Amid mounting fears of the spread of the coronavirus and the COVID-19 disease it causes, local governments should look at quickly redeploying the buildings and people they already have. They just might be able to save money, livelihoods and lives in the process.
Indeed, Chicago is planning to do just this. Hotels are standing empty as tourism has come to a halt. So city and state officials are partnering with hotels to offer rooms for quarantine or isolation.
But more and should can be done — in Chicago and around the country. Chicago’s central business district has 45,000 hotel rooms. New York City’s has 118,000 hotel rooms. Los Angeles’ has 98,000.
No, we don’t have in mind creating M*A*S*H Korean-War-style tent-based hospitals in Marriott lobbies; think instead about creating “field branches” of major hospitals in the region, where existing rooms, kitchens, and laundry facilities can be leveraged to treat patients with mild cases of COVID-19. (Arenas, empty malls, and conference centers might also serve similar purpose.) This then frees up hospitals to focus primarily on severe cases that need critical attention and advanced resources.
Read: Mall REIT offers to turn open-air malls into distribution centers
Additional space could also aid governments in encouraging patients — even those without symptoms — to self-isolate outside of the home. The current U.S. policy of instructing someone who tests positive to remain in their own home is only partially effective. It cannot contain the spread of the virus that is taking place within families: a single infected individual can easily infect the other members of the family. Further, if reinfection is possible, either because the antibodies decay rapidly or the virus mutates, the current policy runs the risk of triggering a chain of contagion, with family members infecting and re-infecting each other or increasing mortality rates.
Of course, many Americans may resist being placed in isolation at a remote facility outside of their homes. Local governments may want to offer financial incentives, such as covering living expenses or medical costs for patients who lack insurance, to encourage self-isolation.
Similarly, compensating hotel owners for transforming them into makeshift hospitals could also be a win-win, bringing much need cash flow to hotels at a time of financial strain. And unlike a bailout, the government would be getting something in return — saving the costs that it would incur in building temporary medical facilities and most importantly saving jobs in some of the hardest-hit service industries.
Physical assets are not the only resources that are currently underutilized — people are too. A major side effect of the current lockdown policies is that a large number of firms in the economy are suffering financially, and they are beginning to lay off workers. Unemployment claims are already spiking. Many of these workers come from the food service and hospitality industries.
With proper and quick training — in just a day or two — food preparation workers can get back to hotels’ kitchens and housekeeping staff can deliver food as they normally do with in-room dining. Disposable food trays can be left outside the rooms and collected later as part of the general housekeeping of the hallways. Hotel employees will work together with medical staff, and similar to other health-care providers, those who interact with isolated patients may be required to wear protective gear while providing dining and housekeeping services.
In a centrally planned economy, the government can mandate this process. In a market-based economy, like the United States, market forces allocate resources. But this process often takes time, and does not work well when coordination is needed. The measures we are proposing are designed to help our nation put its considerable resources to their best use — quickly, and in service of saving lives.
Efraim Benmelech is a finance professor and the director of the Guthrie Center for Real Estate Research at Kellogg School of Management at Northwestern University and a research associate at the National Bureau of Economic Research. Carola Frydman and Dimitris Papanikolaou also are finance professors at Kellogg School of Management and research associates at the NBER.
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