A large consortium of health care organizations, including Henry Ford Health System in Detroit, McLaren Health Care of Grand Blanc, and Premier Inc., a health care improvement group based in Charlotte, N.C., have acquired a minority stake in Prestige Ameritech, the largest domestic manufacturer of face masks, including N95 respirators and surgical masks.
The acquisition goal is to reduce reliance on foreign suppliers. Under the agreement, Premier members commit to purchase a portion of all face masks they use annually from Prestige Ameritech for up to six years, inclusive of a three-year renewal option.
The arrangement with Prestige Ameritech is part of Premier’s strategy to work with members to invest in domestic and geographically diverse suppliers of PPE and other medical equipment currently in shortage due to the COVID-19 pandemic.
PPE products critical for the daily operations of health systems are overwhelmingly sourced overseas, with approximately 80 percent 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 health care workers and patients.
In contrast, Prestige Ameritech represents a domestic supply chain, with production completed in the United States. Prestige also sells 100 percent of its products to U.S. customers.
“With past outbreaks such as SARS, H1N1, and Ebola, the nation talked about domestic manufacturing and expanding supply sources as the keys to preventing shortages, only to return to the same overleveraged overseas markets once the crisis was over,” says Michael J. Alkire, president of Premier.
“This move is the latest step in our long-term commitment to changing the way we source critical products so that we never again experience shortages as a result of overreliance. Our economic prosperity can no longer be tied to things we buy – it must also come from things we make.”
Dan Reese, co-founder and CEO of Prestige Ameritech, says, “As COVID-19 proves, the United States is almost completely at the mercy of foreign nations for vital supplies. Diverse and on-shore manufacturing of critical health care products is clearly a national security issue. With this agreement, we have long-term, multi-year commitments that give us certainty and allow us to dedicate our resources to increase production. Not only does that help us today with COVID-19, but long-term commitments also create economies of scale for when we return to business as usual.”
Financial terms of the agreement were not disclosed.