Cover Story

Hospital supply chain earns high marks in face of SARS outbreak

by Curt Werner

The pneumonia-like scourge of SARS that rippled through large portions of Asia then boarded a plane and landed in genteel, unsuspecting Toronto cost hundreds of people their lives, panicked millions of others and robbed the economies of major nations of as much as $30 billion by some estimates. But even though the absolute worst seems to be over for the time being at least for Severe Acute Respiratory Syndrome, the highly transmittable, frighteningly lethal, apparently seasonal viral condition unknown just a few short months ago, the killer has left North America at least one humbling reminder: that modern medicine is in many respects unready to combat a serious virus that spreads so easily and kills so effectively and indiscriminately.

The images are, by now, most familiar. Ordinarily a city teeming with 14 million inhabitants, many Beijing streets were nearly stripped of their citizens in late April. Several hospitals and many schools were shuttered. Those who ventured outside walked through the city wearing masks, the otherwise humdrum medical products whose thin layer of synthetic fabric serve as virtually the only thing separating them from possible death.

Although seemingly a naturally occurring mutation, SARS, it could be argued, is the century’s first bioterror attack (though emanating from neither al-Qaeda nor Saddam). So comments regarding bioterrorism and disaster readiness made prior to the day when SARS snuck up and delivered a crushing blow to hospitals in Asia, Canada and the U.S. are, in retrospect, extraordinary. For example, the American College of Healthcare Executives recently announced the results of a poll of hospital CEOs, 95 percent of whom said they either have or will have within six months a bioterrorism disaster plan in place. In the fog of war, as they say, admissions of guilt are among the first casualties. The truth is that when SARS first appeared, hospitals were caught flatfooted when it was discovered first that respirators might help prevent the spread of the disease and second, that supplies of respirators, the kind commonly used around patients suffering from TB, were extremely low.

The product in question is known as N95 and the issues surrounding it are many. For starters, SARS has taught us that there is a difference between masks and respirators. “Surgical masks protect the patient and keep exhaled bacteria from escaping, while respirators protect patients and caregivers from viruses that are in the air,” says Craig Wadzink, global marketing manager for surgical masks and respirators for 3M, St. Paul, MN, the global leader in mask and respirator production. He cautions that a surgical mask does not provide enough protection and should not necessarily be used as a substitute for a respirator. He said that the N95, the generic designation for a single-use respirator product sold by many companies, affords the highest level of patient seal.

For 3M and its competitors, the pressure to meet demand for the N95 was enormous. “We were very busy getting production scaled up to 100 percent,” says Wadzink. “We had to add shifts and capacity with the main objective of meeting increased demand and get the product to high risk areas.” 3M operates plants throughout the world.

According to Wadzink, some suppliers sent all or most of their product overseas, leaving the U.S. in short supply. “We are a global manufacturer and our goal is to run at full capacity for respirators and ship to those areas that are most affected. However, we need to make sure we have product in the U.S. as well as at the ‘point of cause.’” That point, as we now know, is China, with Canada not far behind. The illness has ravaged that huge nation, and threatens to disrupt supplies of any medical products made there. So far, those disruptions have not materialized, but items such as medical gloves and other latex-based products are manufactured in nearby countries that could find themselves in the crosshairs of the mystery disease, which could leave those manufacturing facilities short of essential workers.

Despite the immense pressure to produce, reports of backorder situations and shortages of respirators are unfounded, says Wadzink. “I have read that 3M is in back order, but that is false,” he insists. “Even though we were challenged by increased demand, our plants are geared up and running around the clock. We are working on a priority identification process that gives first product to our existing customers and to the areas most affected by SARS. We do not want to focus on one region and starve another. We want to keep the product flowing. We’re strained on supply, but we are absolutely not in back order.
“This is going to be a wakeup call to healthcare facilities. Sept. 11 was a wakeup call. Now, we need to be prepared and make sure our product, our supplies and our training are adequate.”

As the disease continues to kill, reports of price gouging crop up. Wadzink and others interviewed for this story emphatically deny any part in that practice. “3M does not increase prices,” he says. “We maintain an ethical approach.”

That ethical stand is not shared by everyone, however. In Toronto, Jeff Stevens, executive vice president of The Stevens Company Limited, a national med-surg product distributor based near the city, says he has heard instances of people selling N95 respirators for $5 each on Toronto street corners. Stevens, who says that N95 generally sells for “between 30 cents and 50 cents [Canadian],” says that his prices did not change, mostly because of contracts that had already been in place. Hospital prices in this country are said to range from $1.00 to $1.50 for each N95 item in 20-35 piece boxes. 

In mid-March, when the SARS epidemic first appeared in Toronto, the Stevens Company tried to gather as many cases of the product as it could, but was stymied by back orders. “We were quickly placed on back order for masks, as well as for isolation gowns and hand sanitizers,” he says. “We were literally scrambling for inventory.”

However, in late April, in an action that would rarely if ever occur in the U.S., the Canadian government seized control of all supplies if masks and respirators, says Stevens. “They took us out of the supply chain, which doesn’t make us happy, and that fueled panic even more. What really surprised me most is that in this day and age of bioterrorism, we weren’t prepared and neither were you [the U.S.].” Nonetheless, the government action excised a major headache from Stevens and other Canadian distributors, helped prevent price gouging and also helped assure that the neediest hospitals were serviced first. Stevens says there are approximately 30 hospitals in the greater Toronto area.

The run on masks, respirators and gowns, as well as gloves, spurred Stevens to rethink his company’s inventory strategies. For example, prior to the SARS epidemic, the company only needed to stock four or five cases of N95 products for its entire service area. At its peak, hospitals were phoning in orders for 100 cases each. “There weren’t 100 cases of N95s in the whole country,” he says.

The Stevens Company instituted a few other precautionary measures, including eliminating all returns and repairs from hospitals and requiring people entering the company’s headquarters to wear protective apparel if they had been inside a hospital. 

Closer to home in the U.S., large companies such as McGaw Park, IL-based Cardinal Health and Medline Industries, Mundelein, IL, are also taxed by the steep demand for protective equipment. 

Cardinal manufactures masks and respirators, although the N95 is commonly produced under private label contracts with about a half-dozen suppliers. Donna Gaidamak, a Cardinal spokesperson, said that demand for the product has risen in Asia, Canada and on the west coast of the U.S. “We have been working with our customers and giving them their current orders plus something between what they usually order and what they are now asking for,” she said. In addition, she said that retail buyers of the N95 were being placed behind hospital customers, and even hospital customers in line were behind any hospitals that had a confirmed or suspected SARS patient. Cardinal, which is also the nation’s largest med-surg distributor, increased surgical mask production by approximately 25 percent, said Gaidamak. “Since the beginning of April, our volume has nearly tripled,” she said. 

Gaidamak pointed out that Cardinal and its manufacturing partners have built a Continuous Product Replenishment feature into their supply chain (as have some other med-surg distributors like Richmond, VA-based Owens & Minor Inc.). Through it, manufacturers are able to distinguish rising levels of demand and adjust their manufacturing capabilities accordingly, making such shifts smoother and simpler. 

Medline, meanwhile, reported a “humongous increase” in demand for N95s. Stephanie Pasko, a senior product manager for the company, said that sales in the first week of April, for example, equaled three months’ worth of ordinary N95 business, with much of the demand coming from Canada and overseas. She also reported similar increases in sales of protective gowns. Medline, like its competitors, appears intent on satisfying demand from its regular customers first. “Our first commitment is to our current customers,” says Pasko. “We won’t deplete our inventories for SARS. Besides, we are committed to a Department of Defense readiness program which requires that we keep up inventory to an extent.” Medline masks and respirators are produced in Colombia and China as well as in the U.S. Those plants, said Pasko, moved from two shifts of eight to nine hours each five or six days a week to two shifts of 12 hours each seven days a week.

One company little known to the hospital industry apparently managed to find a large supply of N95 respirators extremely quickly. BAX Global Inc., an international transportation and logistics company based in this country in Irvine, CA, said it shipped an estimated 500,000 respirator masks to Hong Kong to help fight against the outbreak of the SARS virus. BAX said it had “sourced” the N95 respirators through a company known as O’Mara Products Inc., Grandville, MI. In a press release, BAX said it was “called to immediately air freight the first 30 pallets, or roughly 3,300 kilograms, of the NIOSH (National Institute of Occupational Safety and Health Administration) certified masks for immediate delivery to Hong Kong’s Ministry of Health.” O’Mara, “through a series of contacts,” was able to source 500,000 masks in the U.S. within a couple of hours. BAX was called in to pick-up the masks at four locations: Chicago, Grand Rapids, Rochester, NY, and Los Angeles. 

HPN

June