Order Management Event ProtocolDistributors very quickly increase orders to manufacturers Manufacturers unable to satisfy demand implement allocation programs based upon historical purchasing profiles Distributors also implement allocation programs, ensuring product flows to accounts who have historically consumed the product Distributor Order Management System protects constrained inventory for higher priority customers: Only generates reservations for “forecasted” items – on-hold available inventory Requires customer-level forecasting (CLF) of projected demand Buffer stock (available inventory less reservations) remains first come, first served Provides an accounts hierarchy to allow for prioritization [Marshall]
18 Pandemic Product Vetting Grid**DRAFT for discussion purposes 10 Fold Custom vaccines Tyvek PPE Complex Sourcing Conditions Long lead times Shelf life restrictions Expensive No incremental manufacturing capacity Complex manufacturing process (i.e., foreign sourcing dependency) Difficult storage and handling requirements (i.e., temp. control, hazmat, etc.) Constrained raw materials Simple Sourcing Conditions Short lead times Extended shelf life Inexpensive Excess manufacturing capacity Simple manufacturing process (domestic sourcing capability) General storage and handling requirements Abundant raw materials Safety Needles & syringes PAPRS Waterproof apron N95 respirators Surgical hoods Full-face shields Surface disinfectant Conventional Needles & syringes Masks CHANGE IN PANDEMIC VOLUME Disposable PPE IV solutions Hand sanitizer Thermometers Biohazard disposal [Linda] Flu test kits Gloves Table paper Diagnostic/Capital equipment Normal Simple SOURCING COMPLEXITY Complex
19 Policymaker Interest ASPR and CDC engagementHearing on Blue Ribbon Panel Report Series of Capitol Hill briefings on pandemics Zika funding PAHPA reauthorization [Linda]
20 Current Opportunities, Best PracticesBuild on hospital tiering (proven success from Ebola) Increase transparency and communication Utilize private sector capabilities Collaborate to increase supply chain elasticity Develop medical countermeasure plans to include products that deliver intervention: For example – syringes, gloves, tubing, protective equipment for clinicians/healthcare workers, etc. [Linda]
21 Current Opportunities, Best Practices (cont’d)Hospitals can be reactive to adverse events. An overwhelming majority are not addressing potential product issues: First call is to distributor, not manufacturer, which requires distributors to be more informed of appropriate response Event strategies are discussed, but interest and preparedness wanes soon after an event’s occurrence Hospitals may be unwilling to invest in strategic inventory Providers not always mindful that when events happen, inventories could be limited The real-time nature of events causes hospitals to react based on perceived product needs: Clearer direction from government agencies regarding products required for each pandemic and the level of response Confusion and self-interest create supply chain havoc and disrupt product availability for where it is most needed List of preferred products and acceptable substitutions by type of event [Marshall]
22 Emergency Preparedness Is ImprovingGovernment agency and key distribution partner (HIDA) communication has improved greatly and is ongoing The private sector’s role and engagement should not be undervalued; it should be leveraged where needed Ability to manage stockpiles and medical products is our industry’s expertise: Developing projected stockpile quantities and pre-deployment suggestions Capability to take stockpiles and deploy as directed Allocation methodology that can be aligned with governmental requests: Key facilities Regional inventory deployment Post-emergency, inventory could be pulled from the stockpile for resale and replenished with fresh inventory [Marshall]
23 Closing Remarks/Questions[Marshall/Linda]