3 Steps to Creating Your Own Strategic Stockpile
Senior Vice President, HIDA
Published in The Journal of Healthcare Contracting
Read on JHConline.com
July 1, 2021
As the nation begins to see the light at the end of the tunnel on COVID-19, government and industry leaders are assessing the historic healthcare supply challenges presented during this pandemic. To better prepare for the future, federal and state officials are considering improvements to preparedness capabilities like the Strategic National Stockpile and regional stockpiles, but healthcare providers are taking proactive steps now to collaborate with their distributor partners.
From major systems to smaller providers, procurement professionals are engaging with their medical products distributors to discuss how to better manage future supply disruptions. Here are three steps providers can take to build and maintain their own strategic stockpile of critical medical supplies.
Conduct a Stockpile Audit
As shortages of PPE begin to ease, it’s an excellent time for providers and distributors to collaborate on an analysis of current supply levels of critical medical products and an updated reserve strategy. Providers can use the experience and data of the past year to answer important questions about their supply needs:
- Does your definition of PPE align with your distributor?
- Which critical medical supplies do you need?
- How will your distributor provide it?
- What is the most cost-effective way to store and maintain it?
- How will you use it?
- How will you replenish it?
- How many days’ inventory will you need during a non-pandemic year?
- Can you fund it over multiple years?
A thorough exploration of these issues can help providers establish the foundation for a sound stockpiling plan with their distributor. Once that plan is established, it will be necessary to work together to identify the most efficient way to implement it.
Utilize Existing Infrastructure
Healthcare providers that are establishing the physical space necessary to store and replenish stockpiled medical supplies could face high upfront costs and significant long-term expenses.
According to commercial real estate giant CBRE, “Warehouse vacancy rates are sinking and rents are soaring” due to historically high demand for storage space. That presents a major challenge given how much warehouse capacity a hospital or hospital system may need for a stockpile. A single 350-bed hospital creating a 90-day stockpile of a typical mix of PPE would need to buy and maintain 13-15 tractor trailers of storage space. To meet the same obligation, a 5,000-bed hospital system of 10-12 hospitals would need the equivalent of 1½ football fields of space.
To prepare for future pandemics and to manage costs, many healthcare providers are contracting to use their distributor’s available warehousing capabilities. Healthcare distributors currently operate 76 million square feet of warehouse space at 500 distribution centers across the country. Providers can work with distributors to access this capacity for their own dedicated supply of medical products, which can increase storage and delivery efficiencies. With distributors managing the logistics of thousands of products, healthcare providers can focus on what they do best – patient care.
Create Trusted Partnerships
One vital lesson learned during this pandemic is how important it is for healthcare providers to have strong, established relationships with supply partners before an emergency occurs. For example, when COVID struck and supply was diminished, many providers turned to unknown brokers who often did not deliver promised products.
The time to establish those trusted partnerships with the full range of supply entities – from a provider’s prime vendor distributor through relevant government agencies – is now. Establish a standing coordination and planning process that can bring the full partnership together to share information about stockpile resources, capabilities, and plans. If a future pandemic occurs, these trusted partnerships will prove essential to a provider’s ability to more effectively access their own stockpile and additional emergency resources from government stockpiles to get these critical supplies flowing to the care settings where they are needed most.
Elizabeth Hilla is Senior Vice President of the Health Industry Distributors Association (HIDA).