 |
|
Perspectives on a selected key
topic
April / May 2020 |
 hat
changes in the business of healthcare are taking place during
this pandemic that will most likely continue when the pandemic
is behind us?”
|
Lindsay Resnick
EVP, Wunderman Thompson Health |
|
COVID-19 has ended business as usual
in the healthcare sector after delivering the ultimate
market disruption. Payers and providers alike face new
risks, new challenges and new opportunities. Anticipating
the impact COVID-19 on customers, stakeholders and core
business assumptions is the first step toward enabling an
enterprise to move into the future.
Here are 10
lasting changes to the ‘business of healthcare’ to
anticipate:
1. Virtual care and telehealth advanced
years in a few weeks – education, acceptance and uptake –
from scalability to care management to customer experience,
plan for it.
2. Surge in uninsured and COVID-19 as a
pre-existing condition will revitalize the push for
healthcare reform, and keep healthcare a central 2020
election issue (#VOTE).
3. Changes in consumer
spending combined with healthcare’s growing ‘out-of-pocket
culture’ will exacerbate delays in care: treatments,
prescriptions, elective procedures.
4. New, more
prominent roles for nurse practitioners and physician
assistants throughout the care continuum are here to stay.
5. Economic downturn and unemployment will be big
influencers in insurance product selection: Medicare
Advantage/Medigap, HMOPPO, Individual/Group.
6. Sites
of care will continue to move away from hospitals and
physician offices to an array of retail clinic options and
at-home care alternatives.
7. Shortfalls and
disparities at all levels of the pandemic response –
federal, state and local – result in renewed efforts to
revitalize the nation’s public health infrastructure.
8. Short-Term Medical insurance (aka junk insurance)
will see backlash as coronavirus treatments are denied and
go-forward underwriting denies COVID-19 applicants.
9. Cross-generational psychological and emotional impacts of
COVID-19 life disruptions will bolster behavioral health
outreach, acceptance and service offerings.
10.
Customer and patient journeys will be reengineered to adjust
to both the COVID-19 recovery period as well as a longer
term ‘new normal’ for the healthcare sector.
In
tumultuous, transformative times healthcare business leaders
must adopt new thinking, new strategies and new
structures—all of them human centric, data driven, and
strategically balanced between addressing customer needs and
supporting core business objectives.
|
Ewa Kisilewicz. MBA
Principal, BDC Advisors |
|
It appears this pandemic has caused us to hit “fast forward”
on several trends that were already in motion: the shift of
care to new settings, the breakdown of regulatory barriers,
and the entrance of new provider competitors. Now that “fast
forward” has been hit, it will be difficult (and
unappealing) to “rewind” and preserve the healthcare model
we previously knew.
Headlines highlighting the rapid
acceleration of virtual care are abundant – we are in a new
reality in which in-person health care interactions have
diminished appeal to consumers and, given changing
communication patterns resulting from social distancing,
virtual interactions are the norm. Evidence suggests that a
significant portion of care can be provided at a distance:
for example, in 2018, more than half of Kaiser Permanente’s
100 million patient visits were performed virtually.1 Once
consumers experience the convenience of telehealth or an
AI-powered interface, they are likely to continue accessing
these capabilities. The same is true for remote monitoring
solutions. Providers planning how to strategically reopen
their clinical programs will need to adjust their business
models to accommodate these trends.
That said, not
all care can be or should be provided virtually. While the
move of care delivery away from hospital settings has
been going on for several years, COVID-19 has deepened
consumer desire to stay away from hospitals.
Consumer-centric providers will respond by adding
non-hospital ambulatory capacity. Care models will need to
be further adjusted to account for a more virtual and more
ambulatory way of delivering care – and consumers will be
segmented based on their desire to access these different
channels.
Since mid-March, CMS and states released a
set of waivers to address anticipated staff shortages caused
by COVID-19. Some waivers are notable in that they have been
a priority for advocacy groups: for example, American
Telemedicine Association has been lobbying to remove
state-by-state medical licensure requirements; at the time
of the writing of this response, 43 states have issued
waivers for in-state licensure requirements for telehealth.2
Several waivers also improve patient access: for example,
expanded scope of practice for non-physician providers (e.g.
NPs permitted to perform select medical exams for patients
in SNFs), expanded use of remote solutions by providers
(e.g. physicians able to serve CAHs remotely), and broader
Medicare patient access to telehealth services.3
While
waivers will expire post-COVID, it will be difficult to go
back to the “pre-COVID norm” on the changes that improve
patient access and expand scope of practice in medically
underserved areas – in so far as they do not create patient
safety concerns. Once these regulatory barriers are knocked
down, there will be little justification to build them back
up again.
Physician practice acquisition by
non-traditional competitors will also be “fast forwarded”
and cause health systems to rethink physician engagement. An
early-April MGMA survey found that 97% of medical practices
“have experienced negative financial impact directly or
indirectly related to COVID-19.”4 Since private practices
distribute all or most of their cash at the end of the year,
many are not structured to sustain prolonged revenue
reductions. Medical groups will need help – and
non-traditional companies, such as private equity (e.g.
KKR), venture capital (e.g. Khosla Ventures) and health
plans (e.g. Optum), that have been acquiring medical groups
at increasing rates, will act. Given that these investors
are not as financially impacted by COVID-19, they may be
able to “out-bid” health systems. Adding to this evolving
competitive landscape are, once again, virtual providers
that will now compete directly with established groups for
patients and may even hold their own patient panels. That
said, there are strategic actions health systems can take,
such as offering financial support to physicians and
re-engaging with independents.
Hitting “fast-forward”
will have multi-layered impacts on health systems,
especially as they look to re-open and recover – and managed
care departments will also need to adapt. Providers will
need to work with payers to ensure they are reimbursed
appropriately for care provided in new settings and
delivered via new models. Deploying a broader pricing
strategy that is sensitive to the needs of consumers, but
also considers the competitive landscape, anticipated
service line recovery, and site of care, will be needed to
address exposures. Finally, to avoid a “rewind” on the
decade-long shift to value, value-based contract terms will
need to be, among other things, revised to adjust
target-setting methodology, reductions in preventive care,
and reporting delays. The need for change is evidenced by
the recent reporting that 56% of risk-based MSSP ACOs may
leave the program to avoid losses.5 Capitated and advance
payment models, which add predictability to revenue, may
become more prevalent.
1.
https://www.modernhealthcare.com/article/20170421/NEWS/170429950/kaiser-permanente-chief-says-members-are-flocking-to-virtual-visits
2.
https://www.fsmb.org/siteassets/advocacy/pdf/states-waiving-licensure-requirements-for-telehealth-in-response-to-covid-19.pdf
3.
https://www.cms.gov/newsroom/fact-sheets/medicare-telemedicine-health-care-provider-fact-sheet
4.
https://www.mgma.com/getattachment/9b8be0c2-0744-41bf-864f-04007d6adbd2/2004-G09621D-COVID-Financial-Impact-One-Pager-8-5x11-MW-2.pdf.aspx?lang=en-US&ext=.pdf
5.
https://www.naacos.com/survey-shows-acos--concerns-about-the-effect-of-covid-19
|
Patrick Horine
CEO, DNV GL Healthcare, Inc. |
|
How true the quote from Deepak Chopra, “All great changes
are preceded by chaos.”
There is so much that we can
expect to result from this pandemic, one of which is change
in so many areas of healthcare. Changing, adapting,
innovating, as well as resilience.... is what we can expect
to see for the healthcare industry.
Our hospitals have
been the most impacted, uniquely caring for so many patients
in response to the pandemic, which has been quite taxing on
our clinicians. They have also been impacted by the loss of
other revenue generating business resulting in the furlough
of staff. It is an understatement to say that our healthcare
providers have made heroic efforts in all they have faced.
However, this pandemic has shown in other ways, our
weaknesses and shortcomings within healthcare in such a
prominent way.
The following is what I see will
continue as well as what will undergo more significant
changes for added accountability of healthcare
organizations.
Use of telemedicine/telehealth has
been growing as a means of providing additional access to
providers and connecting with patients in a different way.
With the expectation that we will be coming out of these
circumstances gradually, we can anticipate that the use of
this technology will grow more quickly and more widespread
including different providers. With so much use of
telehealth during this pandemic one of the outcomes was the
ability to demonstrate the effectiveness of how it can be
used. This will lead to more investment in the development
and improvement of this technology as well as more
recognition from payors and providers. It will not only be
technology that we lean on for the next pandemic, but it
will be a primary means for access to care.
Big
data, artificial intelligence, and integrated information
systems have been evolving for some time in healthcare, but
the pandemic has brought about the importance of more timely
information being available, connecting providers, tracking
& reporting capabilities and the ability to use the data and
apply artificial intelligence to it. The advancements with
AI in healthcare will be enhanced considerably as it will be
important in diagnosis, testing, treatment that will help to
remove so many of the unknown with COVID-19 and prevent
another outbreak. This will also impact the developments
with digital health for more preventive measures to be
taken.
Critical importance to hospitals as well as
the government moving forward, is the emergency
preparedness, business continuity and contingency planning
that will enable a more effective response for any future
pandemic. Whether it be equipment, supplies, and other
resources, it is quite clear there is still much we need to
improve, despite having been prepared with a plan that we
had great confidence in. We have identified so much
opportunity, there will be more necessary change that comes
from this is so many ways.
It will be essential not
only within healthcare, but also in companies, and in life,
that we have more diligent infection prevention practices in
place as well as modification of behaviors to stay healthy.
We will be more aware, more cautious and eventually better
prepared even for a potential second wave that we could see
later this year. As companies take ownership of their
responsibilities to staff and customers, we will see new and
enhanced business processes and health and safety measures
implemented in almost all industries.
With the
enormous strain on our healthcare providers, it has been
evident that even the largest of hospitals have been
challenged by such a mass influx of patients. Makeshift
hospitals, intake process with Emergency rooms, channeling
individuals to their primary physicians instead of going to
the ER and not having enough PPE to keep up with such
demand. Emergency planning and engagement by so many
individuals and organizations to do everything possible in
order to care for the large quantity of affected people.
There were many that looked for where to place the blame and
we can point to any number of things that should have led us
to prepare differently. However, one positive thing that has
come from this is the respect shown for our healthcare
providers. This has been an incredible impact on healthcare,
but the impact that our healthcare providers have shown by
rising to the challenge, has been incredible as well.
Nietzsche said “That which does not kill us makes us
stronger.” Far too many of our family, friends, loved ones
and colleagues have perished from this pandemic. We need to
ensure that we make lasting changes so that we are stronger
and never again experience the same circumstances.
|
Mark Lutes
Chairman, Epstein Becker & Green, PC |
|
The Pandemic as a Catalyst for Health Delivery Change
The Public Health Emergency (“PHE”) will leave many health
care providers (hospitals, SNFs, hospices, physician groups)
seriously weakened. The payment advances (loans which may or
may not be forgiven) and the CARES Act grants are but “drops
in the bucket” relative to the losses experienced to-date
and the losses yet to be experienced as “return to work”,
will be slow and will not necessarily equate to a “return to
public confidence.”
Those providers that are not
strongly capitalized will seek new sources of capital and
debt relief. In many cases, they will align with better
capitalized competitors or new entrants willing to
recapitalize the assets. On the whole, there is likely to be
increased consolidation in markets. Providers will reassess
the value proposition of independence and will increasingly
favor practice settings that can withstand periods of
revenue/volume disruption. They may also seek to redo
financial arrangements to be less dependent on fee for
service payments — favoring capitation arrangements or
concierge type yearly/monthly payments.
The credit
worthiness of patients/consumers has also been impacted by
the PHE. The cohort of patients with commercial coverage
will shrink lowering providers’ margins. These consumers may
find themselves in managed Medicaid or Marketplace options
affording less patient choice. Providers will need to be
organized in such a way to successfully contract with the
organizers of the networks serving these options.
Moreover, consumer confidence in their medical site choices
has also have been shaken. Consumers will rethink their
preference as to sites of care—seeking home based care of
all types. In those instances where the care cannot be
appropriately accessed in a home setting, they are likely to
prefer settings that can accommodate some degree of patient
distancing on site and can be accessed in a fashion which is
perceived to be safe. Providers will seek to restructure
care delivery to enhance infection control and patient
confidence.
The PHE is giving certain delivery
modalities a moment in the sun. Certainly telemedicine is
being deployed to allow care delivery in a range of safer
settings, as a “force extender” and to reduce rationalize
the number and manner of face to face visits. As infection
control concerns persist during the years ahead, there will
be patient and provider pressure for sustained regulator and
payor accommodation for this modality.
Similarly,
ambulatory surgery centers (ASCs) have been invited to do
more during the PHE. CMS will now permit ASCs to furnish
inpatient services under arrangement for a hospital, become
“provider based” to a hospital or choose to enroll as a
hospital themselves. During the PHE, they are not confined
to the ASC covered procedures list but may provide any
hospital inpatient or outpatient service. To what degree
will CMS ever put this “genie back in the bottle”? Now free
of the shackles of the ASC procedure list, will ASCs go on
to be new “hospital light” alternatives — bringing a broader
range of services to new geographies and building consumer
confidence in their contact light settings?
In many
ways, the health care delivery world we have known has been
lost. We must all now plan to accommodate new pandemic
induced changes in patient and health care workforce
preferences.
Likewise we need to plan for competition in a
new dispersed delivery system that has evolved to
accommodate heightened concern with respect to infection
control and for resiliency in times of variable demand for
health care services.
|
Hank Osowski
Managing Partner, Strategic Health Group LLC |
|
The depth of the turmoil and disruption that has gripped our
nation during the last few months has been unprecedented.
The near complete shutdown of most businesses, rising
unemployment and mandatory stay-at-home orders are the new,
and hopefully temporary, order. For the healthcare industry,
the pandemic has created a perfect storm of challenges and
difficulties that has exposed significant weaknesses at a
time when compassionate care was critical.
As an
industry, we have learned valuable lessons from this current
crisis and many of these learnings are already shaping our
future. Telemedicine visits are now recognized by CMS for
reimbursement and may become the catalyst for a paradigm
shift in how care is delivered. This will likely impact
staffing and real estate models. Clinicians are learning and
quickly adjusting care protocols in real time. The use of
video conferencing tools have become mainstream and will
likely influence the future of where and how we work.
What is disturbing however is how reactionary the
response has been for many sectors of the healthcare
industry. While few would have predicted the size and scope
of this pandemic, those healthcare organizations that did
create contingency plans as an integral part of their
strategic and operational planning processes were far better
positioned to respond quickly and effectively. They were
able to execute on well-conceived and practiced contingency
plans rather than trying to decide on the fly how to
appropriately respond to dramatically changing business
conditions. Those who had contingency plans in place were
able to quickly allocate limited staff and equipment
resources where they were most needed to care for critically
ill patients. This planning and preparation gave these
healthcare leaders a significant head start in responding to
the healthcare needs of their community over colleagues who
were considering these challenges, strategies and tactics
for the first time. You do not want a catastrophic event,
whether an earthquake, hurricane or pandemic, to be the
first time you are considering if your organization is
prepared to respond to a major disruption.
We trust
that those organizations that had contingency plans in place
will review, evaluate and strengthen those contingency plans
when this pandemic has subsided. For those healthcare
organizations that were not as well prepared, perhaps the
challenges and pitfalls of being reactionary rather than
thoughtful will hopefully incent them to undertake such a
planning process to be prepared for the next crisis.
The demands and pressure on the healthcare industry has been
increased exponentially on facilities, equipment, supplies
and personnel by this pandemic. Doctors, nurses, support
staff, first responders and so many others continue to do
extraordinary work and demonstrate incredible dedication in
the face of a silent enemy that is wreaking havoc with so
many of our fellow citizens. A simple, though heartfelt,
thank you does not seem to be adequate for their heroic
efforts.
|
Terri Welter, MS
Principal, ECG Management Consultants |
|
In the face of the pandemic, we have seen providers, payers,
and regulators work in partnership to rapidly shift
operational models and set aside regulatory barriers to
enable clinicians to practice at the top of their license,
deploy virtual health technology, and marshal scarce
resources. How we view and fund public health in the US, and
how health systems and our clinical workforce position
themselves for the future, may be different from the
healthcare world as we knew it just a few months ago.
Several major implications will reset C-suite and board
agendas over the next 12 months. Seven strategies may
provide a clearer path to thriving in this environment.
Financial positions are compromised, prompting market
repositioning.
Providers must stabilize their operations
and rebuild their financial position in a sustainable
manner. Some providers will seek refuge via consolidation or
partnerships. Others will seize the opportunity to pursue
strategies that seemed too aggressive just a few months ago.
Strategy One: Aggressively renegotiate health plan
contracts. Payers have not experienced the financial
hardship that hospitals have; they will need to be part of
the solution. Providers should reopen contracts and pursue
terms that address rates, care management fees, and payer
investments in public health.
Strategy Two: Reshape
service lines to bolster margins. Hospitals will need to
create financial stability. As the crisis subsides, health
system leaders will have the opportunity to consolidate
their clinical portfolio, shed low-margin services, and
reshape consumer expectations for how and where care is
delivered. Leaders should seize the moment to reshape
clinical delivery systems into more sustainable, high-value
enterprises.
Outpatient growth will accelerate.
Providers are likely to see a rebound of patient activity;
however, consumers will seek facilities that feel safer in
terms of potential for virus exposure.
Strategy
Three: Invest in building the ambulatory network.
Organizations that expand their ambulatory footprint can
address short-term consumer fears about place of service,
respond to growing consumer demand for greater convenience,
and position themselves to expand market share.
Strategy Four: Revisit capital investment plans.
Long-range
financial plans need to be updated and run against multiple
scenarios regarding future volumes and revenue streams.
Health systems should reevaluate capacity requirements,
assess opportunities for capacity optimization and/or
rationalization, and potentially divest or plan to wind down
under-performing or unnecessary assets. Some hospitals may
not survive the financial distress caused by COVID-19, and
health systems will be presented with opportunities to
evaluate acquisitions and partnerships.
Telehealth
will reshape medical group economics. Adoption is surging,
and patients and providers see value in virtual healthcare
solutions. Systems will need to make significant investments
to optimize their telehealth capabilities.
Strategy
Five: Change the economic and service relationship between
physicians and consumers. With COVID-19 prompting a surge in
digital health and intensifying consumers’ desire for
access, medical groups have an opportunity to reduce their
reliance on fee-for-service payments and diversify their
economic model. PCPs, in particular, should seek additional
financial relationships with patients, employers, and health
plans that help pay for the consumer experience.
Health plan networks will become bigger competitors for
health systems and their physician networks. Physicians and
ambulatory providers will turn to health systems for
financial support; however, many hospitals will not be in a
financial position to provide the desired stability. This
will open the door for health plans to seek greater
alignment with medical groups, ASCs, and other ambulatory
providers.
Strategy Six: Partner with independent
medical groups. Health system leaders will need to rethink
their capital deployment and look beyond the main campus.
Securing market share (think members/lives, not inpatient
discharges) will be critical. Hospital leaders will be
presented with an unprecedented opportunity to align with
medical groups and ambulatory providers that historically
have been staunchly independent.
Strategy Seven:
Restructure health system physician enterprise
organizations. While hospital margins are facing pressure,
health systems should reevaluate their physician enterprise
strategy. Everything should be on the table: provider mix,
size, and distribution; revenue streams; economic
relationships with consumers; productivity and compensation;
staffing levels and operations; organization and governance;
and even ownership structure.
|
|
|
|
|
(c) 2020, MCOL, Inc. All Rights Reserved. No redistribution allowed.
|
|
