November 16, 2020
Supply chain specialists CHAMPS Group Purchasing have partnered with DeRoyal Industries Inc., a global medical manufacturer, and Premier Inc., a leading performance improvement company, to create a new joint venture dedicated to the domestic production of isolation gowns.
A new entrant in the market, the joint venture will produce isolation gowns in an existing facility outside Knoxville, TN. Raw materials will be sourced from U.S.-based manufacturers, with backup capacity from Mexico and South America. In this unique collaboration, gowns are designed to specifications considering CHAMPS GPO’s member care delivery requirements, while also allowing for fully automated production that can scale over time. CHAMPS also entered into a multi-year commitment to purchase a portion of annual isolation gowns from the joint venture.
“The joint venture with DeRoyal and Premier is part of CHAMPS GPO’s ongoing strategy to create supply chain resiliency and invest in domestic and geographically diverse manufacturers,” said Brian Lane, president and CEO for The Center for Health Affairs and CHAMPS Healthcare. “CHAMPS GPO can now expand its offerings by continuing to competitively source products in shortage due to the COVID-19 pandemic.”
Medical products critical for daily operations are overwhelmingly sourced overseas, with approximately 80 percent of PPE coming from China and Southeast Asia. The risks of this overreliance on Asia came into sharp focus as COVID-19 swept across the globe and these nations closed borders and prevented U.S. access to supplies, triggering widespread shortages of PPE needed to protect healthcare workers and patients. In addition, sourcing from overseas makes replenishment difficult, as it can take 90-120 days for foreign products to reach U.S. shores, depending on country of origin, weather, mode of transportation and customs processes.
“Domestic manufacturers face tremendous handicaps against foreign competitors, many of whom draw from among the cheapest labor and supply markets on the planet,” said Brian DeBusk, DeRoyal CEO. “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 fair prices. With this added certainty, we are now able to move into an entirely new product category, create new American jobs and offer a domestic option for providers where one didn’t exist previously. Our intent is to leverage automation to remain price competitive for the long term.”
“CHAMPS is an early leader, stepping up and putting their investment dollars to work in ways that will help protect communities, patients and healthcare workers from shortages of essential medical products,” said Premier President Michael J. Alkire. “This is truly a win-win strategy – where CHAMPS GPO members will have access to a broader array of quality products at a fair price, all while rebuilding domestic manufacturing and better insulating communities from risk and disruption.”
Financial terms of the agreement were not disclosed. Gowns produced by the new joint venture are expected to be available in mid-2021.
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