Procuring PPE through Innovation, Evaluation, and Coordination: A Strategy for True Cooperative Procurement

By Dr. Nathan Myers, Advisor to the Continuity of Supply Initiative

As this is being written, vaccines to protect against COVID-19 are being distributed all over the United States and around the world. If the vaccine proves to be the decisive tool for ending the pandemic, it will be the result of innovation, scientific research, collaboration, and coordination in regard to creating, distributing, and dispensing the vaccine. We must never lose sight of the fact, however, that vaccines have become so vital because of critical failures in other areas of the medical and public health systems. The same elements that allowed for the rapid development of vaccines in this pandemic must be applied in other areas to make vaccines less critical for the next major public health emergency. One such area is procurement of personal protective equipment (PPE).

A Forbes.com article by Jessica Gold reports on Center for Disease Control and Prevention (CDC) statistics indicating that 287,010 healthcare workers have been infected with the novel coronavirus with 953 providers succumbing to the illness. The article attributes these deaths, in large part, to inadequate protection, including a shortage of adequate PPE. The article notes that some personnel lacked access to N-95 masks and were forced to create their own makeshift protection. A BMJ study by Liu and colleagues found that 420 healthcare providers who were reassigned to work with COVID-19 positive patients in Wuhan, China did not contract the disease after being provided with proper PPE and the training to use it correctly. The article cites studies indicating that masks, gloves, eye protection, and gowns, if available and used correctly, can provide adequate protection against the virus. The article advises that national leaders must facilitate the ability of healthcare workers to abide by safety guidelines to protect themselves through ensuring a durable supply of PPE.

That is why groups, like the Continuity of Supply Initiative, are working to develop improved models for true cooperative procurement that will leverage innovation in procurement practices, evaluation research, as well as collaboration and coordination among suppliers and providers to create a more efficient, effective, and resilient system for the continued procurement of PPE during a major emergency. Access to PPE has been a major challenge to the US response to COVID-19 since the beginning. When PPE was available, the pricing could prove prohibitive for some healthcare institutions. The Continuity of Supply Initiative (CoSI) is working to create a framework for a master agreement between suppliers and healthcare providers in which PPE would remain available at reasonable prices during normal circumstances and across a range of emergency situations. To be resilient and effective, the true cooperative procurement advocated by CoSI must result in sufficient market clout to incentivize and assure a continuous supply in all circumstances. That same sufficient market clout and the willingness on the part of the group or coalition to pay reasonably higher prices in non-routine circumstances motivate competitors to craft, commit to (in their proposals and contracts), and honor creative, nontraditional supply solutions. 

Organizations like the National Association of County and City Health Officials (NACCHO) recognized in a 2013 report the benefits of cooperative purchasing for public health organizations. They noted “piggy-backing” as being the most useful in an emergency, because organizations could join existing contracts and save time by not having to negotiate their own arrangements. Through the use of true cooperative procurement, CoSI seeks to remove the need for piggy-backing by creating efficient, effective, and resilient systems during normal times that can flex to meet the challenges of emergencies. A 2014 article by Rego, Claro, and de Sousa notes that improvement of purchasing strategies in the healthcare field usually involves increased centralization facilitated by information sharing using current communication technologies. Costs are reduced through order consolidation. In their view, this makes horizontal cooperation between healthcare institutions to reduce cost and pool supply chain knowledge a reasonable approach. Rego, Claro, and de Sousa go on to cite sources regarding the advantages of cooperative purchasing at the supply chain level, which include more favorable terms with suppliers, reduced purchasing efforts, development of purchasing expertise, better informed selection and standardization, and improved ability to respond to emergency situations. The one disadvantage noted at the supply chain level was coordination costs when the size of the cooperative increases.  

Healthcare institutions as well as state and local governments found themselves in fierce competition for limited resources when the pandemic hit. Healthcare institutions had been placing themselves in a precarious situation for years by relying on “just in time” purchasing and a thinly stretched, international supply chain to meet their needs. Rather than trying to address the situation to allow for more effective and equitable distribution, the federal government sought to outbid those entities to which they should have been offering aid. Some suppliers opted to provide PPE to the highest bidder rather than honoring contracts, leaving institutions at the mercy of unscrupulous profiteers who provided substandard material at hugely inflated prices. Hospital systems, public health organizations, and governments at all levels, as well as suppliers of PPE, must recognize that it is in the interest of everyone that a stable and resilient procurement system is in place to prevent the disruption seen during COVID-19 in the future.

During the pandemic, some state governors formed procurement coalitions to leverage the combined purchasing power of their states to obtain better pricing for equipment as well as better performance in the provision of goods. States also shared unneeded resources with states more heavily impacted by COVID-19. As chair of the National Governors Association, Governor Andrew Cuomo of New York is in a position to advance the idea of creating a national procurement coalition. Such proposals speak to the need to extensively review and revise the legal framework and resourcing of healthcare procurement agencies that hindered the COVID-19 response. It should be emphasized that CoSI is not proposing a “one-size-fits-all” approach to procurement, but rather a model for a master agreement that different regions, states, and localities can modify to meet their particular needs.

Nevertheless, a true cooperative procurement agreement will require considerable work on the part of the lead procurement agency in regard to procurement planning, proposal evaluation, and contract administration. While group purchasing will be used, each individual healthcare provider must be held responsible for upholding their part of the agreement. As previously noted, innovative scientific research, as well as collaboration and coordination, will be just as vital in regard to improving procurement as it has been in developing, distributing, and dispensing a vaccine.

For one, procurement agencies can employ surveillance techniques and use data collected by a variety of stakeholders to identify signals or trends indicating that a greater supply of PPE will be needed. Additionally, program evaluation techniques can be employed to evaluate supplier performance in a range of circumstances, as well as the degree to which the procurement system works after an emergency event. Healthcare institutions must collaborate to determine the metrics by which suppliers’ performance will be evaluated, as well as coordinate to effectively administer contracts and make sure that individual institutions are meeting their commitments.

One of the many important lessons from the COVID-19 pandemic is that the American healthcare system cannot afford to rely on procurement systems that function well during routine operations, but are not designed to facilitate adequate supplies at a reasonable cost during a public health emergency. That is why the Continuity of Supply Initiative is working to design and promote procurement master agreements that will facilitate true cooperative procurement in which suppliers and purchasers will honor the terms of the agreement in routine and emergency situations, while the market leverage created by institutions banding together will allow supplies to be purchased at the best price. In order for the system to be sustainable, (1) both suppliers and healthcare providers will need to maintain consistent vigilance for emergencies, (2) supplier performance needs to be evaluated using evidence-based techniques and consistent metrics, and (3) healthcare institutions must regularly coordinate on the administration of the contract.

It is important to honor the memories of the healthcare providers lost during the COVID-19 pandemic. Part of that will be reforming the healthcare system in the US to make sure that supplies of PPE will be adequate when the next emergency occurs.  The Continuity of Supply Initiative will continue to promote the concept of true cooperative procurement as an efficient, effective, and resilient way to achieve that goal.

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