Part 4: National reserve supplies

4.1
The national reserve supplies, are by definition, a reserve to ensure continuity of supply during a large or prolonged emergency that affects usual supply chains.

4.2
In 2005, the Ministry provided DHBs with $6.3 million funding through the Crown Funding Agreement to purchase supplies for the national reserve. The funding was based on population numbers at that time and on modelling that assessed the PPE needs of hospital use only. The funding was to be allocated proportionally to particular categories of PPE. DHBs were required to use this funding to purchase PPE stock.

4.3
From 2008 to 2013, DHBs were provided with funding for ancillary costs associated with storing and managing the PPE inventory of the national reserve. After 2013, DHBs have been expected to manage the national reserve supplies they hold through their baseline funding (that is, without specifically targeted additional funding).

4.4
In this Part, we outline how the national reserve system was set up, who the supplies were intended for, and the extent to which this changed during Covid-19.

How does the national reserve system work?

4.5
The Reserve Supplies Policy describes the responsibilities for managing and prioritising PPE. The Ministry is responsible for:

• maintaining national reserves supplies in Ministry stores;
• developing clinical guidelines;
• setting and communicating policies for managing, prioritising, allocating, and using national supplies;
• prioritising and allocating supplies between DHBs and regions;
• releasing supplies (when necessary and appropriate);
• transporting and distributing supplies to DHBs;
• monitoring, forecasting, and replenishing national supplies; and
• funding the use of national supplies.

4.6
The Reserve Supplies Policy makes DHBs responsible for:

• maintenance and turnover of national reserve supplies they hold;
• prioritising internal supply and allocation in emergency situations;
• supporting neighbouring/regional DHBs;
• reporting and forecasting local and regional supplies usage;
• distributing and transporting supplies within their district;
• applying to the Ministry for release of supplies when needed;
• ensuring compliance with Ministry-issued clinical guidelines, usage policies, or national priorities;
• ensuring appropriate and economical use of national reserve supplies in all clinical settings; and
• accounting to the Ministry for their receipt and use of national reserve supplies.

4.7
DHB health emergency plans reinforce these responsibilities. The plans are meant to describe how the DHB will receive, manage, and transfer PPE supplies between DHBs, and how the DHB will store, rotate, and manage the national reserve supplies that it holds.

Who were the reserve supplies meant for?

4.8
The health and disability sector is made up of a wide range of organisations and providers. DHBs are funded to provide specific health services to people in their district. In turn, DHBs fund primary care (general practice clinics) and aged residential care services.

4.9
The Ministry funds some services (such as disability support services and maternity care by Lead Maternity Carers), the Accident Compensation Corporation funds others, and some health services are fully private.

4.10
During the Covid-19 response, all these providers needed PPE of varying types, but not all of those providers had links to the DHBs. In our view, the relevant plans and funding agreements were not clear enough about who would be responsible for providing PPE to all these providers.

4.11
During the response, some government agencies (for example, customs staff) and essential services outside the health sector also turned to the Ministry and/or DHBs seeking to access PPE.

4.12
The Reserve Supplies Policy acknowledges that, in a prolonged, unusual, or large health emergency, it “may be appropriate” for the national reserve of PPE to provide support to primary health organisations, private health providers, or non-health agencies. The Reserve Supplies Policy has a prioritisation hierarchy for allocating national reserve supplies. The order of priorities is:

1. health organisations that are essential to deliver the health services response to the emergency, such as community-based assessment centres;
2. health organisations essential for the continued delivery of non-emergency health services, such as day-to-day service delivery during an emergency; and
3. non-health organisations essential to support the continued delivery of critical services during a health emergency.

4.13
The Ministry told us that the modelling that underpinned the funding for DHB-held national reserve stock was intended to support hospital use only and did not include the needs of the wider health and disability sector or non-health sector. The Reserve Supplies Policy and the earlier Ministry funding agreement said that the national reserve of PPE should also be available for the primary and community health sectors and first responders. The Ministry has subsequently told us that there did “seem to have been some margin assumed for wider use when considering the original funding” but did not indicate the extent of that margin.

4.14
On 31 March, the Ministry issued instructions to DHBs that they were to provide PPE to the wider health and disability sector. It was not clear to us that DHBs anticipated that they would be required to supply PPE to health and disability providers who they do not fund and, in many instances, do not have relationships with.

4.15
The Ministry told us that it has initiated a review of the Reserve Supplies Policy.

4.16
During Covid-19, the Ministry provided PPE to essential workers who are not part of the health and disability sector. It also set up an ordering and distribution channel for PPE that other public and private sector organisations used. We note that the Ministry carried out Exercise Pomare, an all-of-government influenza pandemic exercise, from October 2017 to May 2018. In its report on Exercise Pomare, the Ministry recommended that central government agencies include in their business continuity plans the type and quantity of PPE that their agency should hold or have available.¹¹ Further thought might need to be given to whether there needs to be a whole of community/whole of government approach to PPE.

Original basis for estimating the need for personal protective equipment

4.17
Calculations for how much PPE should be held in the national reserve were based on an influenza pandemic scenario. This is not unreasonable. A plan cannot contemplate every disease scenario. There is always a risk that resources may need to be scaled up at short notice to respond to different or unanticipated scenarios.

4.18
However, we now know that there are important differences between influenza and Covid-19. The speed of transmission differs. Influenza has a shorter incubation period and can spread faster than Covid-19, but a person with Covid-19 can infect more people than someone with influenza. A higher proportion of people with Covid-19 become seriously ill and require hospital treatment than people with influenza.

4.19
The Ministry told us that the demand for PPE during the Covid-19 pandemic has been different to the demand that had previously been planned for. Initially, PPE needs were formulated on the basis that a person had to be symptomatic to transmit the virus. Once it was understood that a person could be asymptomatic and transmit the virus, this increased demand for PPE.

4.20
This information should be used to strengthen planning and future demand assessments.

4.21
The amount of national reserve stock DHBs held was linked to the population characteristics of those DHBs in 2005. There have been significant changes in population numbers and in population distribution since 2005. The Ministry told us that the overall population growth rate since 2005 is 19%.

4.22
During our work the Ministry told us that, as a result of Covid-19, it was considering trying to ensure that the national reserve has enough stock to last for three to six months (as a minimum) to ensure supply in the face of global demand and global supply chain issues.

4.23
In our view, when the Ministry looks to restock the national reserve of PPE, it should look at its planning assumptions and update the allocation based on current population characteristics.

4.24
This should include considering whether the decentralised model for managing the national reserve of PPE remains appropriate, whether a prioritisation or criticality assessment for PPE is needed, whether the categories of stored PPE remains appropriate, whether responsibility for storage is appropriate, and whether the distribution model and scope about to whom stock may be distributed remains appropriate. The Ministry subsequently told us that it plans to review the existing arrangements to improve resilience, identify optimal stock holding levels, and develop solutions to minimise stock obsolescence.

Our observations

4.25
There was a lack of clarity about whether the national reserve of PPE had enough stock and the level of stock that DHBs should have held. Although the Ministry knew what it had in its own supply, it had to survey DHBs to work out how much PPE was held in DHB reserves.

4.26
We noted differences in understanding about what DHBs were required to purchase for the national reserve and what they had been funded for. We also saw gaps in monitoring and oversight of the national reserve of PPE.

4.27
In our view, there was a lack of clarity and consistency about how the national reserve supply was resourced when it was set up and who it was expected to provide for.

4.28
There appears to have been an inconsistency between what the original funding was modelled on (hospital use) and the Crown Funding Agreement, which specified that DHBs were funded to purchase PPE for “health care workers in the hospital environment, the primary and community health sectors, and first responders”.

4.29
The Ministry told us that “the [national reserve of PPE was] only to support DHBs and not the wider sector or non-health sector”. The Reserve Supplies Policy suggests a need to provide for other providers (“DHBs and the wider health sector”). However, that expectation is not mirrored in the planning requirements in the Operational Policy Framework for DHBs, and it is not clear in current funding arrangements.

4.30
It is also not clear whether, before Covid-19, DHBs had uniformly understood that they were expected to hold national reserve supplies for community-based health and disability providers that they do not directly fund. During the response, the Ministry told DHBs that they were responsible for identifying the needs of, and providing PPE to, all publicly funded health and disability services.

4.31
The Ministry also ended up supplying PPE to essential workers who are not part of the health and disability sector due to constraints in their usual supply chains.

4.32
The Ministry told us that when it established the national reserve it believes it made it clear to all groups that they were responsible for maintaining the safety of their staff and services. In the Ministry’s view, these groups were responsible for meeting their own PPE needs. We note that legislation requires employers to meet their health and safety obligations.

11: Ministry of Health (2018), Exercise Pomare: Post Exercise Report, Wellington, page 20.