The coronavirus pandemic has called many ideas into question, especially in relation to the public and private sector dichotomy. This article analyses purchases and management of medical equipment by both the demonised private sector and the State. The latter was surprised by the magnitude of a problem that they tried to deny from the beginning. It is common knowledge that Fernando Simón, director of the Center for Coordination of Health Alerts and Emergencies, said at first that Spain would not suffer more than a few cases .
Unfortunately for everyone, not only have more cases arisen than expected, but Spain is the second country in the world with the highest number of total infections by coronavirus (as of May 14), exceeded only by the United States. And it is the is the country with highest infection rate if counted by number of infected per million inhabitants, with 5,831 cases — 34% more than the second, the United States (with 4,342 cases per million population) .
Graph 1. Cases of deaths by Covid-19 per million inhabitants
“It could not be known”
Given the scenario, it is only logical to ask questions such as why no action has been taken before. Although the World Health Organization (WHO) declared an international emergency on January 31, 2020  and COVID-19  as a global pandemic on March 11, Spain would not decree the state of alarm until March 14 . These few days could have had a positive impact on the number of those infected, as several experts in the field have demonstrated by mathematical simulators based on variables adjusted for this type of virus .
Graph 2. Chronogram of the virus
Sanitary material, whose problems we will address in the next section, delayed in arrival; due to this shortage of adequate protective equipment, more than 15% of the infected population was composed of medical personnel. If we specifically observe the age range of 30 through 49 years, this percentage would shoot up to 30% . A scandalously high figure, which shows the seriousness of the situation for those who risked their lives every day using cloth masks made at home.
The purchases took so long that the Government, as of March 17, had only distributed half a million masks, and half more were just arriving . An entirely insufficient amount, despite the fact that it was hyped up and announced as a feat. It would not be until March 26 when Minister Salvador Illa would announce a new contract for sanitary material, valued at more than 500 million euros .
To make matters worse, the purchase of defective tests from companies not included in the list of authorised sellers provided by China, as the Government itself reluctantly recognised that same day , meant they had to be returned. Consequently, the WHO’s recommendations to carry out massive testing was postponed with serious implications for public health.
These oscillations by the Executive branch were not only disastrous at the purchasing level, but also confusing. Due to the decisions adopted by the Ministry of Health, the autonomous communities were unable to collect medical supplies, and were left short of supplies in the face of a pandemic that set new case records day after day.
Veto the autonomous communities?
In Spain, the acquisition of medical equipment is, by large, the responsibility of the autonomous communities. These are in charge of buying and managing the material of the hospitals that correspond to them geographically, while the powers of general coordination of health, pharmaceutical product legislation and economic regime are left to the central government.
Even in a situation like the current one, the political class did not have the ability to unite against a much stronger and more important threat than political colors, a virus that already leaves more than 25,000 dead in our country.
Although Illa defended himself against the accusations by Isabel Díaz Ayuso on March 19 about the blockade of medical equipment , alleging that there had been no restrictions on the purchase of medical supplies , on March 10 the Official State Gazette (BOE) published a document calling these statements into question. On that day, only four days before the state of alarm would be announced, the Government modified article four of Organic Law 3/1986, of April 14, on Special Measures in the Field of Public Health. The article was as follows:
When a medicine, a medical device or any product necessary for the protection of health is affected by exceptional supply difficulties and to guarantee its better distribution, the State Health Administration, temporarily, may:
a) Establish the centralised supply by the Administration.
b) Condition their prescription on the identification of risk groups, carrying out analytical and diagnostic tests, completing protocols, sending information to the health authority on the course of treatment or other similar characteristics.
The justification for this provision is found in Part IV of the Explanatory Memorandum, which states:
However, due to exceptional supply difficulties in our national health system, if the authorisation granted to the State to carry out centralised supply of medicines and health products is insufficient to guarantee the material necessary for prevention of COVID-19 in our national health system, it is necessary to extend this authorisation to other products necessary for the protection of health that do not have the nature of a health product, in accordance with the provisions of Royal Decree 1591/2009, of 16 October, which regulates medical devices. Therefore, it is necessary to modify said Organic Law.
If such a veto never existed, why then would the government want to modify a law published more than 30 years ago? Possibly for two reasons. The first and most fundamental, to legitimise seizure of material after the declaration of the state of alarm. And the second because, in effect, they foresaw that this virus could become much more serious than citizens believed. These were the ones who, in the end, have suffered (and suffer) the consequences. For example, overrun health workers, who lacked the means to save their loved ones, and could not even to protect themselves.
The disastrous management of medical equipment purchases
After considering to the magnitude of the disease in Spain compared to the rest of the world and centraliaed mismanagement by the Government, we now turn to detailed information on each of the acquisitions and contracts signed by the Ministry of Health in this health emergency. To this end, information has been collected on the 77 contracts submitted to public by the Ministry of Health, which contain the most relevant data on obtaining material. The BOE holds more than 1,000 documents that record acquisitions derived from the exceptional situation, but, given its nature, we have decided to focus on those held by the Ministry, since it has taken over a large part of the responsibility for management. That being said, before analysing the contracts signed by the Health Ministry, it is worth noting the contracts of other ministries as an example, which focus on other areas from obtaining from protective material to computers for teleworking.
The latter is especially marks a the clear difference between them. A BOE announcement published on April 28 with file 202010000286 shows the purchase of 40 laptops worth 71,840 euros by the Ministry of Labour and Social Economy. On the same date, another announcement, with file 202010000297, records the purchase of another 50 laptops for 58,450 euros, for Inclusion, Social Security and Migration. Finally, the National Statistics Institute (file 2020N0074050) acquired 40 laptops for 24,520 euros. These amounts, although extraordinarily derisory within the state’s public spending, reveal the difference in cost per unit depending on the agency: 1,796; 1,169 euros and 606 euros, respectively. The first tender triples that of the INE, despite sharing the same objectives, according to the BOE. Therefore, in some cases, purchases are centralised, and in others, they are not. Myrdal said that the collation of examples does not serve to demonstrate anything, but these point to what is the usual trend of the Administration, which cannot be described due to lack of time, space and transparency on the part of the Administration. The following is a complete list of the 77 contracts, with the most relevant information, as of May 14, 2020.
Although we will not comment on each one of them, several details do draw attention once again to the ineptitude of the Government in matters of management. First, more than 20% of the suppliers of the Ministry of Health were initially unknown. But the worst aspect lies in the value of the contracts made, amounting to 577,134,223 euros. This means that 54.2% of all supply was carried out by companies in which, according to the BOE itself, Spain was listed as the country of residence. However, they later modified it (on May 12) to put in China. It was difficult for a company completed in LTD to be part of our productive fabric, but the Executive certainly had to try.
Graph 3. Distribution of purchases bu supplier of medical equipment
Table 1. Contracts awarded to companies with unkown address
Before commenting on specific cases, we cannot ignore the fact that the list provided by the Government is not ordered chronologically. By observing the table ordered by date from oldest to newest, it is perfectly clear that the big purchases were not signed until at least a week after the alarm status was decreed. This reflects, once again, the lack of experience of the central government in obtaining medical supplies.
Cement companies and legal activity
Although the activity of foreign companies of unknown origin is ignored, we do know what two Spanish companies do: Hyperin Business Group and Value&Bro.
Hyperin Business Group
According to public data that can be consulted in the Expansión business directory, Hyperin Grupo Empresarial, with a CNAE of 2352, was engaged in the manufacture of lime and plaster. This did not prevent the Government from awarding him a contract worth 3,310,650 euros in exchange for 144 ventilators.
In the same sense, Value&Bro, with a CNAE of 6910, corresponding to legal activities, has won not one, but two contracts, worth 9,359,350 euros, for the supply of 1.4 million swabs. These (it is important to mention) have been supplied at different prices, despite having been awarded on the same date (April 17). It is true that the Government should act as quickly as possible and that many companies have been reconverted, but it is hard to believe that in Spain there were no companies specialised in a certain field, which would have given the transaction a greater chance of success.
The private sector as an alternative
Much of the population continues to think that the private sector held more weight, we would fall apart. Despite this, the data shows that the colossal effort shown by the current government is not in fact much when compared to the contributions of the private sector. Public sector purchases, according to the contracts referenced in the Annex until May 14, represent a total of 1,064 million euros. Meanwhile, some of the most outstanding donations from the private sector have been at least 381 million euros. This means that, just with the direct contributions of 11 Spanish companies, we obtain 35% of everything invested by the Ministry of Health. The following table is constructed from the news that each of the companies has raised to the public.
Table 2. Contributions made by the private sector to Covid-19
Table 2 does not take into account many of the contributions made by the companies listed below:
- Xiaomi: 30,000 face masks
- Alibaba: 500,000 face masks
- Novartis: 130 million doses of 200 mg of hydroxychloroquine
- Huawei: 1 million face masks
- Solán de Cabras: 240,000 liters of water
- Mango: 2 million masks
- Ikea: 2,500 sets of hospital bedding
- Más Móvil: 2,000 mobiles and 400 routers
We could keep citing all kinds of companies, not just the large ones, as well as formal and informal associations that have been producing material much more efficiently and effectively than other agencies. It is worth noting not only the capacity of the private sector to turn over monetarily, but also the capacity it has had to transform and start generating totally different products. Such is the case of SEAT, which has been manufacturing ventilators; L’Oreal, with hydro-alcoholic solutions; or Inditex, with textile material for sanitary ware. Many of them have succeeded in paying, in addition, the salaries of a large part of their staff.
In conclusion, the question is not necessarily about whether public or private is better. But it is worth noting that the Spanish and international companies that have donated have done so, most likely, not out of solidarity or altruism, but because they are the first ones interested in the economy reactivating. If not, their activity will be reduced. Inditex does not necessarily provide logistical support to the Government in a disinterested and merely charitable intentions, but because it wants Spain to rise out of this crisis so that its stores invoice again. BBVA donates because it requires activity for economic agents to request loans and pay existing ones. Santander has donated 100 million, but only in countries where it has activity. And for Juan Roig, president of Mercadona, giving up the 70 million he would have collected this year continues to report higher brand value in public opinion. All of these constitute an incentives that benefit everyone and, therefore, cannot be wasted.
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