State plans to spend $30M on ventilators
Hospitals not worried about running short
In early April, as the coronavirus swept the country, physicians feared that their hospitals would run short of ventilators.
In response, the State of Wisconsin placed an order to buy 1,500 ventilators.
The order would more than double the 1,274 ventilators in state hospitals.
The state put down half of the roughly $30.1 million cost.
At the time, nearly everyone – including leading Republican lawmakers who had urged Gov. Tony Evers to secure ventilators as quickly as possible – agreed that placing the order was a prudent move.
Every state and many countries were scrambling to find ventilators. The governor of New York, the epicenter of the pandemic at the time, estimated that his state would need 30,000. And no one knew how the pandemic would play out.
The worst-case scenario – the dreaded prospect of physicians being forced to ration ventilators, determining who would live and who would die – didn’t happen.
Wisconsin hospitals had an adequate supply of ventilators as the pandemic hit the state. Fewer patients required ventilators than projected. Physicians learned more about treating the disease, including therapies that avoided use of ventilators.
Now, nearly every health system and hospital no longer worries about not having enough ventilators.
So that raises the question: What does the state plan to do with the 1,500 ventilators it ordered on April 7?
Complicating the question is the state’s deposit of slightly more than $15 million.
The state’s predicament is an example of what economists call the sunk cost fallacy.
The state could cut the order in half – buying 750 ventilators instead of 1,500 – but it would lose $7.5 million. That’s because the state would lose its 50% down payment. On the other hand, it could pay the $7.5 million still owed but end up with 750 ventilators that will never be used.
That’s if it buys 750 ventilators – which would increase the state’s supply by more than 50%.
If it instead opted to buy just 375 ventilators, it would lose roughly its $11 million deposit. The state would have nothing to show for that money. But, at the same time, it would save $11 million.
To put that in perspective, 322 of the state’s 1,274 ventilators were in use on Wednesday.
That said, the potential for a resurgence of COVID-19 infections remains, Jon Meiman, a physician and chief medical officer at the Department of Health Services, said in an email.
“The potential for subsequent peaks in COVID-19, particularly during the fall season, means that the state must remain prepared for a second wave of infections that could place significant strain on the health care system,” Meiman said.
Health systems – Advocate Aurora Health, Froedtert Health, Ascension Wisconsin, ThedaCare, Bellin Health and Hospital Sisters Health System – said they have an adequate supply of ventilators. Large health systems, such as Advocate Aurora and Ascension Wisconsin, also have the ability to move ventilators to hospitals that are running short.
Marshfield Clinic Health System also said it has enough ventilators to accommodate a significant surge.
“However, like many other health care systems, we could use more to be prepared for an extreme scenario,” John Gardner, a Marshfield Clinic spokesman, said in an email.
Meiman at DHS acknowledged that there currently is no shortage of ventilators in Wisconsin.
And though ventilators could be moved to areas with the greatest need – a strategy that would be pursued – multiple areas of the state could be affected simultaneously by a new outbreak, he said.
“There remains a risk that the number of patients requiring respiratory support will exceed the total available supply of mechanical ventilators in the state,” Meiman said in the email.
A second wave would need to be three times the size of the first wave for the state to need an additional 1,500 ventilators.
The state’s initial order was based on early projections that the epidemic could overwhelm hospitals.
The state is buying the ventilators from Ventec, a manufacturer based in Seattle, through KKM Global Group, a medical equipment distributor, Meiman said. The terms of the purchase required a 50% down payment.
The state plans to use money from the federal CARES Act to pay for the ventilators.
In addition to the Ventec order, the state also bought 42 ventilators from
Viemed, a distributor, at a cost of $859,025, Jennifer Miller, a DHS spokeswoman, said in an email. Those ventilators were acquired over several weeks and have been delivered.
Two ventilators from the Ventec order will arrive this week, Miller said, and the remaining 1,498 are expected in the next three months.
The total of $31 million cited by DHS is less than the $40 million Evers said on May 19 that the state would spend on ventilators.
Meiman acknowledged that public health officials and physicians now know more than when the order was placed in early April.
“The Safer at Home order, and the intensive public health response, successfully reduced transmission and significantly lowered the number of cases, avoiding a ventilator shortage,” he said in the email.
Physicians also have gained more experience in treating the disease, Meiman said. And less invasive treatments, such as high-flow nasal cannula, have proven effective in helping many COVID-19 patients, reducing the need for ventilators.
High-flow nasal cannula delivers heated and humidified oxygen through a thin tube, or cannula, inserted in a patient’s nostrils.
The ventilators that the state ordered can also be used for that treatment, Meiman said.
An essential part of the state’s response, he added, is being prepared for a surge of critically ill patients.
Without question, decisions made for valid reasons can prove to be a mistake in hindsight. After all, in early April, medical ethicists were advising the state on possible guidelines for rationing ventilators if hospitals ran short.
DHS did not respond to whether the state is considering reducing the size of its order, given that health systems and hospitals overall have said they have an adequate supply of ventilators.
But the state does face the difficult decision of deciding whether to abandon a project or investment in which time and money already has been spent.
The state so far has spent $15 million to buy 1,500 ventilators. That money is gone. What matters is the $15 million still owed on the purchase, and whether all of the ventilators still on order will ever be needed.
Contact Madeline Heim at 920-9967266 or mheim@gannett.com.