Results for online donation campaigns that include “N95” in the search criteria is growing. On March 30th, the number of search results reached 1,404 and is expecting to keep rising. Most of these campaigns were started in the United States over the last 10 days, and the asking amount ranges from thousands to millions of dollars. Along with the campaigns are a host of Slacks, WhatsApp groups, and Discord channels all trying to accomplish what state and federal agencies, along with medical companies aren’t able to do. These self-organized groups have created a network to bring in CDC approved respirators and donated the coveted face coverings to hospitals. These are the NIOSH (National Institute of Safety and Health) protective face gear that is designed to filter out 95-percent of particulates.
The number of reports coming in from American hospitals detailing the lack of PPE (personal protective equipment) continues to grow, those outside of the medical field are stepping up to help. Art students are donating supplies from closets located in the metal shop. This is where many of the facial coverings are kept for students to use while they’re working on their projects. Others are working to collect them to send to healthcare organizations. Importers are not only working with countries where the majority of the needed items are made but also partnering with new companies and start-ups.
These Groups Are Joining the World of Logistic Management and Supply Chain Vetting Before Understanding the Complexities
These fundraising campaigns, individuals, and volunteer organizations are desperately trying to get PPE supplies to health care workers. Some might have some related experience with logistics or supply chains but very few are familiar with the strict guidelines required by the medical industry. They are trying to avoid scams in a gray market that is loosely regulated.
There is a chance that this burgeoning market will disappear one the threat of COVID-19 has evened out. Another possibility is that it will continue to grow to fill the vacuum created by the government’s failure to enact the Defense Production Act or purchase PPE in mass volume. The efforts by private individuals and companies outside the health field are inspiring, it also points out the flaws and weaknesses in the medical supply chain as it stands today.
How Importing PPE is Supposed to Work
This is how the supply chain for shipping PPE to hospitals should work. The medical supplies company goes over the data that projects future demand for face masks. They compare this with the existing stock at the hospitals and base their order on what will be needed to meet the forecasted demand. The order is either placed with an overseas manufacturer or one in the United States. The order is shipped to the medical supplies company that sends it on to the hospitals. The average time to complete the chain is 65 to 80 days.
During this period between ordering and receiving PPE, several bureaucratic steps must be taken to ensure quality. Factories are responsible for procuring the necessary materials that meet CDC (Centers for Disease Control) and the FDA (Federal Food and Drug Administration) standards. This applies to the non-woven polypropylene and the equipment used to attach the rubber bands that hold the face-covering in place. Both of these need certification from both agencies before they can be shipped. Medical supply companies are responsible for checking quality and the procurement officers at the hospital are in charge of getting the equipment at a fair price.
Even though this does sound like a typical product supply chain, there are differences. A medical supplies company CEO, Michael Einhorn stated: “the health care industry is one of the most fragile in terms of its supply chain and [before Coronavirus] the health care supply chain was fundamentally unhealthy.”
Einhorn points out that U.S. residents began hoarding the converted protected gear before coronavirus hit Asia and Europe. This isn’t the first time America’s hospitals have dealt with a shortage of key medical supplies. The main problem with the medical supply chain is the centralization of manufacturing by only a few companies. If a disaster occurs, natural or manmade, one of the main suppliers of personal protective equipment might no longer be able to keep up with their orders. A prime example is the shortage of IV bags after a central manufacturing plant was destroyed in Puerto Rico during the 2018 Hurricane Maria.
How Grassroots Imports Occur
Most volunteers that are now contributing to the effort find and donate much-needed PPE products to U.S. healthcare workers never imagined themselves being part of the PPE supply chain.
Melanie DiSalvo, the founder of Virtue & Vice is a consultant in the fashion industry that focuses on ethical sourcing. In a recent email, she stated: “It never occurred to me last week that today I would be working pro-bono on finding and shipping masks, but I kept seeing my friends and friends of friends that were working in hospitals take to social media to plead for protective gear and other PPE. It occurred to me that with everyone I know overseas in mainland China someone should be able to help me.” To fund her project she is growing awareness and profits through her online campaign.
There seems to be a common trait with these smaller efforts. Most have existing import-export relations with businesses in the Asian country, Iain Nash is a Manhattan-based artist and tech employee. He is currently live streaming fundraisers geared towards importing KN95 face masks. Similar to N95, these coverings for the face are CDC approved to use when supplies are low.
Demand overseas on the Chinese mainland for face coverings is also starting to level off. Some companies that were turned into PPE manufacturing plants are looking to previous U.S. clients to see if they are interested in purchasing their overstock. This includes grassroots organizations that were clients before the plant changed to only manufacturing PPE. Unfortunately, the major of plants that were tasked with making products with N95 materials during China's outbreak did not create stay-at-home tests,
The main concern for these supply chains is quality and fraud. The vetting process for the PPE is less stringent on the imports these groups are bringing in.
The Wheel Doesn’t Need to Be Reinvented
A member of a group that recently partnered with a PPE data clearinghouse, Rafael De La Cruz understands that volunteers need to hold their efforts to higher standards. He stated: “If anyone is going to bring face masks in from overseas and they haven’t done their due diligence or done this before, it’s a dangerous hobby. Everyone should realize they don’t need to reinvent the wheel. There are established professionals that volunteers should utilize who have been doing this for a long time.” De La Cruz is an adept facilitator, though not in the medical industry. However, he is volunteering his skills to the pre-established group.
DiSalvo goes on to say: “Anyone looking to donate, [they should[ be careful with who they donate to. If a person does not have previous experience with imports or working in Asia stay away.”
Due diligence for Nash starts with ordering a smaller quantity of facial coverings and working closely with his contact at NYU to verify – through testing- if the coverings are KN95 and not fakes. The supplier he uses has a valid FDA number. He also mentioned his suppliers: “their reputation [is] on the line – they’re not someone discovered out to out of the blue”. They’re also not a random vendor that he had no prior experience with.
Deciding to donate personal protective equipment to healthcare workers is a kind gesture but liability and efficiency also need to be considered. Only CDC approved suppliers can sell or donate these products to hospitals. With the shortage, KN95 face coverings have been approved and hospitals can accept donations. This is true even though all vetting might not have been done. One NYC doctor via the WhatsApp stated when asked how he felt about KN95 face masks: “[It’s} irrelevant. For me, it’s about science. If the science behind the gear is equivalent, that’s good enough for me.”
What Supplies Are Needed in the Future?
Medical suppliers do not appreciate the grassroots organizations' efforts. Dealmed CEO Michael Einhorn said: “I think that they don’t know the business and aren’t doing anyone a service.” Stockpiling critical PPE and speculating on potential shortages only leads to higher prices which start the cycle over. According to Einhorn, there has been close to a 400-percent increase in the masks needed to protect healthcare employees over the past week. This includes fraud and counterfeit masks. Before anyone can get into the supply chain they need to have experience and connections with trusted suppliers.
One person working within the supply chain stated that the grassroots suppliers and importers are the main problems. Instead, it is the middlemen profiting off the lack of government intervention and the uncertainty of the gray market.
They explained: “No one is equipped to understand the commercial imperative and commercial psychology of suppliers." Furthering the explanation is the fact that even the kindest CEO is still profit-driven. Since the government contracts never came in, there is no reason for them not to sell their supplies to the highest bidder. Even if it's the middleman that is planning on reselling the items for a profit.
Self-Organized Groups Are Helping The Middlemen On Our Side Due To Their Goal Of Responding Quickly to the Crisis
There is a growing concern about the middlemen that are being helped by self-organized groups. An unidentified person within the medical supply chain said: “These self-organized groups are enabling [the middlemen] on our side because they’re trying to quickly respond to a crisis, and factories are enabling it on their side because they need to make money. You can’t blame either side, but who’s arbitrating that middle part?”
The gray market is only one version of the crises that define health care in the United States. There is no reason why these campaigns for CDC approved protective gear are starting up. This makes as much sense as hospitals creating accounts to help them pay for cancer treatment. Since gray markets typically appear to fill a void left by a lack of resources and options. This type of market not only applies to protective gear but also rapid test kits which are still in short supply.
These grassroots organizations are inspirational and unfortunately needed, and as the coronavirus continues to overwhelm the U.S. healthcare system the gray market may end up being a permanent fix for the broken healthcare supply chain. If this happens, the middlemen will continue to be able to profit from both sides.
It won’t be easy to fix the broken supply chain so shortages in the future can be prevented. It will take more than increasing manufacturing in the U.S. There is also the problem of procuring the necessary materials. For example, along with Turkey the Asian continent are the primary manufactures of the fabric used in creating face masks. Manufacturers would still need it to be ordered, shipped, purchased, and delivered.
The incentives for the medical supply industry would also have to change from being profit-driven to having a more altruistic view. Concentrating manufacturing in one area and having only a few major players in the industry are two aspects that automatically weaken a supply chain. Since many of the manufacturers receive tax breaks and other bonuses from the government and in-house, it will be almost impossible to repair this weakness.
Grassroots groups do not need to concern themselves with tackling these changes. There is already enough for them to do just getting the protective gear to hospitals. Until this current health crisis is over, no one in government or the health care industry is going to put overhauling the supply chain as a priority. However, what the industry and government do need to pay attention to is if ordinary citizens can come together and put altruism ahead of capitalism, it’s a lesson that needs to be learned. If they don’t, this shortage will happen again the next time there is a health crisis. Purchase masks online here