Comptroller Finds New York Didn’t Use Millions in Medical Equipment Purchased During Pandemic

Comptroller Tom DiNapoli says New York state should improve its storage of durable medical equipment purchased during the COVID-19 pandemic. An audit released Friday also says the state distributed only a small fraction of the equipment at its disposal.

The Democrat says equipment including ventilators and x-ray machines that are sitting in storage facilities are missing recommended maintenance and costing taxpayers storage expenses.

According to the report, the state paid more than $452 million to purchase more than 247,000 items of durable medical equipment during the pandemic. Only three items purchased during the public health emergency period were distributed.

WAMC’s Lucas Willard spoke with Comptroller DiNapoli about the report:

We all remember what a time of crisis it was, and a real need to get durable medical equipment to really help deal with the consequences of COVID. People in the hospital, people very sick, people dying. So, the state ended up spending about $450 million to purchase about almost 250,000 items of this durable medical equipment. And the challenge that we found, in looking back at the process to purchase that equipment, we found that the traditional kinds of reviews that would normally happen with the State Procurement were suspended. Again. It was an emergency situation, but because of that, it would be fair to say that much was being paid for without normal review. It ended up out of that, 200-almost-50,000 items, that of the new items purchased, only about three of them were actually ever used. So, fast forward to today, and what we have is a, in effect, a stockpile of this unused equipment that was purchased during COVID. And you know, I think that was the most important takeaway from our audit of not just looking at some of what perhaps went wrong in the beginning of the pandemic, but more importantly, what are we doing moving forward to make sure we’re better prepared in terms of having an appropriate stockpile this equipment, if God forbid, we face another health emergency like COVID down the road.

What kinds of facilities are these pieces of equipment being stored in? Are they in warehouses, buildings? What’s the storage situation like?

Yeah, there are warehouses that, you know, Department of Health, maintains and Homeland Security. And you know, one of the concerns we have is that there was an analysis that, at some point, was made that suggested that 51,000 of these items would be an appropriate level to stockpile. So, you have equipment there that’s not being used that…I believe there are hospitals and health facilities in the state now that could use that. In fact, they there was a survey done, and there was a response for some of this equipment to be requested. Yet they haven’t moved it out of the warehouses, so you’re incurring a cost. Another issue that we identified is that some of this equipment, obviously, needs to be going through routine maintenance to make sure that it’s staying in the state of good repair again, if, God forbid, it has to be utilized, you want to make sure you maintain the equipment, because there are certain warranties that might lapse if you’re not maintaining the equipment, we see that they are not providing the kind of maintenance that they should be providing. So, what we really recommending to Department of Health is that they have a better management of the stockpile, not only in terms of the quantity of what they have, so they can reduce the cost of warehousing, but also make sure it’s being maintained so that it will be ready to use if God forbid we’re faced with another public health emergency.

Now you had just said that only three pieces of equipment were actually distributed. What is the process like in New York State for hospitals or other entities that are in need of specialized equipment and have to make a request?

Well, my understanding is that as part of it, they did do a survey of hospitals and medical facilities, and they did get a response from a number of them that they’d be interested in using some of this equipment, not all of it, but that they have not followed through to actually distribute the equipment. It would be done through the normal process of Department of Health in terms of their relationship with hospitals and medical facilities.

Now, the former governor, Governor Andrew Cuomo’s team has said that it was a good thing that the equipment wasn’t needed during the COVID emergency, and that New Yorkers stepped up and heeded the proper guidance to stay safe. What do you think of the governor’s team’s defense over the last few days?

Well, you know, I would say this, I think I recognize, I think everyone recognized we were in uncharted territory when COVID hit. People were dying from this. So, of course, there was a strong desire to get as much equipment as possible. But I think one of the lessons learned, a hard lesson, is that in the effort to respond to COVID by suspending all normal checks and balances, and in this case, the procurement guidelines through the Office of General Services OGS that would normally be directly involved with purchase orders and tracking, you know, credit card purchases, and making sure, in fact, equipment that was ordered was received and the exact equipment that was ordered was received. By suspending those normal procedures for procurement, mistakes were made in terms of ordering way more than was needed and not being able to fully validate that the correct equipment was ordered, that the money was spent as intended. And I think what that suggests is that, should we be faced with the similar emergency, don’t circumvent the kind of standard procurement checks and balances that have worked so well, even in an emergency. You know, I know the folks at OGS, I certainly know the folks at the comptroller’s office. When we have to review a contractor payment, if it’s an emergency, we’re going to expedite. We’re not going to waste time. So, you know, in the zeal to move quickly, perhaps to control everything, I think too many corners were cut in a way that did not serve the public or taxpayers well, and now that it’s years later, we’re still not figured out. So, I think…what I think is most important about this audit is not pointing fingers about what whoever did in the past. It didn’t make sense. What’s more important is, how do we learn lessons from that time and not repeat those mistakes for the next time moving forward? And what do we do with all this unused equipment? And let’s not have it just be sitting in warehouses, get it at the facilities that could use it, maintain an appropriate level of stockpile this medical equipment and make sure you’re maintaining it so that is ready to go and functional. You don’t want to have a ventilator sitting there for years and not being properly maintained and God forbid you need it two years from now in the face of emergency and it’s not working properly because you didn’t maintain it. So, I think it’s really the lessons learned from that about what we need to do moving forward that’s more important than you know, then then rehashing decisions that were made at the beginning of COVID. Now,

Comptroller DiNapoli, I got to ask you right now, we’re speaking, and the state budget is about two weeks late, so at this point in the game, what is the pain point right now for municipalities that do depend on the state budget? What kinds of effects do communities in New York feel when the state budget is held up?

There may not be an immediate consequence for many, but very soon, what’s it, the third week of May, you’re going to have the school district, of course, the state have to put their budgets out for the voters. They need to know what the state aid is going to be. So. we’re really getting close to the time where those budgets are going to be finalized, and they’re going to have to do guess work. Now, you know, perhaps you could argue in a year like this, you know, you could go pretty close to what the governor’s proposed, because it seems that everybody seems on board with that, but it’s really that inability to plan that, first of all, is going to affect the school districts, but then, over time, is going to affect the planning for the counties, for the towns, for the cities, for the villages as well. If they don’t know what to expect from the state government, it makes them very hard for them to complete their own budgets. The challenge, on top of all of that, it’s not just the lateness of the state budget. There’s so much uncertainty with regard to the impact of the federal budget. There is an expectation, perhaps we will be wrong, that there will be some level of cuts coming out of Washington. When you consider that the state budget in any given year is 35 to 40% federal dollars that pass through the state to the local governments, you could have a circumstance where a state budget is done late, and then the federal government does changes, and the state budget has to, you know, reevaluate some of those spending decisions. So, for the local governments and by extension, and the local citizens, 2025 could really be a year of not only uncertainty, but, you know, having to do some do overs. And I hope that’s not the case. So, it really is incumbent on the legislation the governor to wrap this up as quickly as possible. And you know, be prepared to have to deal with what may come out of Washington, especially with regard, you know, the cuts in education and Medicaid that many people are very fearful of.

You have oversight over the state pension fund and stocks have been all over the place over the last couple of weeks. Are you worried about this volatility in the market right now?

I’m worried about the volatility long term, short term. I was very worried about March because the state pension fund that I oversee values on March 31st so that March 31st number is what we live with, and it goes into the calculation for the contribution rate we charge to our government employers. I have to say, even though March was up and down, when you look at how April has been, I’m glad we had a March 31 date. You know, for the other pension funds that value on June 30th, it’s possible they may have an even more challenging situation that we’ve had at the state. The good news is for all of the pension funds in New York State, the public pension funds in New York are among the best funded public pension plans in the country. So, we’re going to be able to weather this tough time. But moving forward, if this volatility is going to continue, it’s not going to be a good situation. We’re going to make sure the dollars are there for our retirees, those who are retired today and those who look forward to being retired. But I could easily see a situation, if we have a down market over an extended period of time, where the result could be an increased contribution rate that we have to charge to the government employers. That’s going to affect taxpayers. So, we need stability in the markets. Investors could always figure out how to manage a market when they have some sense of certainty. This lack of certainty is really causing a lot of concern. But for us and with the New York fund, we’ve got till next March 31st so we’ve got some time for things to settle down.

New York State Comptroller Tom DiNapoli, thanks so much for taking the time. I appreciate it.

Thanks. Good to talk with you.

Story by Lucas Willard/WAMC/New York Public News Network

Image: New York State Comptroller Tom DiNapoli. (Credit: The New York State Comptroller’s Office/Matthew Ryan)