Advocate Aurora Health has partnered with healthcare improvement company Premier to acquire a minority stake in Prestige Ameritech, the largest domestic manufacturer of face masks, including N95 respirators and surgical masks. The system is among 15 across the country joining this initiative to invest in domestic and geographically diverse manufacturing aimed at ensuring a robust and resilient supply chain for essential medical products.
In addition to an equity investment, Advocate Aurora Health will commit to purchase a portion of all masks used annually from Prestige Ameritech for up to six years, inclusive of a three-year renewal option.
The financial terms of the agreement were not disclosed.
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WHAT'S THE IMPACT?
The organizations hope domestic PPE production will curb an overreliance on Asia for manufacturing and source materials.
PPE products critical for the daily operations of health systems are overwhelmingly sourced overseas, with approximately 80% coming from China and Southeast Asia.
The risks associated with this overreliance on Asia came into sharp focus earlier this year, as the COVID-19 pandemic swept across the globe and these nations closed borders and prevented U.S. access to supplies, triggering widespread shortages of products needed to protect healthcare workers.
In contrast, Prestige Ameritech represents a primarily domestic supply chain, drawing raw materials and production capabilities from the United States. Prestige also does 100% of its business with U.S. customers.
In March, Premier said that 87% of healthcare personnel who responded to a survey said they are not receiving full quantities of the personal protective equipment items they order. N95 face masks are the most urgently needed supply, with nearly a third (30%) who responded reporting no inventory on hand.
The problem is particularly dire in New York State, where the government has ordered senior living employees to wear masks every shift.
THE LARGER TREND
Severe shortages of testing supplies and extended waits for test results limited hospitals' ability to monitor the health of patients and staff, and widespread shortages of PPE are putting both staff and patients at risk, according to an April report from the Department of Health and Human Services' Office of the Inspector General. Hospitals also said they were not always able to maintain adequate staffing levels or to offer staff adequate support.
Hospitals reported using a range of strategies to maintain or expand their capacity to care for patients and keep staff safe. To secure the necessary PPE, equipment and supplies, hospital administrators reported turning to new, sometimes un-vetted and nontraditional sources of supplies and medical equipment.
PPE shortages have had an especially negative impact on primary care physician practices. A March survey found 51% of PCPs lack adequate PPE, and more than half said it was having a severe or near-severe impact on the financial health of their practice.
ON THE RECORD
"Our supply chain team has been scouring the globe to ensure our team members on the front lines have the PPE they need," said Jim Skogsbergh, president and CEO of Advocate Aurora Health. "It's clear that overreliance on foreign manufacturers has been a driving cause of the issues care providers across the country have faced these past two months. By funding domestic production, we intend to change that landscape and create a more diverse, reliable supply chain so that we can keep our workforce safe and healthy and continue to provide high quality care to the communities we're so proud to serve."
"As COVID-19 proves, the United States is almost completely at the mercy of foreign nations for vital supplies," said Dan Reese, Prestige Ameritech cofounder and CEO. "We are ready, willing and able to surge our U.S.-based production and help alleviate the national PPE shortage. With the long-term commitment from Advocate Aurora, we have certainty that allows us to invest in increased production."
"This agreement and the added domestic supply it enables would not be possible without Advocate Aurora's commitment," said Premier President Michael J. Alkire. "They deserve recognition for their leadership and for their real work to bring supplies back home to America."