Premier and 34 of its health system partners are teaming up with DeRoyal Industries to domestically source and produce isolation gowns, the organizations announced Monday.
The joint venture will produce isolations gowns in an existing facility outside of Knoxville, Tenn., and primarily source raw materials from U.S.-based manufacturers, with some backup from Mexican and South American suppliers. The health systems made multi-year commitments to purchase annual allotments from the joint venture, which expects to distribute its first batch in mid-2021.
“Domestic manufacturers face tremendous handicaps against foreign competitors, many of whom draw from among the cheapest labor and supply markets on the planet,” DeRoyal CEO Brian DeBusk said in prepared remarks. “One way we can restore diverse, on-shore and near-shore manufacturing is by investing in automation combined with assurances of long-term purchasing volume at globally competitive prices.”
DeRoyal plans to automate and scale production to “remain price competitive for the long term,” while designing isolation gowns specific to hospitals’ requirements, DeBusk added.
The COVID-19 pandemic reignited the push to diversify the healthcare supply chain. Personal protective equipment ran short as overseas production, where most PPE is made, abruptly halted. Providers were forced to source products from non-traditional suppliers, many of which did not meet U.S. quality standards.
Prior to the pandemic, gown production was disrupted due to a massive recall that stemmed, in part, from a lack of visibility into foreign suppliers.
The group purchasing and consulting organization is one of many stakeholders that have looked to fortify the supply chain via more domestic production. While healthcare organizations hope this will be part of a more sustainable solution, some are skeptical that companies will be willing to absorb the premium associated with onshore or nearshore production.
“Together with our members, Premier has created a proven, replicable co-investment model for generating new sources of supply,” Premier President Michael Alkire said in prepared remarks.