Hospitals, nursing homes, funeral homes and first responders across Louisiana are in desperate need of personal protective gear, like gloves and masks, for workers on the front lines of the coronavirus crisis. In particular, they’re seeking N95 or KN95 respirator masks, which are vital to prevent infection for medical workers treating coronavirus patients.
The state of Louisiana has stepped in to make hundreds of millions of dollars in purchases on behalf of all of those facilities, in part to keep hospitals from wasting resources competing with each other. They’re also acting as a centralized buyer because the state expects that 75 percent of those purchases will be covered by the federal government due to a major disaster declaration for Louisiana.
“Every single hospital across the New Orleans area is in desperate need of all categories of PPE — gowns, gloves and most importantly the N95s,” said Kelly Rovetto, one of the founders of Supplies for Saints, a nonprofit with a mission of getting personal protective equipment, or PPE, to medical workers during the coronavirus crisis. “They’re currently accepting cloth masks because we’re about to run out.” (A spokesperson for LCMC Health, which runs five hospitals in the New Orleans area, later told The Lens that the group’s hospitals were not allowing employees to use cloth masks.)
The state has placed orders for 17.5 million of these masks so far as of Tuesday, according to data provided by the Governor’s Office of Homeland Security and Emergency Preparedness, or GOHSEP. But the masks aren’t coming cheap, forcing the state to place orders at prices as much as 14 times the normal cost.
The high prices are being driven in part by urgent demand from state governments across the country, forcing officials to seek out smaller vendors that do not usually deal in statewide bulk orders, GOHSEP Deputy Director Casey Tingle told The Lens in an interview.
“In a typical event, we’re going after resources in a hurricane-type scenario, where maybe only three or four other states are making the same kind of demands,” Tingle said. “In this scenario, everyone’s making the same demands. Even internationally, the US was not the first to put demands on the system.”
Mirroring reports from around the country, the state is being forced to pay highly inflated prices for masks compared to their usual price before the global pandemic. Even during normal times, prices for N95s can vary, but the normal price is widely reported at about $1 to $1.50 each. New York Governor Andrew Cuomo recently said that the price for bulk orders is 85 cents for each mask, while Buzzfeed reported that they can come as cheap as 35 cents a piece wholesale. Home Depot currently has the masks listed for as cheap as 61 cents each.
It’s more difficult to track the pre-pandemic price of the very similar KN95 masks, which are regularly used in China but only recently approved by the Federal Drug Administration for use in American hospitals. The Los Angeles Times pegged the current price at roughly $2 each, while Buzzfeed said it was less than $2. But both of those estimates were made in April, well after the global demand for the masks had risen.
The Lens found only one vendor with prices under $2 each for either a KN95 or N95 mask — The Community Foundation of Acadiana, a nonprofit group that sold the state 500,000 N95s for $1.50 each.
Of 56 state purchase orders obtained by The Lens, 36 clearly indicate the cost per mask, accounting for roughly 10 million masks. There were 21 orders that were just for N95 masks, with an average cost of $4.67 per mask. There were 8 orders that were just for KN95 masks, with an average of $3.71 per mask.
There were also 7 orders that had both N95s and KN95s, but didn’t list the individual cost of each mask. The average blended rate for those orders was $3.78 cents.
Overall, for those 36 purchases, the state spend $40.7 million for 9.8 million N95 or KN95 masks, with an average per-mask cost of $4.17.
3M, the largest manufacturer of N95s in the US, is currently suing a New Jersey company for selling the masks at $6 each, calling it “extreme price-gouging,” according to CNN. One of the vendors Louisiana placed an order with, Practice Like Pros, was selling 3M brand N95 masks at $6.45 each, according to the data provided by GOHSEP. And there were at least four other vendors the state placed orders with unit prices above $6.
Some of Louisiana’s individual orders were even more expensive than that. One order from Maxx Equipment in Broussard, Louisiana charged $14 per N95 mask. A man in Baldwin Park, California was arrested and cited last week for selling masks for roughly $15 a piece. Neither Maxx Equipment or Practice like Pros responded to requests for comment.
State mainly focused on speed and quantity rather than cost
Treating coronavirus patients in a hospital setting requires an immense amount of disposable PPE. Ideally, masks and gowns are changed every time a doctor or nurse exits the room of an infected patient. But almost immediately after the crisis hit New Orleans, hospitals started rationing their masks and changing safety protocols.
In March, The Lens reported that medical workers at Touro Infirmary were only being given one mask and gown per shift. A day later, the CEO of LCMC Health sent an updated policy on PPE use due to a “critical shortage.” Under the new guidelines, workers were limited to one N95 per patient, and workers were told to only use the masks for “Aerosol Generating procedures.”
In a statement sent to The Lens on Thursday, the day after this article first published, LCMC spokeswoman Mary Beth Romig-Haskins said the five-hospital network “is not in desperate need of all categories of PPE.”
“Further, while we have had the offer of cloth masks presented to us, we are not using them, according to CDC guidelines restricting the use of those masks in a clinical setting,” she said. “We appreciate the community’s efforts to make those, and there are certainly people in public spaces that can use those.”
But from the start of the crisis, medical workers in New Orleans and across the world have said they fear for their lives and the lives of their families due to their exposure to the virus and the lack of protective gear.
With medical facilities scrambling to find more gear, the State of Louisiana decided in March to step in to streamline the process.
“We were trying as much as possible to limit the amount of people that were going after the same resource on behalf of the State of Louisiana,” Tingle said. “What we wanted to do is to try as much as possible to streamline it, and to have the people that needed to wear the masks focused on that business rather than spending all day trying to procure.”
Tingle said that at least initially, the central goals were quantity and speed of delivery.
“While cost was part of it, it wasn’t the primary goal for us,” he said.
He said that requests were coming in at a rapid pace from across the state.
“The range is pretty broad. We’ve got parishes with their first responders, their EMTs, their sheriff’s deputies, their police departments, their fire. So you’ve got that end of the spectrum. And then you have the larger hospital systems that have their needs. … And then you’ve got the smaller hospitals, you’ve got funeral homes, you’ve got nursing homes.”
He said that the state targeted a lot of smaller mask distributors that could deliver quickly, instead of waiting for bulk orders. He said that it was also important to place orders with a wide variety of companies and distributors, rather than relying on just a few large orders, in case any of them fell through.
“There’s a lot of unknowns in the system,” Tingle said. “We had some vendors that couldn’t deliver.”
He said he expects the average price to go down over time and that many of the outlier prices, like the $14 per mask purchase, will be reduced. Many of those higher prices were from smaller, short-term vendors, he said.
The goal for the state, he said, was to use smaller, short-term purchases to build a “bridge” to more consistent, long-term bulk orders.
“Certainly I think we were willing to pay more for those that had probably more limited quantities, but potentially have a shorter delivery timeframe so we could begin to fill in the gaps, with the plan that over time, larger orders at lower cost with longer delivery timeframes could come in and backfill that,” Tingle said.
Asked whether the state’s vendors were unjustly profiting from a crisis, Tingle said it was too early for his office to make that judgement.
“Where we stand right now is not the best perspective to do that type of analysis,” he said. “There may be some things that make perfect sense, and there may be things where there are real questions about what a vendor was doing. I just think our focus has been, how do you operate, how do you deliver, how do you procure limited quantities of precious resources.”
‘The day will come where we step back with some perspective’
Sean McClellan is the owner of Grey Wolf Safety Group in Broussard, which sold the state 5,000 masks at a cost of $11.49 each. The $57,000 purchase was a drop in the bucket compared to the tens of millions of dollars the state is spending on masks, but the per-unit price was among the highest in state purchasing records.
McClellan, a disabled military veteran, was the only vendor who spoke with The Lens, and he argued that his prices were one of the things that Tingle described as making “perfect sense.”
“I want people to know, and I try to explain to my customers that I understand that things are more expensive,” he told The Lens. “But it’s not me. It’s a domino effect. You have to look to where I get the product from and how that trickles down. And if you do, you’ll see a bunch of small increases until it gets to that point.”
McClellan told The Lens that his company provides a lot of safety equipment to the oil and gas industry. As a smaller company, he said he can’t buy directly from manufacturers like 3M, so he has to buy from distributors and wholesalers at a markup. Even in normal times, he said that the masks may go through two or three different companies, which all add a markup on the price, before he has a chance to buy.
He said that when the crisis first began and the market for masks got more chaotic, distributors raised their prices. Then, he says he was cut off from his usual distributors altogether because they were saving their inventories for bigger buyers. But he says his customers were still calling him, still in need of the equipment.
“I’m in the first aid and safety business, that’s what I do. So I still have all of these oil field companies, I’ve got clinics,” McClellan said.
Once he was cut off from his main distributor, he said that he had to resort to local stores so he could get inventory and retain his customers. He said that the masks were dramatically marked up at the local stores.
“I bought from every place that’s over here. Supply stores, I bought from paint stores, whoever had any boxes. Welding shops, anybody. … To pay for all the marked up pricing, plus all the shipping, plus trying to make something off of it, that’s how I come to that price.”
There have been similar stories from around the country, where individuals drive around buying out local stores of PPE and selling them for marked up prices. But McClellan argued that he wasn’t hoarding the equipment to sell them at higher prices, he was just trying to maintain inventory for his customers.
And he stressed that not all N95 masks are created equal. He said that the masks he buys are better suited for people working with chemicals and paint, which may be more expensive than those fit for medical use.
McClellan said that he was told by his oil industry customers that work would continue, meaning their workers would still need masks when dealing with chemicals and paint. That was early in the crisis, before he and his clients were aware of a dramatic downturn that was coming for the oil and gas industry. Since then, there have been reports of canceled contracts and laid off workers.
He said that left him with a supply of 5,000 overpriced masks with no customers.
“I lucked out with the state purchase, but it’s done,” he said.
McClellan said it was a one time deal that helped his business from falling into bankruptcy. But now, he’s done trying to get new inventory because of the chaotic market.
“Now I’m starting to lose customers,” he said. “I was in the military for 27 years and I’ve had 17 surgeries. This is all I have. If this doesn’t pan out for me I don’t know what I’ll do. I actually have two more surgeries planned for this year, one of which I already missed because of all this. I have to redo my neck and my shoulder.”
Whether the inflated prices are mainly due to situations like the one McClellan describes, or whether they’re due to more calculated profiteering, is something the state is going to have to figure out down the road, Tingle said.
“The day will come where we step back with some perspective and we look back at how this all worked,” Tingle said. “For us, it’s probably a little soon to step back and have that perspective.”
This story was updated after publication to include comments from LCMC Health.