Healthcare systems have been having a hard time getting enough personal protective equipment (PPE) to battle COVID-19.
So, they decided to buy a stake in a face mask manufacturer.
Charlotte, North Carolina-based healthcare improvement company Premier and 15 healthcare systems partnered to buy a minority stake in Prestige Ameritech, the largest domestic maker of PPE such as face masks and N95 respirators.
The purchase, announced Tuesday, comes as hospitals across the country have had major problems getting enough PPE to keep safe and treat COVID-19 patients. A primary reason has been a reliance on materials from overseas, as 80% of the PPE products come from China or Southeast Asia, which have also been hit hard by the pandemic.
Banner Health and Advocate Aurora have both pledged to buy a portion of Prestige’s masks that they use annually for up to six years.
“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,” said Jim Skogsbergh, president and CEO of Advocate Aurora, in a statement.
Advocate Aurora was one of the 15 systems that bought a stake in Prestige, alongside Banner Health.
By investing more in domestic production, the systems said they hope to create a more reliable supply chain.
“We are ready, willing and able to surge our U.S.-based production and help alleviate the national PPE shortage,” said Prestige Ameritech co-founder and CEO Dan Reese in a statement.
The health systems also get a preferred purchasing position and can acquire PPE before the general market might, said Rick Klein, chief business development officer for Advocate Aurora, on a call with reporters Tuesday.
Klein said the system wasn’t concerned about whether it will have less demand for PPE once the pandemic subsides and demand lessens.
He noted that the company will be able to scale up quickly in case more PPE is needed. “We would build that capacity and it doesn’t mean we have to use the product,” he said.
Advocate Aurora has experience with this strategy.
In 2018, some of the largest providers in the U.S. joined forces to launch a nonprofit generic drug company called Civica Rx. That idea, which was spearheaded by Intermountain Healthcare, drew plenty of interest from hospitals and health systems, with more than a third of U.S. hospitals signing on.