Strengthening market access and use of oxygen generation plants

Oxygen generation plants—one of numerous ways oxygen can be produced—are standalone systems (PSA or VSA plants) that use a flow and compression methodology to extract oxygen from the air. The oxygen produced can be piped directly to patients’ bedsides or compressed and stored in gas cylinders and administered from there.

Oxygen generation plants are the primary source of bulk oxygen for many health facilities across LMICs. Hundreds of oxygen generation plants were procured during the COVID-19 pandemic. However, market and operational challenges put existing and newly procured plants at risk of falling into disrepair. To ensure reliable access to medical oxygen, it is imperative to invest in the continued operation of oxygen generation plants and address the market barriers that inhibit equitable access.

Below are four critical ways to sustain oxygen generation plants and ensure oxygen access for decades to come.

Understanding the appropriate mix of oxygen sources, an equipment’s total cost of ownership, and brand and supplier options makes for better planning and procurement decisions in setting up or strengthening an oxygen system.

Context-specific drivers, such as plant placement and configuration, electricity availability and source, delivery modality, and operational hours, can make oxygen generation plants cost competitive with other technologies. In many cases, there is a need for different operational models. These factors should be considered when planning procurement options and selecting oxygen generation plants.

Owning such a large and complex technology has operations and budget implications. First, the majority of costs—50 to 70 percent—are operational costs, compared with the initial procurement cost, over its lifetime. This cost breakdown should be considered when deciding if an oxygen generation plant is the right oxygen source for a health facility. Second, they require sufficient technical capacity for operations, delivery, and maintenance—all of which can be challenging in low-resource settings.

Plant configuration, delivery modality—such as using cylinder-filling stations or piping—and electricity requirements are important drivers for plant operation and thus have cost and installation implications. In many cases, bulk oxygen, including oxygen generation plants, and piped oxygen are the best options for continuous oxygen availability. In addition, piped bulk oxygen has health, access, cost, and operational benefits over decentralized oxygen supply. For example, piped bulk oxygen systems are 30 percent less expensive than a cylinder-filling system. Newly built health facilities should consider installing piping if the facility has a bulk oxygen solution, such as PSA plants, on-site to support effective oxygen delivery to patients.

Plant sizes and configurations are often customized to cater to each facility’s needs. This customization has led manufacturers to produce equipment only when an order is received, which, at scale, risks long lead times and reduces potential efficiencies from mass production.

Standardization of plant sizes is one way to address these barriers and improve oxygen access. Doing so could lead to a more standardized procurement and installation procedure, reduced spare parts proliferation, and more streamlined maintenance—all of which contribute to lengthening the useful lifetime of an oxygen generation plant.

Ongoing operating costs—for technicians, electricity, maintenance, and spare parts—make up a large proportion of the total cost of oxygen generation plants. However, there is a lack of understanding of the true costs required to sustain plant operations. This often results in insufficient budgeting for operating expenses and, ultimately, plants falling into disrepair as early as one year post-installation. Further, plant downtime is very costly—substantially increasing the unit cost of oxygen production and shortening the lifespan of equipment. Frequent plant downtime ultimately means that less oxygen is available for the patients who need it.

To counter this, effective preventive maintenance is a necessity, as corrective maintenance is more costly and results in longer downtimes due to lead times for technicians and spare parts. However, in a PATH analysis, 60 percent of oxygen generation plants were overdue for maintenance. Almost all of the facilities had no spare parts on-site and no full set of tools for maintenance, and none of the facilities noted having a maintenance log. Critical solutions to address this challenge include training on-site technicians on how to assess plants and obtain support and embedding preventive maintenance checks into routine facility tasks.

The market for oxygen generation plants is fragmented, which can lead to challenges with procuring and managing a bulk oxygen system like an oxygen generation plant. For example, oxygen generation plants are often customized to each health facility or hospital, and manufacturers offer dozens of size options. This, along with procurement from many individual buyers, makes product demand—thereby the market for this technology—unpredictable. However, the majority of oxygen demand (85 percent) in LMICs could be met with a small set (three to four) of standard size options and reduce the 12 to 16 weeks of lead time needed for customized plants.

As well, different plant sizes, models, and brands in the market also means varying numbers and requirements for spare parts—leading to further complications for effective planning and maintenance. A pilot that consolidated procurement of spare parts resulted in a 26 percent reduction in procurement and transaction costs, and up to six months of reduced lead times, while increasing availability of parts to LMICs. The real world impact of this type of mechanism was observed in 14 countries across Latin America, the Middle East, and sub-Saharan Africa, such as in Madagascar and Lesotho.

To improve market access and use of oxygen generation plants, oxygen stakeholders each have a role to play:

• Governments and other decision-makers should assess and ensure that current budgets allocated for oxygen generation plants adequately cover their total cost of ownership, particularly ongoing operating costs.
• Procurers and health facilities should ensure adequate operating capacity in health facilities before purchasing new plants by investing in efforts to enhance operating best practices and to increase and retain a skilled workforce.
• Manufacturers and suppliers should consider further standardizing plant size options and centralizing access to spare parts, which would provide additional efficiency gains without compromising the ability to meet oxygen needs across health facilities.

Incorporating this evidence and knowledge around oxygen generation plants into budgeting, procurement, and production decisions will sustain plant operations and resolve market inefficiencies. Ultimately, it will protect the sizeable investments made in oxygen generation plants and provide timely, equitable access to lifesaving oxygen for decades to come.

To learn more, see PATH's other oxygen resources.