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Northeastern States Team Up To Buy $5 Billion In Medical Equipment As Prices Soar

05/12/2020

Seven states in the Northeast have come together to buy $5 million worth of medical equipment and supplies, such as ventilators and PPE or personal protective equipment, during the COVID-19 outbreak. The states are teaming up in an attempt to overcome the obstacles and price hikes associated with the equipment among different regions. The seven states include New York, Connecticut, New Jersey, Pennsylvania, Rhode Island, Delaware, and Massachusetts. Together, these states seek to combine their purchasing power to drive down costs to supply equipment for their combined 53.6 million residents.

Key highlights include the following:

States team up by region to safely reopen and procure medical equipment and PPE to keep costs down.
Currently, New York, Connecticut, New Jersey, Pennsylvania, Rhode Island, Delaware, and Massachusetts are spending a combined $5 million on medical supplies and PPE.
Other states, such as Washington, Oregon, and California, as well as the Midwest states of Indiana, Ohio, Wisconsin, Michigan, and Illinois are considering a similar approach to tackling the COVID-19 pandemic and reopening safely.

The seven states also plan to gradually lift social distancing requirements together, despite the total number of confirmed COVID-19 deaths in the United States passing 67,000 on Sunday (1). Along with these Northeastern states, the governors of Washington, Oregon, and California are currently working together to open their states safely. The Midwestern states of Indiana, Ohio, Wisconsin, Michigan, and Illinois are also teaming up to jointly reopen safely.

Within the United States, the federal government and private entities have placed states in a bidding war against each other for supplies while the pandemic spreads. The competition for supplies, such as isolation gowns, masks, nasopharyngeal swabs, ventilators, and more, is fierce. It has caused states to pay above-market rates. For example, according to an article published in USA Today, the price of a single ventilator has increased from $12,000 to $65,000 (2). Hospitals need thousands of ventilators to meet the needs of COVID-19 patients. However, these numbers exceed most hospital budgets. This, along with other factors, is why many hospitals are losing money.

Coming Together Enhances Buying Power

Instead of working against each other, these states are coming together to serve their residents and keep their hospitals stocked as best as they can without paying an arm and a leg. The new chain being formed is in an attempt to tackle the rising costs, which are unlikely to go back to normal anytime soon as experts predict a second wave of COVID-19 in the fall. These states also believe that coming together to tackle healthcare expenses will benefit taxpayers.

According to New York Governor Andrew Cuomo, putting all Northeastern hospitals together makes them more competitive in the international marketplace and also saves taxpayers money (3). He stated that his state is having problems getting the equipment they need because vendors are dealing with other countries and the federal government. He stated that the federal government is less likely to deal with one state when they could do business with an entire country. However, when the states come together, it enhances their buying power.

There has been tension between President Trump and the states that have called on the federal government to help navigate supplies through the COVID-19 pandemic. Some governors have asked for help centralizing procurement through the Federal Emergency Management Agency by requesting them to order equipment and distribute it to areas that need it the most. On the other hand, many feel that President Trump has taken a backseat approach by putting pressure on states while their governors report losing negotiations to FEMA, resulting in higher equipment prices.

Additionally, states do not have many options for relief during these shortages. For example, the Strategic National Stockpile of emergency supplies has been deleted since April. President Trump has responded by invoking the Defense Production Act, which is usually intended for wartime use. It allows the president to force manufacturers to increase production of necessary supplies to meet the demands of supply chains for N95 masks and ventilators. Despite this, hospitals and healthcare systems are still short.

The problem is that the United States relies on global sources for many of its medical equipment storages. This has normally been a good way to take advantage of low-costs abroad. However, the shortage of supplies is a global problem that most countries in the world are suffering from. Supplies from the world's usual sources are no longer available, which has prompted the need for costly alternatives and manufacturers to step up.

Additionally, the lack of personal protective gear, equipment, and tests for COVID-19 have caused many states to reopen their public spaces and businesses to reboot the economy, including Texas, Georgia, and Florida. Many fear that these states are opening too soon, which may lead to a second wave of the coronavirus and prompt a second shutdown, resulting in yet another shortage of supplies.

New York Prepares For Resurgence

New York was one of the hardest hit states when the pandemic first broke out. In the future, Governor Cuomo stated that New York will require hospitals to have a 90-day supply of key medical supplies and PPE to use against national health emergencies. He stated that he hopes this will help keep hospitals stocked in case of a resurgence in COVID-19 cases.

By teaming up together, the seven Northeastern states plan to identify regional and in-state suppliers within the United States so that they can meet demands within the next three months. Governor Cuomo stated that they are spending billions of dollars right now and this money would be well spent going to businesses in their own region rather than to another country, such as China. He hopes that in-state suppliers will reduce the supply chain risk and drive regional economic development.

Governor Cuomo stated that the states can produce more when they come together. He continued by saying that Phil Murphy has an amazing pharmaceutical industry in New Jersey. They can help out with reagents and produce gowns in Rhode Island. He stated that together, the states can prepare for the next round and put their destiny in their own hands without having to compete for supplies against one another.

According to New Jersey Governor Phil Murphy, it makes sense for the states to come together and coordinate as a region. He stated that they have moved 21 million pieces of PPE into their state within the past two months (4). This likely could not be done without the help of neighboring states.

Governor Cuomo stated that it's a national security issue if states are not able to obtain the equipment and PPE that they need in the United States during a pandemic. He stated that we are currently in need of emergency service. He continued by saying that when a state is in a snowstorm, they need to be able to get salt and snowplows. During a hurricane, you need pumps, and during a pandemic, you need to be able to have access to PPE. He stated that step one is to produce PPE in each individual state instead of relying on China for supplies that aren’t available anymore.

References:

Northeastern States Team Up To Buy $5 Billion In Medical Equipment As Prices Soar

Coming Together Enhances Buying Power

New York Prepares For Resurgence

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