Large Medical Product Stockpiles Divert Supplies From The Front Lines To The Back Shelf

Matthew J. Rowan, President and CEO, Health Industry Distributors Association (HIDA)
Published in the Albany Times-Union

August 2020

Proposals like those by New York that require healthcare providers maintain a 90-day stockpile of personal protective equipment (PPE) and other critical supplies appear to be a logical way to avoid future equipment shortages. In reality, requiring every hospital and nursing home to maintain a sizable stockpile during this crisis will exacerbate ongoing PPE shortages. Stockpiles of this size divert supplies from the front lines to the back shelf of a warehouse.

The U.S. recorded 467,600 new COVID-19 cases in the last full week of July. While the most severe shortages experienced in the spring have eased for some hospitals, equipment demand is still well above pre-pandemic levels in new state hotspots.

Additionally, nursing homes, physician offices and surgical centers have increased their demand for PPE by 50% over pre-pandemic levels. A majority of these non-acute care facilities still cannot obtain adequate PPE.

Efforts to create larger equipment reserves are one reason why demand continues to outstrip supply. Imposing a 90-day stockpile mandate on every hospital and 60-day on every nursing home would create even greater shortages.

In the long term, 90-day stockpiles present an unworkable mix of management, logistical, and financial challenges for healthcare providers at a time when they can least afford it.

A 90-day stockpile of a typical mix of PPE for a 350-bed hospital would require 13-15 tractor trailers of storage space unavailable at most hospitals. A 5,000-bed hospital system of 10-12 hospitals would need the equivalent of 1½ football fields of space.

A 90-day stockpile for the 350-hospital system could tie up $2 million in supply costs. In addition to acquisition costs, hospitals also would incur expenses that come with storing, managing, and delivering the inventory to the point of care.

These costs and complications are happening when hospitals are reeling from the impact of the pandemic.
Many are suffering a steep decline in revenue due to the cancellation of elective surgeries that can generate up to 50% of a hospital’s operating revenue. The added logistical and financial burdens divert time and resources from a hospital’s top priority: patient care.

A better approach is to leverage the proven expertise of health industry distributors.
Distributors have the infrastructure ready to provide storage, logistics support and the expertise to manage the range of costs, operational, and logistics issues. All this can be done while building a new national pandemic response infrastructure capable of replenishing supplies when needed. This framework also provides a model for states.

One component of that infrastructure would be forward-deployed reserves of supplies to meet the first-call needs of healthcare providers when a crisis strikes.

Based at the 500 commercial distribution centers across the country or government warehouse, the federal government would manage and control the stockpiles. Distributors would manage them to ensure the inventory is rotated and replenished.

In addition to reserves, the pandemic response infrastructure would include expanded, diversified surge manufacturing capacity that includes strong domestic production and centralized federal stockpiles to provide a back stop to state and local governments.

Health industry distributors currently deliver billions of pieces of PPE and other critical medical products to 294,000 hospitals, nursing homes, assisted living facilities, physician offices, and clinics throughout the U.S. efficiently and cost effectively. Healthcare providers trust them to handle the logistics of procuring, shipping, storing and managing large inventories and to deliver thousands of products to the point of care.

Relying on forward-deployed reserves would relieve providers of burdens of maintaining massive stockpiles of their own and enable hospitals to keep doing what they do best: care for patients.

Matthew J. Rowan is President and CEO of the Health Industry Distributors Association (HIDA).