By: Ryan Power
The medical industry has long been known as the fastest slowest industry in the world. Dynamics have always changed rapidly through innovation, product development, integrating technology and geographical advantage. These changes then hit a brick wall during implementation; either through regulatory, or project lead times extended and burn through funding are most common. As EMM has passed its 11th year in the industry our vision needs to adapt as well. In the past everything was based on our Founder, David Power’s vision of Risk Mitigation.
It is clear now during the peak of a global pandemic that the foundation EMM has been built on has shown to shine. With our deep roots in both our supply stream with over redundancy, as well as our vertical integration of key processes, we have been able to navigate this pandemic and provide great insight and support to our clients. The question we are faced with now is what will the world and the healthcare market look like post Covid-19.
It has become routine over the last 6 weeks for myself and my sales team to get multiple emails a day from all over the world in response to the current pandemic. Many of such emails start with “I am from my local government agency and have been approved to source 20 million in PPE. Please advise a price and arrange for shipment starting in 2 weeks.” These emails show a lot into the depth of many topics. In order to show the entire picture, we must first remember where over the last 10 years the medical industry has been converging too, which is a path of deregulation and commodity pricing.
Specifically, in regard to surgical gowns, some items have become 510K exempt which only adds fuel to the fire of subpar suppliers that can pop up very quickly with near impossible submarket pricing because they just don’t have the overhead of quality and regulatory compliance. Likewise, hospitals are on tight budgets with 120+ day payment terms as well as keeping minimum supply to last a few days only of routine, prescheduled surgeries.
This has created a state of disparity during this crisis with a huge shortage of needed products in the market. Unfortunately, one of the solutions that was used was more deregulation in order to allow even more products into the market that are now being brought to light to have critical performance failures; N95 masks that have 15% transfer rates and more were flooded into the market, as well as testing kits that were only 30% accurate.
On the other end of the spectrum you have the current major world supplier surgical gown recall of over 90 million gowns just a couple months before this pandemic started, as well as the shut down of major US based sterilization companies. All put a huge pressure on other manufacturers to supply to the market. A recall was birthed because of the fanatical desire to cut costs by one of the largest suppliers in the industry who had multiple contract suppliers overseas. Suppliers that figured out if they created satellite operations and hid them from their end user, they could save a tremendous amount of cost by not enforcing controlled environments or production standards with QA. Also, more importantly, no inherent care for contaminants which eventually was discovered and the product was forced to be recalled and scrapped because it was impossible to ensure these products could be sterilized due to contaminants in these environments
Healthcare supply is not a water faucet. It cannot be adjusted at will and takes weeks to ramp up to speed and capacity, which is then also very difficult to manage and control. So, when an email is received asking for 20 million units of PPE equipment, it is very difficult to grasp the magnitude of what is being requested. The sourcing and hiring of 2 or 3 times your normal workforce and weeks if not months of material allocation and manufacturing equipment sourcing that would be needed to produce such requests are an astounding feat of industrialism.
All of these factors played a large part in the healthcare industries uphill battle going into this pandemic and it is clear that positive changes are on the horizon. States and local governing agencies mandating hospitals keep 90 days of stock for certain products and also maintain secondary sources of critical items. Heightened concern over low quality products will turn regulatory into being a top priority again as well as reinforcing strong supply chains with stable and proven partners that are there during good and bad times.
It is clear during these times that EMM’s core standings are key to our success. At EMM, we strive for partnership and transparency while ensuring the utmost integrity in our products and process. As a 100% family-owned and operated company, we are able to control and provide immediate oversight into all areas of our company. This is what we must maintain for our future while being open-minded to the changing industry.