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As Doctors Don Trash Bags, Firm Recalls 9 Million Surgical Gowns

Reprinted with permission from ProPublica.

There's an overlooked reason why hospitals treating COVID-19 patients are so short of protective gear. In January, just before the pandemic hit the United States, a key distributor recalled more than 9 million gowns produced by a Chinese supplier because they had not been properly sterilized.

"At this time, we cannot provide sterility assurances with respect to the gowns or the packs containing the gowns because of the potential for cross-contamination," Cardinal Health wrote to customers on Jan. 15. It added, "We recognize the criticality of our gowns and procedure packs to performing surgeries, and we apologize for the challenges this supply disruption will cause."

The recall immediately forced the canceling of some elective surgeries. It also meant that supplies of medical gowns were already low when hospitals and state governments began desperately searching for protective gear to cope with the pandemic. Most gowns are supposed to be worn once and not reused. As some doctors and nurses have resorted to covering themselves with trash bags, raincoats and hazardous materials suits bought online, many health care workers have contracted the virus, further taxing already overwhelmed hospitals.

"Demand has gone up at a time when supply was already constrained," said Bindiya Vakil, the chief executive of Resilinc, a Milpitas, California, firm that monitors supply chain disruptions worldwide. "Coronavirus made what was already a bad situation a lot worse."

Colin Milligan, a spokesman for the American Hospital Association, said that the group's members continue to experience shortages of medical gowns and that the Cardinal recall "has had a ripple effect."

A Cardinal spokeswoman said that "the supply of surgical gowns should not impact the supply of PPE," or personal protective equipment, for health care workers because they usually wear another type of outer garment, isolation gowns, when tending to coronavirus patients.

Cardinal received approval Tuesday from the federal government to donate the 2.2 million recalled gowns that remain in its inventory to the Strategic National Stockpile for distribution as isolation gowns. Each pallet must be "labeled in with a warning that the articles are for use for non-sterile apparel purposes only," according to the approval letter.

The company is "working around the clock to meet the needs of healthcare providers so they can safely serve the patients who depend on them," a Cardinal spokeswoman wrote in an email.

The shortage of gowns even before the coronavirus outbreak highlights the vulnerabilities of a U.S. health care system that depends on protective equipment largely made in other countries, led by China. The quality of gowns and other gear has been a recurring problem, including a dead insect in the packaging of a Cardinal gown, complaint records show. Replacing an overseas supplier can take months, and even if a new one is found quickly, it still has to ramp up production and arrange shipping.

"Unfortunately, like others, we are learning in this crisis that overdependence on other countries as a source of cheap medical products and supplies has created a strategic vulnerability to our economy," U.S. Trade Representative Robert Lighthizer said at a meeting Monday. "For the United States, we are encouraging diversification of supply chains and seeking to promote more manufacturing at home."

The recall also exposes flaws in how both companies and government regulators monitor the overseas manufacturers that produce much of the country's inventory of protective medical gear. Because surgical gowns are considered a medical device, their quality is monitored by the U.S. Food and Drug Administration, which inspects manufacturing plants every two years.

A spokeswoman for Cardinal, which is based in Dublin, Ohio, said that it has a "broad and diverse manufacturing and supplier network" that includes the U.S. and is not dependent on any one locale. Cardinal is also one of the largest prescription drug distributors in the world. It had revenues in 2019 of more than $145 billion, making it the 16th largest company in the U.S., according to Fortune.

Cardinal chief executive Mike Kaufmann told Wall Street analysts in February that the company understood "the gravity" of the recall. He said it had hired outside experts to review Cardinal's quality assurance procedures.

The company's board has established a special committee to review management's actions pertaining to the recall, according to Cardinal's website. The outside experts continue to scrutinize the company's practices, a spokeswoman said.

Of the recalled gowns, Cardinal had already distributed almost 8 million to health care facilities; the others had not reached customers. Some had been manufactured as early as the fall of 2018, the company has said. Cardinal does not have information on how many of the gowns were used but believes a majority of them were, a spokeswoman told ProPublica. Asked if any health workers or patients were infected as a result, she said that "we continue to track and analyze complaint data."

The FDA last inspected the problematic Chinese plant in April 2018 and did not identify any violations, an agency spokeswoman said. Manufacturers are responsible for detecting problems and reporting them to the FDA, she said, adding that the Chinese company did not report any such issues during the period covered by the recall.

The January recall was not the first time Cardinal had a problem with the supplier, which it has identified as Siyang HolyMed Products Co. in Jiangsu province on China's coast. Cardinal disclosed in a January press release that in the spring of 2018, around the same time the FDA was inspecting the Chinese company's manufacturing facility, the company learned that Siyang outsourced some of its production to an unqualified facility. Cardinal tested products at the time and determined there was no reason to take further action such as a recall, it said.

Then, last Dec. 10, Cardinal received a tip that Siyang was making gowns at two sites that weren't approved by the U.S. company or registered with the FDA, a Cardinal spokeswoman said. Ten days later, an on-site investigation confirmed the tip, she said.

In a Jan. 21 letter to customers, Cardinal said it couldn't guarantee that the gowns were sterile because Siyang made some of them at locations that "did not maintain proper environmental conditions as required by law." They were "commingled with properly manufactured gowns," Cardinal said.

Phone and email attempts to contact Siyang were unsuccessful. The FDA said in January that it was investigating how the gowns may have been contaminated. An agency spokeswoman did not respond to questions about the status of that investigation.

Health care workers wear gowns to protect themselves from coming in contact with blood and other bodily fluids, microorganisms and particulate material. The gowns offering the highest level of protection are sterilized. A gown that is not properly sterilized increases the risk of infection, which can be transmitted to a patient during a procedure.

Health care workers use two kinds of medical gowns. Surgical gowns, like those sold by Cardinal, provide the highest level of protection and are more heavily regulated by the FDA. Isolation gowns, which are produced in larger amounts, are not sterilized but are appropriate for many interactions with COVID-19 patients. Both are in short supply right now as hospitals are quickly burning through any gowns they have and, in some cases, using already depleted supplies of surgical gowns when isolation gowns are unavailable.

The 9.1 million gowns recalled by Cardinal likely represent about 30 percent of the company's global distribution, according to Premier, a Charlotte, North Carolina, company that negotiates prices on supplies bought by more than 4,000 hospitals and health care systems. The recall "absolutely contributed to the challenges that some of our hospitals are having treating their patients," Chaun Powell, a group vice president at Premier, said. "That put burden on the supply chain prior to COVID outbreaks, and then the COVID outbreaks only exacerbated that issue."

In the past two years, the FDA has received several complaints about the quality of Cardinal gowns. Adverse event reports filed with the agency include accounts of inadequate and improper protective wrapping on sterile gowns, holes in gowns, and blood soaking through the protective material. The reports disclosed to the public do not name the facilities or individuals reporting the product defects. Complaints have been filed about gowns purchased from distributors other than Cardinal as well.

In 2019, a hospital reported that a sterile gown arrived from Cardinal improperly wrapped, rendering it non-sterile. "This was noticed before it was opened to the surgical field; however, had it been opened it would have contaminated the entire field," the report said. Ten days later, another report noted another packaging defect that could have caused contamination. "This is not the first time this has happened," according to the report. "The gowns are coming from the manufacturer this way."

In February, after the recall, a hospital found a dead insect in the packaging of a Cardinal sterile gown, according to a report filed with the FDA. The hospital said the gown was not part of the recall. The report noted there had been previous, unconfirmed reports of hair, gum and a cigarette butt found in Cardinal products labeled as sterile.

Cardinal did not respond to questions about the adverse event reports.

China is the source of 45 percent of all the protective medical garments imported to this country, according to an analysis last month by the Peterson Institute for International Economics. Other countries where gowns for U.S. health care workers are manufactured include Mexico, Thailand, Cambodia, Honduras and the Dominican Republic, according to the nonprofit ECRI Institute in Plymouth Meeting, Pennsylvania.

Another major distributor of surgical gowns, Medline Industries Inc., declined to answer questions about where its gowns are made. Attempts to contact another supplier, Halyard, were unsuccessful.

At a health care conference last month, Halyard's parent company reported making surgical gowns at a plant in San Pedro Sula, Honduras.

For Cardinal, the recall has been a costly blow to its bottom line and reputation. The company's operating earnings declined 34 percent in the second quarter ending Dec. 31, in part due to a $96 million charge related to the recall.

"We don't know how this could affect our business going forward, and we're hoping that it doesn't," Cardinal's Kaufman said in a conference call with investment analysts in February. "But we know that we have created some pain."

With Shelters Under Threat, Crisis Looms For Migrant Kids

Reprinted with permission from ProPublica.

Arizona health officials threatened on Wednesday to revoke the licenses of 13 federally funded immigrant children shelters, accusing the facilities’ operator, Southwest Key, of displaying an “astonishingly flippant attitude” toward complying with the state’s child protection laws.

But a day after the state sent its blistering letter to Southwest Key CEO Juan Sanchez, it became clear that any shutdown would create a tumultuous chain of events for federal and state regulators, who lack options for housing tens of thousands of unaccompanied children who cross the border every year.

“Shutting down the shelters would create a crisis for the federal Office of Refugee Resettlement, which is charged with housing children caught at the border,” said Maria Cancian, deputy assistant secretary for policy at the U.S. Department of Health and Human Services’ Administration for Children and Families from 2015 to 2016.

Southwest Key is the country’s largest operator of immigrant youth shelters, housing more than 5,000 children in Arizona, Texas and California. As many as 1,600 children currently reside in its Arizona facilities.

The Texas-based nonprofit has become an increasingly critical asset for the federal government as the number of children in its custody has reached record numbers — even as the Trump administration has ended the practice of separating children from their parents. Southwest Key has received more than $1.3 billion in federal grants and contracts for the shelters and other services in the past five years.

Arizona’s investigation showing the company has been lax in protecting children in its care highlights the government’s fraught reliance on shelter operators — and the power those operators have, even in the face of failures. The federal government desperately needs every shelter as tougher immigration policies have put the system near capacity, housing five times as many children as last summer. Former HHS officials said closing 13 shelters in Arizona at once would throw the system into chaos.

It would create a “humanitarian crisis,” said one former official, forcing federal officials to scramble to find safe, licensed housing with trained and vetted staff for 1,600 children.

Arizona launched its investigation of Southwest Key’s shelters after news reports raised questions about background checks and other issues. A ProPublica story in August detailed the charges against Levian Pacheco, a former Southwest Key employee who is accused of molesting eight boys at a Mesa shelter over an 11-month period. Pacheco, who is HIV-positive, went without a background check for nearly four months. He was convicted earlier this month of 10 sex offenses connected to the molestation.

In response to media attention and complaints, Arizona health officials reviewed records on background checks at every Southwest Key facility across the state. Of the 13 shelters, the state found two additional facilities also had problems with background checks. In mid-August the company agreed it would verify that all employees had complete background checks by mid-September.

Arizona health officials also found that Southwest Key hadn’t vetted all employees by interviewing their previous employers and hadn’t ensured all employee files contained proof of tuberculosis testing. At some facilities, officials discovered bedroom and bathroom doors missing and problems with the size of residents’ rooms.

In Wednesday’s letter, Dr. Cara Christ, the director of the Arizona Department of Health Services, told Sanchez that his organization had failed to comply with the mid-August agreement.

“Southwest Key’s lack of ability to deliver a simple report on the critical protections these children have against dangerous felons demonstrates an utter disregard for Arizona law,” Christ wrote.

Jeff Eller, a Southwest Key spokesman, said the nonprofit has requested a meeting with state health officials to discuss the matter. “We have apologized to DHS for missing the reporting deadline and are serious about ensuring that never happens again,” he said in a statement. Eller declined to comment on the substantive issues raised in Arizona’s investigation. The state’s move to revoke the licenses was first reported by Arizona media outlets.

Gov. Doug Ducey’s office said in an email on Thursday he expects licensed facilities to comply with the law or his administration will hold them accountable.

Federal HHS spokesman Kenneth Wolfe said in an email Thursday that the agency was reviewing the letter and working with the shelters and Ducey’s office “to get all of the facts regarding the Arizona Department of Health Services audit to determine the next step.”

Former federal officials said they anticipate HHS will step in to help negotiate an outcome between Southwest Key and Arizona that will allow the children to remain in the facilities. Even Arizona officials acknowledged that the letter represents the beginning of what would be a long process.

In Texas, which has 16 Southwest Key facilities housing about 3,700 children, state health officials say they are not aware of similar issues with Southwest Key.

The Texas’ Health and Human Services Commission said its “monitoring inspections have not produced evidence of a pattern of background check deficiencies within any SWK [Southwest Key] operation, nor any patterns of failure to comply with minimum standard training requirements.”

An official with California’s Department of Social Services said in June the agency re-inspected all known facilities used by the US Office of Refugee Resettlement — including those operated by Southwest Key — and found no licensing concerns. The dust-up comes as the number of immigrant youth in federal custody has continued to grow. Immigrant advocates and former health officials say the record population doesn’t appear to be due to an influx of children at the border, but to the fact that children are staying in the shelters nearly twice as long as in the past.

They attributed that to a Trump administration policy that requires health officials to share information with Immigration and Customs Enforcement to vet potential sponsors for children in the shelters. As a result, they said, many parents and relatives who have traditionally served as sponsors worry they’ll be turned over to ICE if they come forward.

Matthew Albence, who heads ICE’s Enforcement and Removal Operations, gave credence to that fear at a Senate hearing on Tuesday when he testified that ICE had arrested 41 people who either came forward as sponsors or lived with them.

“Close to 80 percent of the individuals that are either sponsors or household members of sponsors are here in the country illegally,” Albence said. “So we are continuing to pursue those individuals.”

Arizona’s move against Southwest Key is just the latest in a series of bad headlines for the nonprofit.

In addition to ProPublica’s reporting on Pacheco, two other cases involving abuse at other Southwest Key shelters in Arizona surfaced in July. An employee at a Southwest Key facility in Phoenix was arrested on allegations that he sexually abused a 14-year-old girl by kissing her and rubbing her breast and crotch, according to Phoenix news outlets. And The Nation reported in July that a 6-year-old girl, who had been separated from her mother, was allegedly fondled by a boy at a Southwest Key facility in Glendale in June.

At other Southwest Key facilities, police reports and call logs from the last five years detail dozens of runaways, inappropriate relationships with staff, sexual contact among kids, and allegations of molestation by employees, ProPublica found. In one case, a 46-year-old youth care worker in Tucson was convicted of groping a 15-year-old boy who had arrived in the United States five days earlier.

In response to each of these reports, a Southwest Key spokesman said the organization immediately reports any abuse claim to police, that it cooperates fully with all investigations and that it educates children in its care of their right to be free of abuse.

And in August, UnidosUS, formerly known as the National Council of La Raza, the nation’s largest Hispanic civil rights and advocacy organization, suspended its affiliation with Southwest Key.

Both UnidosUS and Arizona officials highlighted similar concerns about the Southwest Key officials’ attitude toward the scrutiny it is receiving. UnidosUS said the organization “failed to convey that it understands the gravity and magnitude of the situation” and had failed to apologize to the victims in its care.

In response to UnidosUs, Eller told the Austin American-Statesman in August that the company was disappointed in the group’s decision and said any insinuation that Southwest Key didn’t take allegations seriously was grossly incorrect.

A former HHS official with knowledge of how the refugee resettlement agency operates said the recent developments with Southwest Key raise serious questions about the organization’s ability to meet the government’s needs.

“It sounds like, based on their inability to respond or even communicate in a timely fashion that they have really significant internal operating challenges and that may or may not be indicative of the quality of care the children are receiving,” the former official said.

Nonetheless, other former officials said shuttering the facilities might not be in the best interest of the children. The state might have more effective options, such as increasing unannounced visits to shelters.

Claudia Flores, director of the International Human Rights Clinic at the University of Chicago Law School who has studied the conditions faced by immigrant youth at the border, highlighted the difficult position the federal government and Arizona are in with Southwest Key.

“It’s not a response to say we can’t shut down the facilities when there are reports of abuse taking place,” she said. “It’s really not the kids in these facilities that should be suffering.”

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