Monday, March 30, 2020

How to efficiently (re)distribute ventilators (and masks, gowns, test kits...)?

How to allocate scarce medical goods, when all signals indicate shortages of everything, everywhere (but some needs are more immediate and urgent than others)?

Market mechanisms that work well when the situation evolves slowly are struggling under big swings in demand and supply.

I've received many emails on this and related subjects in the last week. (If the predictions of future need were precise, things would be easier...).  Here are two thoughts on providing market-wide information that isn't emerging naturally from the functioning of existing markets.

From the WSJ:

Manufacturers Seek U.S. Help in Deciding Where to Ship Scarce Medical Goods
To address coronavirus-related shortages, companies want the federal government to provide strategic guidance
By Rebecca Ballhaus and Andrew Restuccia, March 29, 2020

"Producers and distributors of medical supplies across the country are raising red flags about what they say is a lack of guidance from the federal government about where to send their products, as hospitals compete for desperately needed masks and ventilators to combat the spread of the novel coronavirus.
"Company executives say they are ill-equipped to make decisions about which hospitals and states should first receive their medical supplies and are calling on the government to step in.

“It’s really the allocation piece that’s most important to us right now because we just cannot and never will have a window into what the most urgent need is,” said Scott Whitaker, chief executive of the Advanced Medical Technology Association, a trade association that represents producers of medical devices.

"Charlie Mills, chief executive of Medline Industries Inc., a large privately held manufacturer and distributor of medical supplies, said as the company works to ramp up its production of supplies, it is being inundated with orders. He said he would welcome the government having a “strong say” in how to respond.

“All of our customers are wanting more,” Mr. Mills said. “The federal government might be in a better position to decide where it would go.”

And here's an op-ed in The Hill by Loertscher and Marx:

A national ventilator exchange could address critical shortages

"With elective procedures on hold indefinitely, we know there are ventilators sitting unused across the country right now — we just don’t know where and how many, so we need a nationwide registry. Every hospital in the country can document the quantity, makes and models of their machines, how many are available to treat COVID-19, and which are reserved to treat other conditions.

"There is ample evidence, for example, from reallocating land or spectrum licenses, that such registries improve the efficiency and volume of transactions.
"Of course, if there are not enough ventilators to go around, we face terrible ethical dilemmas, either with or without a rental market. But if we have enough, and they are just in the wrong places, then a short-term rental market is exactly the thing that could get us out of such dilemmas.

"For this model to be effective, it’s imperative to act now. If our government moves quickly to pool our resources and combine the best ideas of health care professionals, market design economists, and logistics specialists, we could do a lot of good in this time of unprecedented challenges."

No comments: