NYC vendor accused of wasteful COVID spending, got $700M in contracts

Financial watchdogs criticized a New York City contractor last month for overstaffing and wasteful spending at the height of the COVID-19 pandemic. That same company has gotten more than $700 million in contracts since the pandemic began, public records show — including a $219 million contract filed earlier this month.

The Adams administration also commissioned the company to care for recently arrived migrants in early 2023, as Gothamist previously reported. The new report raises questions about whether the same alleged wasteful spending is occurring in yet another citywide emergency.

Executive Medical Services, also known as Affiliated Physicians, got mixed reviews from the city comptroller’s office, which audited the company’s use of health department funds for COVID-19 testing sites and vaccine clinics between 2020 and 2022. The report, released at the end of June, stated that while the health department succeeded in placing COVID-19 services around the city, it didn’t keep a close enough eye on how much Affiliated Physicians was spending to run 315 sites.

“As a consequence of this, the costs of administering tests and vaccinations were not controlled,” the report reads.

The contract, which was written in May 2020 during the de Blasio administration and extended through the end of 2022 under the Adams administration, promised Affiliated Physicians $150 per hour for every staff member on site, in addition to payouts for each test or shot administered. Combined with scant oversight of how many workers were assigned to each clinic, the report alleged that per-person rate led to skyrocketing costs, often without the results to match.

At some sites, staff only gave a shot or test every hour or two on average, the report says. When the staff fees were taken into account, the report’s authors calculate, each test cost the city anywhere from $200 to more than $900 on average, depending on the testing site. Vaccine clinics run by the company, meanwhile, ranged from $169 per shot to a staggering $2,400 per shot based on the same calculations.

The mismanagement described in the report did not just fall on Affiliated Physicians or the health department, the audit says. Without careful oversight, contracts inked during emergencies can favor companies at the city’s expense, the comptroller’s office stated in a public letter to agencies released a few days after the report.

“Lack of action on the part of agencies to mitigate those risks led to poor cost control, wasteful spending, and unsupported expenditures,” the letter reads. It also explicitly cautioned city agencies to be careful with contracts related to the arrival of migrants in New York City.

“Especially as multiple city agencies deploy emergency contracting to address the humanitarian crisis created by the arrival of tens of thousands of individuals seeking asylum, and as New York City prepares for future crises from extreme weather to future health emergencies, City agencies must be prepared to contain emergency spending costs,” Deputy Comptroller for Audit Maura Hayes Chaffe wrote.

As of late July, over 56,000 migrants were staying in city-run shelters, Gothamist reported. City officials said that by the end of next year, they will have spent more than $4 billion caring for the new arrivals.

Affiliated Physicians has run vaccine clinics for city agencies for more than a decade. But business really picked up during the COVID-19 pandemic, comptroller data shows. The company raked in $229 million in municipal checks in 2021 and $157 million in 2022, up from just under $90,000 in 2019, according to data from Checkbook NYC.

Because the arrival of migrants has been declared an emergency, it’s difficult to know how much money Affiliated Physicians has received from the city government to care for asylum-seekers. But a recent contract with the NYC health department, which was registered on July 20, promised the company $219 million for testing and vaccination services.

Late last year, NYC Health + Hospitals, the public hospital system that also operates a subset of large-scale migrant shelters, contracted with Affiliated Physicians to run vaccine clinics for newly arrived migrants, many of whom had fallen behind on routine medical care during their journeys to the U.S. Workers alleged that they got little training and guidance, leading to mistakes on the job, Gothamist reported.

Adam Shrier, a spokesperson for NYC Health + Hospitals, said the city’s public hospital system isn't currently doing any business with Affiliated Physicians. Officials from the comptroller’s office declined to comment on Affiliated Physicians’ role in migrant health care.

The audit’s authors urged the health department and other city agencies to take pains to keep future emergency contracts from spiraling out of control. They suggested that agencies track spending closely and try to approximate a competitive bidding process as best as they can under emergency circumstances. For the health department, the report recommended that officials set careful staffing levels and carefully watch for signs of over-full rosters.

The health department agreed with those suggestions but disputed many of the report’s findings, according to a public letter sent in response to the audit and included alongside it. In it, officials argued that the pandemic broke the mold for public health emergencies and required a flexible approach to make sure everyone got the tests and vaccines they needed.

“The [Affiliated Physicians] vaccine operation, as directed by the health department was unique,” the letter reads. “No comparable vaccination model existed prior to the pandemic due to the scale, duration and scope of the crisis, the specific needs of diverse communities and systemic health inequities. Further, the operation evolved over time with changing eligibility criteria, the introduction of new types of vaccine, and other State and federal policy and programmatic changes. The health department had to set the standards for this type of operation in real time.”

The health department also argued that vaccine hesitancy and medical mistrust, not overstaffing, drove the paltry shot-to-staff ratios described in the audit.