Contributing Factors to Personal Protective Equipment Shortages during the COVID-19 Pandemic

from Health Economics at on November 2, 2020 at 08:34PM

This study investigates the forces that contributed to severe shortages in personal protective equipment in the US during the COVID-19 crisis. Problems from a dysfunctional costing model in hospital operating systems were magnified by a very large demand shock triggered by acute need in healthcare and panicked marketplace behavior that depleted domestic PPE inventories. The lack of appropriate action on the part of the federal government to maintain and distribute domestic inventories, as well as severe disruptions to the PPE global supply chain, amplified the problem. Analysis of trade data shows that the US is the world’s largest importer of face masks, eye protection, and medical gloves, making it highly vulnerable to disruptions in exports of medical supplies. We conclude that market prices are not appropriate mechanisms for rationing inputs to health because health is a public good. Removing the profit motive for purchasing PPE in hospital costing models and pursuing strategic industrial policy to reduce the US dependence on imported PPE will both help to better protect healthcare workers with adequate supplies of PPE.