'There’s a 5 to a 17 times level of demand for some of this critical product': Premier CEO on PPE

As the number of coronavirus cases continues to rise, healthcare workers are lacking protective equipment that can help in the fight of the coronavirus outbreak. Premier CEO Susan DeVore joins Yahoo Finance’s On The Move panel to break down the PPE supply chain.

Video Transcript

- Health is a big issue. And here in the United States, the issue of reopening the economies in different states is dependent upon not only testing, but also having the medical capacity and the gear necessary to protect frontline people in the hospitals. To help us talk about this and the PPE supply chain is Susan Devore. She's CEO of Premier, which has-- what-- more than 4,000 US hospitals and health systems with 175,000 other providers and organizations trying to deliver health care to all of us. What is the most important thing you are seeing through the data you collect from these large networks that you service?

SUSAN DEVORE: Yeah. Adam, through the data that Premier collects, we can see that there is a 5 to 17 times level of demand for some of this critical product-- PPE, swabs, diagnostic kits, blood products, ventilators. And that's all without the elective surgeries taking place. So as health systems ramp up elective surgeries, it's going to place additional demands on those products. And so we've got to make sure we have adequate supply to meet the demand as the economy comes back and as the COVID disease probably has a couple of waves to it.

- Well, a two-part question for you, because we've been concentrating so much on the manufacture of masks and ventilators here in the United States. Where do you see us as far as that part of the supply chain? But something we don't talk a lot about is the need for blood, blood transfusions and those issues. What's coming at us in regards to the blood supply? That's a two-part question, please.

SUSAN DEVORE: Yes. So I think from a blood supply perspective, we will need 50% more blood products than the current demand. And that's because all those elective surgeries haven't been happening. Once they start again, and if we have another wave of COVID or two more waves of COVID, we are really potentially going to have a challenge with blood and blood product.

- Hi, Susan. I wanted to ask you, just thinking a little bit farther out maybe on the other side of this, are we ramping up now our structure to be able to handle future events, a second wave, perhaps? Do you think we're going to be better off in the future, I guess, is the bottom line.

SUSAN DEVORE: It's a great question, and Premier is very focused on that, because we do think this is like swimming in rough waters. A wave hits you, you pick yourself back up, another wave hits you. And so I think we need to bring manufacturing, more manufacturing back domestically. We are ramping up additional production lines through various suppliers. We do have mechanisms to bring more supply into the country.

But this is going to happen in waves, and what we need to do is continue to try to be two to three months ahead of the wave. I mean, we essentially went from having six weeks of inventory on hand to two days of inventory on hand. And again, as we bring back surgeries, we're going to have to bring back very significant inventory levels. And I also think the federal governments and state governments are going to be focused on rebuilding stockpile because, as I said, I think this is a 12 to 18-month cycle that we're going to be in.

- Susan, what about the drug supply? Because COVID-19 is presenting new demands on drugs for kidney disease as well as blood thinners because of blood clot, what they're seeing happen to people who have COVID-19. What can you tell us about the drug supply?

SUSAN DEVORE: It's absolutely true. And initially, the drug supply shortages were on drugs being used with ventilators. That's now shifted, to your point, to kidney drugs, to heart drugs, to steroids, to propofol. And as that shift occurs, those shortages will increase. And one of the big challenges in the drug arena is that a lot of the raw materials for the active pharmaceutical ingredients come from countries across the world-- India, China, other places. And so again, we've got to bring more of that back to the US. But we are facing significant challenges in drug shortages as well.

JULIA LAROCHE: Hey, Susan. It's Julia LaRoche. I want to dig a bit further into the idea of reopening and just from that supply-- the conversation around these sorts of pieces of equipment that we need. What do you think that looks like when we reopen, and how critical will it be? You're talking about bringing manufacturing back. I guess more nationalized manufacturing is kind of the trend that we'll see. But how critical will that be in the reopening process?

SUSAN DEVORE: Yeah, Premier is working with all of our health systems now. They are all in the planning phases for reopening their surgical suites and trying to get back to taking care of the patients in their communities. And I think that means that we will see a surge in products.

It might be different products. I think the surge now will be surgical masks, surgical gowns, foot covers, drugs, all the things that go with the demand for normal surgeries together with the demand for COVID. And so I don't think you can bring back domestic manufacturing fast enough for the wave that we're going to experience in the next few months. And so what I think folks are doing now is they are building up their inventories of all of these products in the hopes that they can bring back their revenue streams, and their elective surgeries, and also deal with what might be a resurgence of COVID.

- Susan Devore is the CEO of Premier. We appreciate your insight on the data that the hospitals are dealing with. We hope you'll come back to Yahoo Finance.

SUSAN DEVORE: Thanks so much, Adam.