SALT LAKE CITY — What began as a pitch for a coalition of Utah’s tech companies to crowdsource funding to help tackle the coronavirus pandemic in their home state has resulted in multimillion-dollar, no-bid, taxpayer-paid contracts for those companies.
So why did the plan go from “we pay” to the state of Utah pays?
Mark Newman, CEO of Orem-based health insurance/provider software platform Nomi Health, contracted with the state to perform assessments and process COVID-19 tests at numerous locations throughout Utah. He said the transformation from a volunteer effort to contract deal was a function of necessity brought on by the sheer volume of need.
“In conversations with the state as we stood things up it evolved very quickly from how to get testing done in Utah County to a statewide effort with questions like how do we scale this, how do we get to 3,000 tests a day,” Newman said. “The scope and scale expanded so rapidly and moved beyond the ability of a voluntary effort to the necessity of a paid, professional workforce.”
The contracts are among the tens of millions of dollars Utah has so far spent to respond to COVID-19 under emergency declarations that allow the state to bypass competitive bidding.
They raise questions of how state officials are balancing the protection of the taxpayer dollar while responding in real time to the pandemic. It’s a question the Deseret News has been pursuing since the discovery of the state’s $800,000 purchase (and refund) for controversial anti-malarial drugs now being audited by Utah State Auditor John Dougall, along with about $70 million in other purchases made for the state’s pandemic response.
An early concept of how Utah tech companies would partner together came just days after COVID-19 first began spreading in Utah — and it came with a call for action.
Newman called on Utah’s tech giants to help play a part in making sure Utahns could get tested fast — and for free.
The hurdle, Newman wrote in a March 14 email to other tech company representatives obtained by the Deseret News through a public records request, was questions around who was paying for it as U.S. insurance companies, labs and hospitals fight over billing.
“Let’s solve it,” Newman wrote, first reported by the Salt Lake Tribune. “We pay for it. We pay manufacturers of tests, labs and pharmacies directly for testing + med packs for our employees and families. No noise. On top of that like Tom’s shoes we match each buy for the community and open access to everyone.”
Newman wrote he had negotiated prices for cheap tests and about 20,000 “med packs” of anti-malarial drugs from Meds in Motion, calling for partners including Qualtrics, Vivint and others to share empty parking lot space for testing tents.
“We want to mobilize the community — pay for the tests + packs and setup drive through testing locations in our empty office parking lots ... and let our shared employees, family members and broader community members come and participate,” Newman wrote. “No cost to them.”
Initially, Newman’s pitch was met with curiosity.
“Really interesting,” wrote Kirsten Rappleye, the lieutenant governor’s chief of staff in a March 17 email in a thread about Newman’s pitch. “I mean, we’re working our damndest to get access to reagent and other testing supplies for COVID (even swabs are scarce right now), and for the state, it’s really not a money issue — we have a huge rainy day fund. I wonder what it is the Nomi guy thinks he has that we don’t ... If it turns out to be legit, I’m sure health care systems would be clambering for it. Keep me posted...”
Rappleye asked for more information, encouraging “innovative ideas” to keep flowing.
“We need to get out of a government mindset on this one,” Rappleye wrote. “Things are going well ... but we need the innovative thinking.”
On a March 20 Silicon Slopes COVID-19 town hall webinar, Newman recognized an effort to secure thousands of doses of hydroxychloroquine, which he attributed to the state, was moving forward.
“I want to give a shoutout to Meds in Motion, Dan Richards over there,” Newman said during the virtual event. “He’s been leading the charge with members of the health department, with members of the state, (Utah Senate) President (Stuart) Adams. They are launching a large standing order for hydroxychloroquine and chloroquine which many of you have seen in the news around potential treatment for this, for people exhibiting symptoms.”
In another Silicon Slopes online presentation on March 23, a slide Newman referenced during his remarks indicated the cost of the hydroxychloroquine and chloroquine would be covered by the “private sector.”
“State standing order for hydroxychloroquine and chloroquine, 20,000+ packs paid for by the private sector so cost isn’t an issue for anyone ... Dan Richards of Meds in Motion leading the charge,” the graphic read.
Fast forward several weeks, and that “innovative thinking” has taken full form, but with a big price tag billed to taxpayers.
Nomi Health signed on to a $5 million-plus, no-bid contract, including $2 million for the creation of TestUtah.com, $3 million for the first month of five drive-thru testing locations and lab services, according to a copy of that contract obtained by the Deseret News from a public records request. Under that contract, Nomi also gets an additional $600,000 a month for each active testing location — which is now up to at least seven sites.
And emails and documents show Nomi Health was directly involved with the state’s purchase — which has since been refunded amid outcry — of $800,000 for 20,000 medication packs of hydroxychloroquine, chloroquine and zinc.
Newman, in a March 31 email, the day the invoice was signed, linked state purchasing officials with Richards, Meds in Motion owner. And Newman was listed on the invoice for billing, even though the state ultimately footed the bill via wire transfer, according to emails obtained through a public records request.
“As discussed, I’m connecting you here directly with the Meds in Motion team to process the order for the medication packs for the state storehouse,” Newman wrote to Chris Hughes, director of the Division of Purchasing and General Services, copying Richards in the email. “This is the group that has been working with President Adams and the state health department to get the supplies right for potential public use.”
When state purchasing officials moved to process the payment, which wasn’t until mid-April, they questioned why the invoice bill was addressed to Nomi and Newman and not the state of Utah.
“Nomi is the point of contact for the state,” explained Richards in an April 8 email to Stephanie Martin, the state’s purchasing financial manager. “We were advised to invoice them but then connected with Chris Hughes directly so we bypassed them and went direct to the state.”
In those emails, Newman did not disclose he is also an investor in, and board member of Meds in Motion. In a Deseret News interview, Newman said, in retrospect, it was a disclosure he probably should have made but at the time he was more focused on the work at hand.
“Inside of your network and community around you, you use people you know and trust to get the job done,” Newman said. “What wouldn’t have worked at the time was going to your local pharmacy and try to get it.
“I thought it was quite open that I was on the (Meds in Motion) board. I could have been more clear, but ultimately, the solution at the table was way more important than (whether) I’m on the board or not.”
As first reported by the Deseret News, emails show state budgeting officials moved to buy the drugs under pressure from Dr. Joseph Miner, executive director of the Utah Department of Health, and state leaders including Adams, who were supportive of acting quickly to obtain and facilitate use of the controversial drugs.
In response to a request for more information about who ultimately decided on the pricing for the contract with Nomi Health and why the state opted to pay for the services despite the plan being originally pitched as one that would be privately funded, Anna Lehnardt, spokeswoman for the governor’s office, said the “state of Utah did not expect Nomi to provide their services free of charge.”
Nomi’s contract is just one that Utah state officials have signed with tech companies to respond to the pandemic. The state has also executed a $2 million contract with Domo, an American Fork analytics company, for IT services for TestUtah.com; and a $2.75 million contract with Twenty Labs for the Healthy Together app, which also requires the state to pay “out-of-pocket expenses (including reasonable legal costs)” and support fees of $300,000 a month for up to 1 million monthly active users, with each additional user costing another 30 cents per user per month, according to the contract.
The state also signed a contract with the University of Utah for field testing, at nearly $2.8 million per month for the first phase (or 12,500 participants) and $1.1 million per month for phase two (or 5,000 participants a month). The U. breaks down its test costs in the contract as $125 for running the extraction and COVID-19 test while TestUtah reports its costs for those procedures as $51.
As of the end of April, TestUtah said it has performed 120,000-plus assessments and completed over 21,000 tests.
To the group Alliance for a Better Utah, the contracts with Nomi and others raise more questions of transparency and government accountability during a time of crisis when competitive bidding isn’t required.
“The slapdash deal with tech groups gave inexperienced, unelected, and unaccountable private entities control over key parts of our state’s response to this public health crisis,” said Lauren Simpson, Alliance for a Better Utah’s policy director. “What’s worse, because of the lack of transparency surrounding this deal, Utahns have to rely on public records requests and investigative reporting to figure out how a deal that started as a ‘public service’ turned into a no-bid, $5 million contract.
“We understand the need to move quickly in an emergency,” Simpson continued, “but this entire process has been irresponsibly handled by government leaders and demonstrates the need for transparency and government accountability, even in the midst of a crisis.”
Newman recognizes that the entirety of the TestUtah project to this point had not been without problems but predicts that the effort, when viewed in retrospect, will be seen as a win for Utah residents.
“Could we have done some stuff better?” Newman queried. “Yes. But, when the dust settles and we get compared to the costs of everything else going on, I think our work will stand on its own.
“We’d rather be one of the people that raised their hand to try to help to do something than one of the people that just stood back and criticized.”