Part 5: Maintaining the national reserve of personal protective equipment

5.1
In this Part, we set out how stock in the national reserve of PPE was managed before Covid-19, and how the Ministry subsequently identified what supplies were held in the national reserve.

5.2
We looked at the state of knowledge about what was held in the national reserve of PPE in early 2020. We also report on our work to reconcile the reporting on stock on hand, stock received, and stock distributed during the response.

How did the Ministry know what the national reserve held?

5.3
Until Covid-19, the national reserve model was a mixed model, with both the Ministry and DHBs responsible for maintaining and distributing supplies (see Figure 1).

5.4
DHBs were expected to maintain sufficient PPE stock to meet their routine operational needs. In addition, DHBs also held national reserve supplies.

Figure 1
National reserve supplies held by the Ministry of Health and by district health boards

National reserve supply items	Stored by DHBs	Stored by Ministry
Respirators (N95 or P2 masks) and general purpose masks
Personal protective equipment (aprons, gloves, eye protection)
Clinical equipment (such as syringes, sharps bins, giving sets, IV fluids)
Antivirals – Relenza and Tamiflu (each DHB holds 440 courses of Tamiflu)
Pandemic antibiotics
H5N1 pre-pandemic vaccine
Vaccination supplies
Body bags

Source: Ministry of Health, National Health Emergency Plan: National Reserve Supplies Management and Usage Plan, third edition, page 1.

5.5
The Ministry’s national reserve of PPE comprises masks manufactured and held by QSi, pre-pandemic vaccine, body bags, and vaccination supplies. For the purposes of responding to Covid-19, only the masks needed to be used.

5.6
The Ministry received reports about what stock it held in the national reserve. On 1 January 2020, the Ministry had 9 million N95 masks and 5.2 million general purpose masks.

5.7
In November 2019, the Ministry asked QSi to produce 4.5 million more general purpose masks. By 31 January 2020, QSi had manufactured 1.452 million masks and procured an additional 3.048 million masks from China. At the start of February 2020, the Ministry had 18 million masks in its national reserve.

5.8
DHBs held operational and national reserve supplies of PPE. They had different approaches to how they managed the national reserve supplies they were holding.

5.9
Before 2016, DHBs had to report to the Ministry on stock levels, and expired and expiring stock. At first, they had to report this quarterly, then every six months from 2008. They have not had to report since 2016.

5.10
This meant that, when the Ministry started to mobilise its emergency response, it did not know whether or how DHBs were fulfilling their responsibilities to maintain national reserve supplies.

5.11
We asked the Ministry what volumes of stock were meant to be held in the national reserve of PPE. The Ministry could not initially locate any specific guidance about PPE levels and was unable to provide us with evidence that it had done regular stocktakes of the national reserve supplies held by DHBs.

5.12
On 4 February 2020, the Ministry asked all DHBs to provide information about their PPE stock levels to identify any pressure points and help assess the need for further PPE.

5.13
The Ministry told us that, when it needed to quickly assemble this information to identify what reserve supplies there were in New Zealand, the information DHBs provided and the quantity of reserve supplies that DHBs held varied significantly. There does not seem to have been a consistent method for reporting stock on hand, use rates, and forecasting demand.

5.14
As a result, on 16 March 2020, the Ministry asked DHBs to confirm and clarify any ambiguities in their original stock information and to provide information on other stock. DHBs were given a template to report on national reserve stock they held.

5.15
We heard that one DHB reported that several weeks’ worth of stock figures reported to the Ministry were inaccurate because stock had expired.

5.16
The Ministry carried out a follow-up exercise with DHBs on 31 March 2020 to determine what stock they were holding. Several DHBs identified issues with PPE supplies as part of this stocktake.

Expired stock

5.17
DHBs and the Ministry were responsible for maintaining and turning over national reserve supplies. Some DHBs rotated national reserve stock into their own supply and replaced it with new stock to keep it current. We observed that DHBs that kept the national reserve stock separate were more likely to end up holding expired stock. Capital and Coast DHB has suggested that one means of ensuring that stock is kept current could be for DHBs to partner with PPE suppliers and their supply chain infrastructure.

5.18
During April 2020, two DHBs told the Ministry about an issue with faulty N95 masks the Ministry had provided. QSi recalled 364,000 masks and checked them. Five thousand were rejected as unfit for use, and QSi is continuing to investigate this.

5.19
Once the Ministry started receiving regular information from DHBs about stock levels, it emerged that a significant amount of stock had expired. Fourteen DHBs informed the Ministry that they were holding either expired national reserve mask stock or no national reserve mask stock. Because DHBs’ responses to the Ministry’s request for information were not consistent (that is, no volumes or volumes of some items reported inconsistently), the Ministry has been unable to quantify the volume of expired stock.

5.20
It is concerning that stock management practices led to the expiry of PPE stock and that it took two months to assemble this information. Although this does not appear to have affected availability, it could have in different circumstances (for example, if procurement had been more difficult).

Stock reconciliation

5.21
From 7 April 2020, the Ministry requested a weekly report from DHBs on operational and DHB-held national reserve PPE use and supplies on hand. However, issues were identified through this process. These included inconsistency in how stock was counted, the process for identifying stock that had expired, and national reserve stock not being separately identified from operational PPE stock.

5.22
To help DHBs provide information in a consistent manner, a national template was prepared for the DHBs to complete and units of measurement were made clearer.

5.23
We have tried to reconcile the stock held in stores, incoming stock and new stock on order, and outgoing stock. For the reasons outlined below, this has been difficult to do.

5.24
Between 1 January and April 2020, the Ministry went from having oversight of national reserve stock held by QSi in stores in three locations in the North Island to having multiple new domestic and international PPE suppliers and three different distributors supplying a large number of providers.

5.25
The Ministry’s stock on hand report as at 29 April 2020 involved compiling information from these three distributors and 20 DHBs, and about stock that had been procured and had arrived in New Zealand but that was not yet in the main distributor’s warehouse.

5.26
Each provider of information has separate systems, and the Ministry placed a high degree of reliance on information provided by the distributors and DHBs. The Ministry could not independently verify the information. It has not been practicable in the time available to us to document and understand every system.

5.27
There are some inconsistencies with stock reporting from DHBs. DHBs do not have the same inventory systems nor the same level of reporting information. For example, some DHBs count stock issued from the central store as “used” while others have detailed stock information at a hospital ward level. Of the DHBs we asked, all had a stock system, but some were not able to produce historical information about stock in hand.

5.28
The Ministry does not track the amount of stock that has been released beyond the DHBs to community providers. All stock released from one of the three distributors is deemed to have been used unless it goes directly to a DHB or is transferred to another distributor.

5.29
The Ministry considers its stock on hand information an estimate because of the difficulties in collating this information at a point in time, the differences in how organisations assess when stock has been released, and the potential for stock orders to be processed at any time of day in a hospital environment.

5.30
As part of our review, we summarised stock received and distributed by each class of PPE from 1 January to 29 April 2020. The Ministry was unable to provide this information to us in collated form. We identified discrepancies in the level of PPE held and the levels set out in schedules provided by different organisations.

Depletion modelling

5.31
The Ministry told us that, in March 2020, it did not know how much PPE would be needed. In an attempt to determine this, the Ministry developed a PPE depletion model based on information from several sources.

5.32
We did not test the assumptions the model was based on or the integrity of the model. The model had several high-level assumptions and took into account clinical guidance on PPE use. Initially, the model did not include aged residential care, community providers, ambulance services, or community midwifery services. However, it was adapted in April to include estimates of both the primary and community care health workforce.

5.33
From April 2020, the Ministry requested weekly and then daily reports from DHBs about stock levels and stock received. It started to rely more on actual PPE usage data than the depletion model.

5.34
In March 2020, the Ministry released masks from the Ministry’s national reserve supplies. Since the start of April, there has been at least weekly distribution of PPE stock to DHBs. The Ministry told us that decisions on allocation took into account a number of factors, including PPE allocation based on DHBs’ populations, information from DHBs on available mask stock levels and usage, and consideration of Covid-19 incidence in the area.

What stock has been ordered and distributed?

5.35
In the early days of the Covid-19 response, the Ministry (through the Director-General) and the Prime Minister provided regular updates on what PPE – in particular, masks – had been distributed. The Ministry told us that in February and March 2020, in anticipation of increased demand and likely supply chain pressures, the Ministry placed additional mask orders with QSi. By the end of March, the Ministry had distributed about 897,000 masks from national reserve supplies to DHBs.

5.36
On 2 April 2020, in its response to the Epidemic Response Committee and in the Director-General’s daily briefing, the Ministry reported that 1.8 million masks had been distributed in the last seven days. It also reported that it had placed an order for a further 41 million masks, 1 million gloves, 850,000 safety glasses, and 640,000 face shields, with orders due to arrive in the next six weeks.¹²

5.37
Isolation gowns and some aprons were in short supply because there was a shortage of raw materials worldwide and New Zealand had no domestic production capability. Figure 2, which is based on information from the Ministry, shows the estimated stock at hand and on order as at 29 April 2020.

5.38
The volumes of supplies on order indicates that the Ministry recognised that the stock held was likely to be not enough to meet a significant increase in the rate of infections or a second wave of Covid-19. The Ministry told us that it considered that it should try to have 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. There is a significant difference between three and six months of stock.

5.39
We note that the Ministry has subsequently told us that it plans to review the optimal stock levels.

Figure 2
Estimated stock of personal protective equipment at hand and on order, as at 29 April 2020

* Orders awaiting confirmation of delivery mode and date of arrival.

Source: Ministry of Health.

Our observations

5.40
For a national reserve system to operate well, you need to know how much stock might be needed, what is held in supplies, whether the stock is usable, how stock can most effectively be distributed, and how you can quickly source more stock if you need to.

5.41
The Covid-19 response identified that some of the earlier systems to support the Ministry’s oversight of the national reserve of PPE had fallen away over the years. In February 2020, when the WHO confirmed that Covid-19 constituted a public health emergency, the Ministry did not know what stock was held by DHBs in their national reserve throughout the country.

5.42
Information that was not initially available included what PPE was on hand in DHB stores and information about the condition of PPE. There was no central oversight of what the national reserve held. Requirements for stock rotation appear to have lapsed, and the Ministry did not monitor this.

5.43
In February, the Ministry took steps to quickly assemble information to identify what national reserve supplies there were in New Zealand. However, the information DHBs provided varied significantly. This is likely to have contributed to a degree of confusion about precisely how much PPE was available.

5.44
The Ministry asked for better information, and it took DHBs five weeks to provide it. Through this process, the Ministry identified that some national reserve stock had expired.

5.45
We are in no doubt that the Ministry has learned much from setting up systems to respond to the demand for PPE during Covid-19. We consider it timely for the Ministry to review the planning framework for the national reserve system.

5.46
In our view, this should include ensuring that there is a system for identifying optimal PPE levels and monitoring and reporting on stock. Stock should be appropriately managed to reduce the risk of redundancy. The Ministry needs to continue to improve its demand modelling and take into account what it has learned about actual PPE usage during the Covid-19 response. The planning framework should also make clear what the preferred model is for procurement and distribution during a national emergency.

12: Ministry of Health, answers to Epidemic Response Committee questions on 31 March 2020, published 7 April 2020, page 4.