November 15, 2020
We successfully procured and donated $1.3M of PPE supplies to our practices including 330,000 surgical masks, 170,000 KN95 respirator masks, 400,000 medical gloves, 110,000 disposable gowns, 31,000 face shields, and 9,000 bottles of hand sanitizer. It took negotiating with US distributors, navigating uncertain supply chains, and even working around a seizure of supplies by the Chinese government. Here’s how we worked through each of those, and what we learned.
Before COVID, most primary care practices had some gloves and a small supply of surgical masks on hand, but not the array of personal protective equipment (PPE) like gowns, N95 respirator masks, and face shields that have become essential in the fight against COVID-19. During the pandemic, as we now know, practices not only need PPE to ensure that staff are not infected, but for their patients as well – many practices attempt to provide a mask for each patient who comes through their door.
As one Aledade practice in Arkansas told us, “We issue PPE to any provider or support staff in contact with a patient who has respiratory symptoms, who has traveled outside of the state, or who has been in contact with someone diagnosed with COVID-19. We try to limit the number of patients and support staff in contact with these patients to preserve our supply.”
We also started to hear from many of our clinicians they were worried about getting infected – not because they were worried about getting sick, but as one practice humbly stated “because we would be unable to care for our patients, especially those who are over 65.”
Despite the clear need, many practices struggled to order PPE. For some, when they tried to order through their existing suppliers and manufacturers, the order would show up in their cart, but when they tried to process it, they got a response that their order had been canceled with no further detail.
Other practices were still pending backorders – as far back as February – and were provided no expected ship dates. One practice in Florida told us, “We can’t get PPE from any of our current suppliers/distributors since they are prioritizing hospitals and large clinics who are placing larger orders. We are having to find new suppliers, but even these groups are asking for too high of minimum quantities to be helpful.”
Larger clinics in the most affected markets were not spared either. A Procurement Director at a large community health center in New York painfully described that they were placing orders for surgical masks, but these kept getting cancelled – despite the fact that multiple staff members had already been infected. They were forced to shut down 13 clinics due to limited PPE.
Aledade tried to reach out directly to a few of the large US-based medical supply manufacturers to place a bulk order, but we were told they were not accepting orders from any new clients as, understandably, they needed to serve customers with existing accounts first.
Given the challenges in ordering directly through traditional suppliers and manufacturers, many practices started looking into ordering supplies from overseas. They quickly learned this required a pretty hefty minimum order quantity – one we heard often was 100,000 units of N95 masks (which would cost an individual practice between $250-$450K). Given that many primary care clinics are already operating on thin margins, coupled with the fact that they are largely dependent on patients walking through their doors in order to pay their bills, many clinics were simply not in the position to access a large order of PPE on their own.
To fill the void before the Aledade shipment arrived, many practices attempted to order small batches of supplies online the same way the average American was ordering masks — through Amazon or eBay — despite price gouging of 10-100 times the normal price.
Ultimately, many of our ACO networks resorted to helping each other out. One practice in Kentucky volunteered to send another practice in their Aledade ACO N95 masks free of charge for the first week of the pandemic. An Aledade staff member in Florida found 15 boxes of N95 masks in their local community and shipped packages to 5 practices where supplies were hardest to find. Some practices reached out to specialists and dentists in their communities that were experiencing decreased volume and were willing to sell their supplies.
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At Aledade, our mission is to support and empower primary care practices, so we knew securing PPE would be an essential part of helping these primary care practices continue to care for their patients and stay open. We needed to act fast to aggregate orders and get PPE supplies in the hands of our practices.
In order to kick-start the process, we surveyed all practices to gauge their PPE needs. Through introductions from Aledade staff members, and after many emails and phone calls, we were able to quickly connect with a variety of distributors who had access to suppliers overseas (the vast majority were in China). In vetting the plethora of distributors who started coming our way touting their access to supplies, we focused on the following questions and learned a few lessons along the way:
1. What is your minimum order quantity? Is this by-product or aggregated across all products ordered? What are the specs for PPE products available, what is the cost per unit, and what is the expected ship time after the order is placed?
— Some groups required a minimum of 250K+ units, which was too high for us for the first order. Other groups only had access to N95 masks, not other products, so we would need to contract with a different supplier for each product. We finally found a distributor that was combining orders across multiple organizations, which reduced minimums substantially for us. They also had access to multiple suppliers to cover all our PPE needs. Once we confirmed the number of units we wanted to order, the unit price dropped from what we were originally quoted. Sometimes it was as simple as asking “Is this the best you can do? I’ve seen $2.50 per unit from other suppliers…”
2. Are you able to source from overseas, unpackage the cartons, then repackage and send specific allocations to 500+ Aledade practices across the country?
— Some groups required a minimum of 250K+ units, which was too high for us for the first order. Other groups only had access to N95 masks, not other products, so we would need to contract with a different supplier for each product. We finally found a distributor that was combining orders across multiple organizations, which reduced minimums substantially for us. They also had access to multiple suppliers to cover all our PPE needs. Once we confirmed the number of units we wanted to order, the unit price dropped from what we were originally quoted. Sometimes it was as simple as asking “Is this the best you can do? I’ve seen $2.50 per unit from other suppliers…”
3. How can we ensure these supplies are high quality and FDA approved?
— For both suppliers we used for KN95 masks, we asked to see copies of the factory’s FDA and CE registration letters and asked to see test results for the specific products we ordered. We were able to obtain a signed letter from one of the suppliers explicitly stating the masks were NIOSH compliant and not counterfeit. We also asked our distributor to retest the masks once they arrived in the US to ensure they passed FDA regulations around fluid resistance, filtration efficiency, flammability, Delta/P test, and material composition.
Once we crossed contracting hurdles and placed the orders, we navigated a few other challenges getting the shipments from China to the US:
- New Supply Chains – Many US-based distributors placing bulk PPE orders have deep experience in the supply chain business and working with Chinese suppliers, but do not have experience procuring medical supplies. This was a risk in partnering with these distributors as they had to work through certain regulatory requirements for the first time, in the midst of a global pandemic, which led to shipping delays. One of these distributors told us, “Everything is changing daily and we are trying to keep up with all the new policies. We’ve never seen anything like this before.”
- Chinese Regulations – The Chinese government seized our first order of disposable gowns directly from the factory, so the distributor had to pivot and find another supplier which delayed us a few painful weeks. We were told China was limiting large quantities of certain items that could be sent to the US and increasing factory regulation requirements to prevent counterfeit masks from getting out of the country, which delayed other orders as well.
- Customs Regulations – U.S. customs continued to change regulations for masks coming from overseas which created new hurdles (and more delays) for our distributors to clear our PPE through customs. Many KN95 masks were turned away at customs, but we learned this was only if the suppliers and products were not already FDA approved.
- One More Thing – In the last hurdle before our KN95 masks could be shipped to the US, China required the name of the manufacturer to be printed on each carton, so our masks had to be sent back to the factory after they were already at the airport to ensure they had the appropriate markings.
Three lessons to take from our work.
First, due diligence is essential. Ask questions from suppliers, and lots of them. Test equipment whenever possible. Practices must be able to protect themselves in a situation that changes as rapidly as COVID-19, with new supply chains that practices may be unfamiliar with.
Second, expect the unexpected. Be prepared for changing timelines based on regulation and shipping requirements. Expect timelines to shift, and be prepared for sudden pivots in your strategy.
Finally, practices need a support network. A single practice operating by itself has little chance of ordering supplies on the scale needed for international shipping. Being part of a broader organization like an ACO helps practices negotiate as a larger group, ensuring their voices are heard when there is high demand combined with a dangerous shortage of supplies.
At the end of it all, we successfully procured 330,000 surgical masks, 170,000 KN95 respirator masks, 400,000 medical gloves, 110,000 disposable gowns, 31,000 face shields, and 9,000 bottles of hand sanitizer. After we placed the initial order on March 18th, the first shipment of masks were in the mail on their way to practices by April 10th. By the end of the month, we will have delivered supplies to 502 independent practices across 27 states. All of these supplies represent a $1.3M donation by Aledade to our partner practices. These supplies should give many of these practices a vital lifeline and a way to stay open in the near-term, and hopefully a way to keep themselves and their patients safe.
Primary care practices across the country need help securing PPE. They need to protect their patients and staff today, and whenever we are finally able to open up society again, they’ll be essential to getting us all back to normal. We need to protect those who are on the front lines protecting all of us.