Enhancing Canada’s Healthcare Supply Chain to Achieve PPE Security

Enhancing Canada’s Healthcare Supply Chain to Achieve PPE Security

Team Temerity

(Andrea)Xue Qin

Sally Tang

Supply Chain Analytics

Pharmaceutical Management

Timothy Hutama

Padmaja Nair

Pharmaceutical Management

Marketing & Pharmaceutical Management

BACKGROUND

PROPOSAL

IMPLEMENTATION

BUDGET

SUCCESS MEASURES

CONCLUSION

Agenda

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Canada's Healthcare Supply Chain Is Vulnerable GEOGRAPHIC AND ADMINISTRATIVE DIVERSITY Canada’s large landmass and heterogenous mix of private and public payers and strong responsibility division between federal and provincial authorities presents unique challenges

LIMITED END-TO-END TRANSPARENCY No end-end visibility of medical products due to inadequate digital infrastructure and lack of UDI (Unique Device Identification) across healthcare organizations

LACK OF LOCAL MANUFACTURING CAPACITY

Limited local manufacturing and overdependence on international suppliers leads to supply chain susceptibility

WASTED EMERGENCY INVENTORY Lack of transparency in inventory management in the National Emergency Strategic Stockpile (NESS) led to expiration of millions of PPE Background

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Proposal

Implementation

Budget

Success Measures

Conclusion

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Canada’s Diverse Procurement Landscape Informs Possible Solutions • Solution needs to work with multiple system types: provinces that have a single SSO, semi-private systems with multiple GPOs like Ontario, the PSPC at the federal levels, and large private organizations.

• COVID has shown that both provincial and federal systems have limited transparency in emergencies.

• A federal initiative is the best solution to ensure Canadian PPE security across multiple system types.

4

Shared Service Organizations (SSO) per province were investigated by the group through provincial websites and are listed to the best of our understanding.

Background

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Proposal

Implementation

Budget

Success Measures

Conclusion

Executive Summary Challenges

Proposal

Budget

Outcomes

• Limited Digital Infrastructure • Lack of Transparency in Emergency Stockpiles • Limited Local Manufacturing Capacity

• GS1 mandate, National Product Registry using GS1 Canada • NESS integration as Prime Vendor.

• Local manufacturing requirements to federally supported RFPs.

• Total budget of $1B funded through bonds.

• ~60% Capital costs, 40% operating costs.

• 5-year implementation timeline.

• Improved patient safety outcomes.

• Retention of at least 50% PPE manufacturing.

• A sustainable emergency stockpile for future pandemics.

5 Background

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Proposal

Implementation

Budget

Success Measures

Conclusion

Adoption of National GS1 Mandate Harmonization of medical product inventory across Canada

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National GS1 mandate and framework established

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National Product Registry using GS1 Canada provides suppliers with common platform to provide product catalogue data for all health organizations served

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All products in healthcare organizations to be coded with GTIN (Global Tracking Identification Number) identifying unique product attributes

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GLIN (Global Location Identification Number) makes it possible to accurately identify location of every product within specific site

•

GSRN (Global Service Relationship Number) enables identification of clinician and patient to ensure endend tracking of a product

GS1

NATIONAL PRODUCT REGISTRY

6 Background

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Proposal

Implementation

Budget

Success Measures

Conclusion

National Emergency Strategic Stockpile Rebuilding NESS with Inventory Turnover Enabled by the GS1 standards National Emergency Stockpile System

Hospitals

Live Stock Month 3

“When the agency closed a warehouse in Regina in 2019, it tossed two million expired N95 respirator masks and 440,000 expired medical gloves.

— Globe and Mail [1]

Month 2

PPE Manufacturing

Month 1

Inventory turnover will be improved by transforming NESS into a prime vendor for critical supplies.

Provincial / Private GPO

Reselling old inventory on a monthly basis at 97% of cost will reduce national stockpile upkeep costs.

PPE Inventory Flow Data Flow

As the largest national PPE wholesaler, Canadian content requirements can dramatically impact future supply security

[1] Walsh, M. “Canada cut number of stockpile storage locations for critical medical supplies by one third in past two years” Globe and Mail. 2020. https://www.theglobeandmail.com/politics/articlecanada-cut-number-of-stockpile-storage-locations-for-critical-medical/ [2] The current mandate of NESS is to maintain 16 weeks of inventory, but it has been unable to maintain inventory due to ins ufficient budget.

Background

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Proposal

Implementation

Budget

Success Measures

7 Conclusion

Supporting Local Manufacturing

RFPs with Local Content Requirements Promotes Local Industry • More than 50% of PPE is now domestically produced[1] in a market that has grown by more than half.[2]

Warehouse System

RFP

NPR

Manufacturers PPE Inventory Flow Data Flow

• Canadian content requirements in orders will promote the retention of PPE manufacturing.

• If 50% of monthly orders have Canadian content requirements, up to ~1,000 well-paying jobs can be retained.[3]

~1,000 Manufacturing Jobs Retained

[1] “Bains: Domestic industry now supplying half of Canada's PPE need”Politico. 2020. https://www.politico.com/news/2020/09/30/navdeep-bains-canada-ppe-424029 [2] “Trade in medical and protective goods, June 2020.” Statcan. https://www150.statcan.gc.ca/n1/pub/45-280001/2020001/article/00061-eng.htm [3] Calculated as a wage share of 10% of company revenue, or $5MM, over employees averaging a wage of $60,000/year.

This assumes a monthly PPE replacement of $100MM/month.

8 Background

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Proposal

Implementation

Budget

Success Measures

Conclusion

Implementation Strategy

GS1 Mandate/Stakeholder Engagement • Federal & Provincial Agencies to oversee Supply Chain transformation • GS1 mandate roll out • Stakeholder engagement • ERP Guidelines • Price Harmonization across individual provinces

Canadian Warehouse System A sustainable NESS model that supports local industry ▪ Central Warehouse in every province ▪ Prime Vendor Designation ▪ FIFO inventory management ▪ Supports Canadian manufacturing through bulk purchases

National Product Registry (NPR) Transparent Data for all of Canada ▪ National Product Data Master using GDSN ▪ Common Product Data ▪ Customized Price Data (province wise)

PPE Security Local Manufacturing

Healthcare Organizations

Boosting Economy by Reshoring Manufacturing • RFP requirements for PPE mandating local content • Incentivize local suppliers through subsidies • Ensure quality compliance via established standards

National Procurement Integration ▪ ERP Implementation ▪ Clinician Education/training ▪ GTIN, GLN (Product identification/encoding), GSRN

9 Background

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Proposal

Implementation

Budget

Success Measures

Conclusion

PPE Demand Allocation using GS1 System Current Demand Forecast [2]

GS1 and the NPR Implementation Provides transparency • Analytics-driven sourcing • Asset sharing • Cloud optimization • Supplier ecosystem

Report fulfillment rate [3]

Order flow through ERP

Aggregate national and provincial PPE demand [1]

2015

Assess and Refactor Projections

Item Allocation and Delivery

2016

2017

2018

2019

[1]:https://github.com/CSSEGISandData/COVID-19 [2]:https://walletinvestor.com/asx-stock-forecast/ppe-stock-prediction/chart [3]:https://powerbi.microsoft.com/en-us/partner-showcase/stoneridge-software-vendorsupplier-and-inventory-dashboard/ Powrer BI showcase

10 Background

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Proposal

Implementation

Budget

Success Measures

Conclusion

Stakeholder Engagement Is Key to Success Step 1

Step 5 • • •

Identify future opportunities Assess feedback from all stakeholders Implement procurement innovations

Step 4 •

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Coordination of clinical leadership and procurement team to ensure seamless integration Real-time clinician feedback mechanism to correct inventory errors

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Approach to stakeholder engagement

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Background

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Proposal

Step 2 •

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Step 3 •

Set up stakeholder relationship management team Define goals for engagement: monthly, annual, three-year, five-year plans

Frontline worker and clinician training for ERP implementation Evaluation of items in inventory by clinicians to ensure clinically relevant procurement Implementation

Budget

Identify & prioritize stakeholders: hospitals, clinicians, frontline workers, suppliers, procurement agencies Use of Digital platforms for ease of engagement Involve clinicians in mapping of medical products in individual organizations

11 Success Measures

Conclusion

5 Year Timeline for Supply Chain Transformation Mandate & Stakeholder Engagement

NPR-Data Master

3 months Ongoing

6 months

ERP, GTIN, GLIN, GSRN Implementation

12 months-ongoing

National Stockpile System

Local Manufacturing

2 years

3-5 years phased Ongoing

• Timeline modeled after digital healthcare transformation using GS1 standards in Australia and Alberta, Canada [1] • Project Milestones • Parliamentary budget and mandate • Full GS1 compliance mandate ~3 years after program launch • Prime vendor launch ~1 year after approval followed by an additional year for new warehouses across country.

• Canadian content requirements for PPE phased in over 2 years after prime vendor launch.

[1] "The Australian Supply Chain Reform – Past, Present and Future" NEHTA. 2014. web. https://www.gs1.org/docs/healthcare/Nehta_AU_Oct14.pdf

Background

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Proposal

Implementation

Budget

12 Success Measures

Conclusion

Investing $1 Billion Will Create an Efficient Supply Chain VISION • A $700 million federal capital investment will encourage transparency and secure the national emergency stockpile.

• An additional $300 Million in operational support.

• Cost-neutral support of Canadian industry through bulk PPE purchasing.

HISTORICAL PRECEDENT • Post-H1N1, preparedness budgets included $1B over 5 years.

• Post-COVID preparedness planning provides a key opportunity to invest in healthcare for Canada’s Future.

FEDERAL FUNDING • Large capital outlay can be satisfied through a bond offering.

• Money can be invested into Provincial systems as a contingent interest free loan.

INVEST IN HEALTH

PROVINCIAL DIFFERENCES • Vision will be implemented through a mandate and provincial subsidy.

• Implementation model has precedence in provincial Medicare.

• Letting provinces self-implement allows for efficient inclusion of local differences.

CONTINUED FUNDING • Past emergency preparedness programs limited by cost cutting.

• This budget is revenue neutral overall for NESS 13

Background

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Proposal

Implementation

Budget

Success Measures

Conclusion

60% of the 5-Year Budget Is Devoted to Setup, 40% to Operations

• • •

GS1 Network

Prime Vendor

$268MM Capital Investment

$403MM Capital Investment

Setting up national ERP systems and subsidizing users will ease transition to national GS1 utilization.

Utilizing NESS stockpile as emergency safety stock will reduce overall NESS upkeep and ensure national PPE security.

Operating Cost

Operating Cost

$32MM

$36MM

Budget for GS1 implementation derived from Alberta Health Services estimate, scaled for Canadian population and corrected for inflation for initial value based on Bank of Canada inflation calculator. Yearly budget increased with inflation by 3% over five years. AHS estimate obtained from “ Exploring the Journey of Supply Chain Transformation in Three Global Health Systems” by Dr. Anne Snowdon, 2017.

Budget for Prime Vendor establishment based on 2009 reported values for NESS for warehousing and salaries of 23 staff. Warehousing cost was doubled to account for additional need, and staff multiplied by 8 to reflect greater use and nation-wide presence. The values were obtained from the 2011 NESS evaluation report from PHAC. Materials cost estimated as the replacement cost of NESS, as reported in 2011 NESS evaluation report from PHAC.

Background

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Proposal

Implementation

Budget

Success Measures

Conclusion

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Project Net Present Value Demonstrates Potential Savings Estimated Project Savings ($millions) $259

$253

“By conservative estimates, more than $100 million [in Australia] in potential savings can be achieved by addressing product data quality issues”

$264

$269

• Breakeven date of 2024, and a 10-year ROI of 190%.

• Estimated ~$200MM in savings per annum from better data. [4]

2021

2022

2023

2024

2025

2026

$97.8MM

— [Australian] National EHealth Transition Authority [7]

$(235)

Project 5-Year NPV[1-8]

• $400MM National emergency stockpile can be maintained through FIFO inventory cycling from local manufacturers by 2026 with minimal additional cost.

$(267) [1] Discounted cash flow analysis based 30-year bond financing at an interest rate of 1%. Yearly cash flows were discounted by 20%.

[2] Budget for GS1 implementation derived from Alberta Health Services estimate, scaled for Canadian population and corrected for inflation for initial value based on Bank of Canada inflation calculator. Yearly budget increased with inflation by 3% over five years.

AHS estimate obtained from “Exploring the Journey of Supply Chain Transformation in Three Global Health Systems” Dr. Anne Snowdon, 2017.

[3] Budget for Prime Vendor establishment based on 2009 reported values for NESS on $1B of for warehousing and salaries of 23 staff.

Warehousing cost was doubled to account for additional need, and staff multiplied by 8 to reflect greater use and nation-wide presence.

The values were obtained from the 2011 NESS evaluation report from PHAC. Capital outlay initiated in 2022.

[4] A conservative savings estimate was based on an IBISworld report (note 5) for Canadian hospitals showing a procurement budget of

Background

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Proposal

Implementation

12.6% of $73.8B. A savings rate of 2.5% was used. Inflation was included with a 3% estimate. Other sources of savings were not considered for the purposes of the DCF analysis. Sa vings were treated as positive cash flows.

[5] “Hospitals in Canada” IBISWorld. 2020. Obtained though Queen’s University Library.

[6] Budget for prime vendor includes $403MM in supplies depreciated over 5 years acquired in 2022 based on inflation adjusted values from 2011 NESS evaluation in note 3.

[7] “Healthcare Data Crunch” NEHTA. 2014.

[8] NESS inventory upkeep cost estimated at ~20 million per year of 10% of acquisition cost from wastage and discounted resel l price

Budget

Success Measures

Conclusion

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There Are Benefits to Stakeholders at All Levels Government/Health Authorities • PPE Security: Accurate real-time tracking of PPEs, disinfectants, medical products • Global Incorporation: Strengthened by adapting GS1 standards

• Economic Benefit Local manufacturing

Manufacturers • Inventory Tracking: Maintains data security, reduces inaccuracies

• Productivity & Profits: Enhanced by reduced manual work • Optimized Supervision: Straightforward and time-saving

Transportation

Healthcare providers

• Defective Products Prevention: Visible product categories restrict unqualified items coming into the supply chain

• Reduced Adverse Events Accurate product tracing prevents adverse/never events

• Improve Customer Satisfaction: Customers’ requirements such as shorter delivery cycles with accurate demand can be achieved

• Patient Safety Provided with full visibility in the supply chain

Patients • Safe/Timely/Accurate Healthcare service reception • System Operational: Accessible to their own e-health system on the mobile side

• Traceability: Ensure counterfeit prevention and products recall

[1] https://www.longwoods.com/content/25703//case-study-supply-chain-transformation-in-the-albertahealth-services

Background

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Proposal

Implementation

16 Budget

Success Measures

Conclusion

Outcomes Measures – Effectiveness System Standardization • Brings Canada in line with other GS1 countries.

• Enable better automatic inventory control • Allows increased hospital data sharing.

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Patient Safety Outcomes Can prevent 50-100 medication. errors per million patients • Reduced adverse drug event costs saving $1.1-1.9 MM annually per hospital

Material Inventory • Assure 3 months of emergency PPE supply at only 10% of the current cost.

• Enable JIT deliveries for PPE across Canada in normal conditions.

Outcome

Measures

Data Accuracy & Expansibility • Advanced e-health platform

•

Logistics • Retain up to 50% local PPE manufacturing.

• Provide end-to-end knowledge of order status.

• Save up to $10,000 per pharmacy in recall costs.

Financial Efficiency • Reduces hospital procurement spending by up to 5%.

• Eliminates ~$50MM in national stockpile inventory maintenance.

• Bulk purchases can lower overall cost of PPE by 1-10%.

(PC/mobile side) Reduces data entry error by >99.99% through barcodes.

• New technologies applications • UDI2 completion level

Preparation

Implementation

Evaluation & Expansion

[1] estimates of savings largely from“Strength in Unity: The Promise of Global Standards in Healthcare” McKinsey. 2012. web. https://www.gs1.org/docs/healthcare/McKinsey_Healthcare_Report_Strength_in_Unity.pdf [2] unique device identifier

Background

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Proposal

Implementation

17 Budget

Success Measures

Conclusion

Program Challenges Can be Overcome Capitalize on post-COVID preparedness planning. Over $1 Billion was spent after swine flu and a similar or greater amount will be spent after COVID.

BUDGET SIZE $1.1B is a big ask

STAKEHOLDER ONBOARDING

Change for institutions is hard

MANUFACTURING RISK

Local production may be more expensive

NOVEL MODEL RISK

Implementation hiccups are likely

Engage stakeholders during and before rollout and continually emphasize the potential savings from fully adopting the GS1 system.

Use data from NPR for improved demand planning. Bulk purchases can lower overall cost of PPE purchased though the warehouse system as a prime vendor for PPE. There is a greater risk from doing nothing: a new model is required after failures in 2003 (SARS), 2009 (H1N1), and now 2020 (COVID).

“The issue of strategic stocks and secure supplies has to be reconsidered.

A new model has to be invented.”

–Louis Gautier, former director, General Secretariat for Defense and National Security (France)

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Background

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Proposal

Implementation

Budget

Success Measures

Conclusion

Our Proposal Is Scalable Worldwide

GS1 / NPR Implementation

Prime Vendor Stockpile

Already implemented in Australia, GS1 can save ~5% on annual procurement costs worldwide.

This model can reduce the cost of each country’s emergency stockpile maintenance up to 90%.

RFP Local Content Requirements Large orders can help countries retain manufacturing integral to national security.

"Implementing global standards across the entire healthcare supply chain could save 2243,000 lives and avert 0.7 to 1.4 million patient disabilities on an annual basis.”

McKinsey, 2012[1]

[1] “Strength in Unity: The Promise of Global Standards in Healthcare” McKinsey. 2012. web. https://www.gs1.org/docs/healthc are/McKinsey_Healthcare_Report_Strength_in_Unity.pdf

Background

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Proposal

Implementation

Budget

Success Measures

19 Conclusion

PPE Security Is an Attainable and Sustainable Goal Increased PPE Security • 90% reduction in maintenance cost of the national stockpile will ensure PPE availability in a future pandemic.

Increased Fiscal Responsibility • Implementing improvements to digital infrastructure now will steward taxpayer dollars and save ~$200MM per year.

These changes will sustainably secure Canada’s PPE supply against future pandemics

Increased Supply Chain Transparency • NPR and GS1 standards will enable users to accurately track their orders from endto-end.

GS1 standards implementation • Implementing GS1 will save lives by increasing data accuracy.

These changes bring synergies with reduced medical error rates and lower maintenance costs

Reduced Inventory Wastage • Increased turnover in national stockpiles prevents expired inventory.

Reduced Reliance on Foreign Imports • Local requirements will reduce reliance on imports in future pandemics.

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Background

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Proposal

Implementation

Budget

Success Measures

Conclusion

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