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The Pandemic One Year in: The Silver Linings and Big Reveals

MHE PublicationMHE March 2021
Volume 31
Issue 3

Healthcare has successfully pivoted and collaborated. But COVID-19 also has spotlighted flaws in how hospitals are financed and the weakness of the public health infrastructure.

Now that we’re about a year into the COVID-19 pandemic, many healthcare experts are looking at how the industry responded and categorizing what areas were positive and which parts need improvement.

In the plus column, for example, is the unprecedented speed of decision-making and execution of those decisions. Practices transitioned to virtual platforms in a matter of weeks, sometimes days. COVID-19 vaccines were developed in a matter of months.

But healthcare’s ledger is hardly all positive. It is clear that the long-neglected and underfunded public health infrastructure was ill-prepared at best. Public health is always joined to politics, but in 2020 they were hopelessly tangled, with dire consequences, as reflected in the disproportionate number of Americans who died from COVID-19 relative to the number of deaths from the virus in other countries. Moreover, the accolades for vaccine testing and development in 2020 have been followed by criticism of — and confusion about — distribution of the vaccines this year.

The silver linings

Still, many healthcare leaders speak with pride about how their organizations —and the sector, in general — responded to the pandemic. Alexa B. Kimball, M.D., M.P.H., CEO and president of the Harvard Medical Faculty Physicians at Beth Israel Deaconess Medical Center in Boston, notes that a year into the COVID-19 pandemic, the industry has seen incredible innovation, true collaboration for the good of all patients, improved communication, and sharing of resources among hospitals and caregivers.

“For healthcare, the silver linings of the pandemic have included the expansion and rapid deployment of telehealth, the discovery that even large academic institutions could pivot in a nimble fashion and the incredible innovation necessitated by the pandemic,” she says. “In an age when healthcare is sometimes criticized as a business with a cold bottom line, collaboration took the place of competition.”

Hospitals within systems anchored to academic medical centers were able to share expertise, expedite patient transfers, and redistribute personal protective equipment and ventilators to other facilities where they were in short supply, Kimball says. Physicians and staff members across a healthcare network collaborated and communicated in ways that will benefit them for years to come, she says.

“Community hospitals that are part of larger networks benefited from the availability of specialists and supportive infrastructure, and those of us who are part of those large networks learned of the incredible talent of care providers within our networks,” Kimball says.

Ben Kornitzer, M.D., chief medical and quality officer for Agilon Health, a Long Beach, California, company that advises physician practices, says that the pandemic accelerated the transition to value-based care and created incentives for physicians to care for vulnerable individuals who weren’t able to be seen in person.

“We saw an increased ability to meet the patient where they are — telehealth, remote monitoring, home visits, medical care in parking lots and so on,” he says. “One of our PCPs even did a televisit with a patient on a construction crane hundreds of feet in the air.”

No one wants to be so insensitive as to talk about winners amid a pandemic, yet there’s no question that some groups and organizations have prospered in the year since the first cases were discovered in the U.S. Michael Abrams, M.A., co-founder and managing partner of Numerof & Associates, a healthcare consulting firm headquartered in St. Louis, notes that the pandemic has left many insurers in a strong financial position.

“So many elective procedures and routine visits have been deferred during the pandemic that medical claims for most insurers during the second and third quarters of 2020 were dramatically lower than originally anticipated, creating a windfall profit for most payers,” he says. Flush with cash, companies such as Anthem, many of the Blues plans and others have announced rebates to plan members now as opposed to waiting until August 2021, when the medical-loss ratio requirements of the ACA would require them to do so anyway, Abrams says.

Abrams also sees telehealth providers coming out of the pandemic as winners. Before the pandemic, healthcare systems had generally little interest in telehealth, partly because of low reimbursement and regulatory obstacles. “But with the onset of COVID-19, hospitals facing the choice of telehealth visits or nothing quickly ramped up,” he says. “Telemedicine giants have seized the moment, responding to exploding demand for their services. CMS and other big payers have helped in a big way by increasing the number of telehealth services eligible for enhanced government payments and, at least during the pandemic, paying for telehealth visits at the same rate as in-office visits.”

Adnan Iqbal, M.S., MBA, CEO of Luma Health, says Americans can view COVID-19 as an impetus for improved healthcare in the future. The pandemic has caused illness and death and economic hardship, Iqbal says, but it also has been transformative. “The pandemic has very quickly forced healthcare to deliver better patient care — including increased digital options and virtual care, which offer added convenience. The status quo has absolutely been kicked to the curb,” he says.

The reveals

According to data compiled by Bloomberg News, more than three dozen hospitals have entered bankruptcy this year. Meanwhile, the American Hospital Association is projecting hospital and health system losses of more than $323 billion through 2020. Kaufman Hall has projected that more than half of all hospitals will report negative margins from the fourth quarter of 2020.

“Those medical centers and systems that rely on patients from outside of their network’s geographic area clearly experienced large declines in patient volume during the pandemic,” Kimball says. “Patients weren’t getting on planes to go to cancer centers or specialty hospitals providing elective, nonemergent surgery.”

During the initial spike in infections between March and April 2020, the healthcare industry lost 1.5 million jobs. More than half a million jobs remained lost six months later, with losses spread across the major healthcare sectors of hospitals (22.7%), ambulatory care settings (39.6%) and long-term care facilities (37.7%). The pandemic has been especially hard on small medical practices, Kimball says. “The necessary investments in PPE (personal protective equipment), the need for physically distanced compatible waiting rooms and the overall decrease in routine care all have played a role in the economic burden to these practices,” she says.

The fact that hospitals that treated many patients with COVID-19 often struggled financially is an indictment of how hospitals are funded, Kornitzer says. Many healthcare experts believe the industry needs to re-envision what hospitals do, how they do it, and how their services are reimbursed.

“Hospital economics do not serve their true public function, and that was laid bare during the pandemic,” Kornitzer says. “Hospitals have increasingly relied on high-margin specialty service lines and elective procedures to cross-subsidize critical services that often lose money, such as general medical admissions.”

Kornitzer also says the pandemic has shined a negative but needed light on the care that older Americans receive. “The warehousing and unacceptably high mortality of our older patients in long-term and nursing facilities must be reevaluated at every level,” Kornitzer says. He sees a shortage of personalized and primary care in addition to the need to focus on holistic medicine and palliative care.

Abrams believes the pandemic put a spotlight on the failure of the industry — and political leaders — to pivot from a transactional model of treatment that only reacts when individuals are sick, to a population health model that addresses the management of chronic conditions across time and through multiple service delivery modalities. He says more emphasis needs to be placed on the importance of social determinants of health and population health.

“The disproportionate impact of COVID-19 on disadvantaged populations and those with chronic conditions highlighted the costs that come with the choices made to date,” he says. “Disadvantaged populations and many essential workers have had a disproportionate share of infections and deaths. And these subpopulations make it that much harder to bring COVID-19 under control. Had a population health approach been the organizing principle across the industry, we would all have been better prepared to weather this onslaught.”

The pandemic also made clear how reliant the U.S. is on other countries, especially China, for critical active pharmaceutical ingredients, drugs such as penicillin and statins, and products such as personal protective equipment, Abrams notes. “While no industry could have accommodated the explosion in demand for things such as PPE driven by COVID-19 without shortages, the fact that our supply chains extended across continents and were hostage to the political agendas of other countries was a miscalculation that imposed a price on all of us,” Abrams says.

Finally, Abrams sees a big lesson to be learned in the hidden vulnerability of the fee-for-service payment model. “For years, the industry has resisted payment models that made prudent use of resources and actual delivery of desired outcomes a factor in reimbursement, labeling them as ‘too risky,’” he says. “But as hospitals across the country canceled the elective procedures that provide the bulk of operating margin in a fee-for-service payment structure, it became clear that this legacy approach carries its own hidden form of risk. Healthcare organizations reliant on fee-for-service reimbursement will be repairing their balance sheets for years.”

Keith Loria, a frequent contributor to Managed Healthcare Executive®, is a freelance writer in the Washington, D.C., area.

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