When Gavin Newsom outsourced key components of California’s vaccine rollout to the private sector during the pandemic’s darkest days last winter, the Democratic governor promised the changes would benefit the most vulnerable.
But the $15 million contract with Blue Shield, plus another $13 million for McKinsey, did not deliver on that promise, according to state and county officials, as well as public health experts.
“Equity is a useful catchphrase, but the work was either nonexistent or completely nontransparent,” said Kim Rhoads, a health advocate and physician researcher at the University of California San Francisco. About 45 percent of eligible Black residents and Latino residents are fully vaccinated in California, according to state data, compared to nearly 60 percent of the eligible White population. “The numbers speak for themselves,” Rhoads said.
California wasn’t alone in using private contractors to manage the vaccination campaign. At least 25 states, along with federal agencies and many cities and counties, hired consulting firms, according to a Washington Post tally. The American vaccination drive came to rely on global behemoths such as McKinsey and Boston Consulting Group (BCG), with downsized state and local health departments and even federal health agencies relying on the private sector to make vaccines available to their citizens, according to hundreds of pages of contract documents, emails and text messages obtained through public records requests.
McKinsey’s role extended beyond California to other states, including Ohio and New Jersey. Deloitte worked in 10 states. BCG received millions of dollars from the federal government to coordinate vaccine planning, while at least 11 states also worked with the company, in some cases paying it to address gaps in federal planning.
Consultants say they helped save lives by supporting overextended public servants with specialized expertise. “Our work helped state decision-makers quickly size up key factors impacting the effective distribution of vaccines,” said McKinsey spokesman Neil Grace. “All our work was based on state-defined priorities, and the data we analyzed was provided by state and local public health authorities.”
But critics question whether such contracts improve government performance, arguing the arrangements are costly and difficult to oversee. Taxpayers have no way to know what precisely they are getting under no-bid contracts worth millions of dollars because the internal documents of private consultancies are not subject to public records laws.
“California has chosen to pay Blue Shield and other consultants millions of dollars to do the job that their public health workforce was already doing, while on reduced salaries due to pandemic-related budget cuts,” said a state health official, who spoke on the condition of anonymity to avoid professional reprisal.
Complicating matters, some contractors contributed to the political campaigns and projects of elected officials who then became clients, prompting allegations of favoritism. Such questions have surrounded the no-bid contract Newsom gave to Blue Shield, which helped finance his political campaigns and signature housing initiative. Aides to Newsom, who is battling a recall election, did not respond to inquiries about previous financial backing from the company. Blue Shield spokesman Matthew Yi said the insurer did not profit from the contract, using the $15 million to cover costs. “Our reward is to help save lives,” he said.
A year and a half into a crisis with no end in sight, experts say the continued dependence on private consultants leaves the nation poorly prepared for other health threats, including the spread of new pathogens that could be more deadly than this coronavirus.
By farming out vital health services, from disease surveillance to contact tracing to vaccine distribution, state and local governments have eroded their own capacity, experts argue, making Americans more reliant on private companies to safeguard their health. The weaknesses are all the more glaring with the delta variant’s devastating march through the United States, enabled partly by insufficient penetration of vaccines.
In some instances, current and former health authorities said consultants gave elected leaders political cover while taking on few substantive tasks. But the deeper problem is when private firms are entrusted with too much, rather than contributing too little, said Robin Taylor Wilson, a former chair of the American Public Health Association’s epidemiology section and an associate professor at Temple University in Philadelphia.
“The contractors leave and we’re not retaining that expertise,” she said. “So the next time an emergency hits, we’re going to have another delayed reaction.”
‘Farming things out … to the wrong folks’
The early rollout of coronavirus vaccines was so chaotic that President Biden insisted there was “no plan to vaccinate most of the country” when he took office in January.
Yet there was a plan, or at least the promise of one, and it relied on Boston Consulting Group. For $4.9 million, the Centers for Disease Control and Prevention made BCG responsible for “driving planning for vaccine distribution and administration,” according to a contract with the firm signed in September 2020 and extended this March for another $4.7 million.
The contract called for the creation of a “robust central infrastructure” supported by “accountability mechanisms” to coordinate federal, state and commercial immunization plans. But as shots moved slowly from points of delivery into people’s arms, and as state and federal officials traded blame, these goals went unrealized — part of a bungled early rollout that dissatisfied two-thirds of Americans, according to Gallup polling.
Neither officials from the federal government nor representatives from BCG would say whether the centralized infrastructure or accountability mechanisms were put into place. Senior CDC leaders did not respond or declined to comment on the record about why they enlisted BCG and whether they were satisfied with the firm’s performance. But the arrangement fit a pattern. Since the pandemic began, BCG has won contracts with the Department of Health and Human Services, the CDC’s parent agency, worth more than $165 million, according to a federal contracting database.
A CDC spokeswoman, Kristen Nordlund, compared BCG to a “counselor in that they have been integral in listening to the needs of the states and helping distill that down so CDC can take action.” The firm’s services focused on data analysis and program management, BCG spokeswoman Nidhi Sinha said in an email.
The lack of clarity about the services rendered under a nearly $10 million contract points to the opacity and overpromising that some current and former officials say undermined the first several months of the vaccination campaign — and that also characterized outsourcing at the state level, according to The Post’s examination of those contracts and of extensive email correspondence.
“It’s another example of the government farming things out, and often to the wrong folks,” said Jeffrey P. Koplan, a former CDC director who now serves as vice president for global health at Emory University.
Others said it was reasonable for the CDC to use consultants given the demands on the agency, whose budget has shrunk by about 10 percent over the past decade, according to a 2019 report from the nonprofit Trust for America’s Health. Likewise, the CDC’s funding for state and local preparedness has been cut by a third since 2003. “Career scientists were really busy,” said Helen Keipp Talbot, a member of the CDC’s Advisory Committee on Immunization Practices.
But some of the consultants lacked expertise in logistics and immunization and would often seek out tasks, creating pressure for CDC staff to “find things for them to do,” said one federal health official who, like others not authorized to discuss the issue, spoke on the condition of anonymity. Another found the consultants essential given the volume of the work, but said not all CDC staff had the management skills to deploy them effectively, causing internal tensions.
Instead of the “targeted program management support” promised in the contract, consultants often performed rudimentary services, such as taking notes during calls between states and the CDC, and then organizing that information in PowerPoint slides for presentations, agency officials said.
Sinha disputed that characterization, saying the CDC project was co-led by an expert with a PhD in infectious-disease epidemiology and an emergency medicine physician. But she declined to discuss the firm’s specific contributions, saying the company doesn’t comment on client work.
While promising to streamline the CDC’s vaccine planning, BCG also dispatched consultants to states responsible for executing delayed and confusing guidance from the federal government. It was not federal authorities, but BCG consultants, who convened officials from seven Northeastern states on Zoom last winter to discuss policies ranging from immunizing people from out of state to accelerating inoculations at nursing homes, according to emails.
The vaccine working group served two aims, Selin Zalma, a BCG consultant with no public health expertise noted on her LinkedIn profile, said in an email to the Massachusetts assistant public health commissioner — “part to learn from each other, part therapy.”
BCG’s vaccine footprint extended across more than a fifth of states, planted not just in those seven states — New York, New Jersey, Connecticut, Massachusetts, Pennsylvania, Delaware and Rhode Island — but also in Idaho, Illinois, Kansas and Washington State, officials confirmed.
The services were expensive, especially for states that spend little on public health.
Pennsylvania, which contracted with BCG for nearly $13 million, needed help because of what Keara Klinepeter, executive deputy health secretary, called the “chronic underfunding” of public health in the state, which ranks 47th in the nation for such spending per capita. BCG examined data to help “tee up” decisions about vaccine eligibility, Klinepeter said in an interview, and instilled a “common-sense approach,” for instance not sending more doses than a provider could handle.
Consultants also kept health authorities abreast of national rankings showing how they compared to other states on vaccine administration, which became a point of pride for elected officials. “Metrics are gradually improving … now at #40,” a BCG partner wrote to Klinepeter and others in early March. “Onwards and upwards we go!”
Fear of the political fallout from those rankings led Ohio officials to rely on consultants. Gov. Mike DeWine (R) was “getting pummeled by the media,” the state’s health director, Stephanie McCloud, told her staff in a Jan. 28 email, “about where Ohio falls nationally and in the Midwest.”
For answers, the state turned to McKinsey, signing a $6 million contract later extended for an additional $2.6 million. To “help us tell our stories,” McCloud wrote, the firm needed access to internal data — “visibility into our numbers: how they are arrived at and what they mean.” She directed staff to “prioritize McKinsey requests.”
Some states succeeded by keeping vaccine planning in-house.
Vermont, the first state to deliver a dose to 80 percent of eligible residents, did not join the Zoom confabs or hire consultants. Neither did Colorado, the state performing the best in the Rocky Mountains, or New Mexico, the leader in the Southwest. These states spend more per capita on public health than does Pennsylvania or Ohio.
Vermont Gov. Phil Scott, a Republican and former construction executive, built trust in the rollout by relying on public officials to manage it, his top aide said.
“Our system has at least one major advantage over a contracted system: Executive branch leaders, at the highest elected and appointed level, accepted the responsibility and the accountability of managing the response,” said Jason Gibbs, Scott’s chief of staff.
Gibbs added, “Our approach is scalable to any size state. I simply do not buy the ‘Vermont was successful because it is small’ hogwash.”
‘Glad they all got a state bailout’
No state went as far as California in handing over the reins to contractors — putting Blue Shield in charge of the network of providers administering shots, with assistance from Kaiser Permanente and McKinsey.
Inside the state’s public health department, some officials first learned these duties were being outsourced when they were instructed to transmit vaccine allocation data to McKinsey consultants, according to a state health official. “We were just told today about this, but have no details about how it’s going to work,” the official told The Post in late January.
Newsom announced the shake-up on Jan. 27, saying doses shipped to the state weren’t reaching residents fast enough.
But health officials in Sacramento and throughout the state were baffled by his response, saying the contract was a solution in search of a problem.
They traced the initial delay to limited vaccine supply and data problems with the statewide vaccine registry, which created the appearance of unused doses. Time spent this spring adjusting to a new allocation system, they said, could have been devoted to building vaccine confidence.
“It’s a political decision, not an operational decision, that was made,” said Santa Clara County Executive Jeff Smith, who is also a physician.
Leaders of the state’s academic health centers — among the state’s biggest vaccine providers — were especially irate. They balked at the requirement that all providers use a state-approved appointment system plagued by glitches, which they said undermined equity. “The most vulnerable and least technologically connected patients will be left behind,” Michael Condrin, chief operating officer for ambulatory care at the University of California at Davis, warned in a February email.
Condrin could not fathom why an insurance company was selected. “Blue Shield?” he wrote to colleagues. “They needed to pick Fed Ex, UPS, or Amazon.” Ann Boynton, a former state official who managed California’s nearly $10 billion health benefits program for public employees and now serves as a top administrator at UC Davis, agreed, noting of Blue Shield, “they’re not experts in distribution and delivery.”
Details of the contract also shocked UC San Diego Health’s associate chief medical officer, Chris Longhurst, who said the health center had managed to run the state’s first mega-site without support from the insurer or from McKinsey.
“Glad they all got a state bailout,” he wrote in an email to colleagues.
Newsom spokeswoman Erin Mellon declined to make the governor available for an interview but said the new setup “allowed for a single solution that was easier for the public to understand when signing up for an appointment, and it allowed for vaccines to be allocated to disproportionately impacted communities in an accountable and measurable way.”
Blue Shield had also played a leading role in earlier chapters of California’s pandemic response, with CEO Paul Markovich co-chairing the state’s testing task force.
A year before the company secured the contract to take over the state’s vaccine rollout, Blue Shield of California Foundation, a philanthropy funded exclusively by the insurer, gave $20 million to support Newsom’s signature housing initiative, Project Homekey, which funds the conversion of hotels into housing for the homeless.
When Newsom ran for governor in 2018, Blue Shield partnered with labor unions to sponsor a committee supporting him that was not subject to spending limits. After Newsom won, Blue Shield contributed $100,000 for his inauguration, while giving $50,000 on his behalf to a charity for firefighters, according to filings with the state.
Mellon, Newsom’s spokeswoman, did not respond to an inquiry about the contributions. But she accused those critical of Blue Shield’s role in the immunization effort of seeking to “rewrite history.”
“The crisis needed a solution and lives depended on us moving faster,” she said.
The solution involved outsourcing not just oversight of the vaccine network, but also the work of building confidence in it — a task that depended on McKinsey. In emails, Marta Green, a state official who coordinated with the contractors, requested that “public-facing docs” devised by McKinsey be “pretty and glossy like their project docs.”
But the public outreach faltered.
Company executives developed a list of outside advisers on vaccine equity listed by racial, ethnic and other categories, according to emails. But in a meeting in February, some of those advisers raised concerns that Blue Shield mainly served affluent residents and was “not known for equity,” asking the state to give money instead to community groups capable of distributing the vaccines, said Rhoads, the UCSF researcher representing the “Black/African American” community.
Sami Gallegos, a state public health spokeswoman, did not address criticisms of the lower vaccine uptake by Black and Latino residents but said the state sent more doses to hard-hit communities and partnered with local groups to boost access. Riverside County’s health director, Kim Saruwatari, who was put forward by Gallegos, said Blue Shield improved data collection and “provided benefit overall.” But the insurer added little in the crucial “last mile” of “getting vaccine to the people who are hardest to reach,” she acknowledged.
Now, Blue Shield is in the midst of transitioning to an advisory role, returning oversight of “day-to-day operations” to public officials, according to a recent state notice to providers.
Logistical decisions that were supposed to be facilitated by the contractors sometimes became more confused, according to emails and text messages. In several instances, vaccine allocation errors by McKinsey were caught by public health officials, who declined to speak on the record. But internal messages reflect their alarm about the risk of wasting doses or delaying distribution due to those errors.
“This is truly unacceptable,” a state official messaged colleagues one night in April, as they waited for corrected figures from consultants.
“It’s just crazy how much they’re being paid and for such little benefit,” another replied.
Grace, the McKinsey spokesman, declined to address the criticisms.
Coronavirus: What you need to know
Vaccines: The CDC recommends that everyone age 5 and older get an updated covid booster shot designed to target both the original virus and the omicron variant. Here’s some guidance on when you should get the omicron booster and how vaccine efficacy could be affected by your prior infections.
Variants: Instead of a single new Greek letter variant, a group of immune-evading omicron spinoffs are popping up all over the world. Any dominant variant will likely knock out monoclonal antibodies, targeted drugs that can be used as a treatment or to protect immunocompromised people.
Tripledemic: Hospitals are overwhelmed by a combination of respiratory illnesses, staffing shortages and nursing home closures. And experts believe the problem will deteriorate further in coming months. Here’s how to tell the difference between RSV, the flu and covid-19.
Guidance: CDC guidelines have been confusing — if you get covid, here’s how to tell when you’re no longer contagious. We’ve also created a guide to help you decide when to keep wearing face coverings.
Where do things stand? See the latest coronavirus numbers in the U.S. and across the world. In the U.S., pandemic trends have shifted and now White people are more likely to die from covid than Black people. Nearly nine out of 10 covid deaths are people over the age 65.
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