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The Good, the Bad and the Ugly

by John Moore | May 06, 2020

As sheltering in place wears on, I keep all in perspective knowing others have it far worse than I. Some have lost loved ones, others their jobs and others are still facing down the COVID-19 virus on a daily basis delivering care and comfort to those that have been infected.

Personally, I’ve been having a bad case of writer’s block. Part of the problem may simply be being overwhelmed with all the COVID-19 information out there. It is incessant. What could I ever add to this? Part of it may be my own high risk to this disease and a certain fear to write would be to attract it. Regardless, I have been remiss.

That is not to say I have not been following this crisis closely. Actually, quite the opposite. COVID-19 has shed light on so many issues regarding the U.S. healthcare system that it can be difficult to unravel. The pandemic has exposed or brought forth both the good, the bad and the ugly of our current healthcare system.

The ugly begins with health disparities, a poor public health infrastructure, and a fragile supply chain that has put many healthcare workers needlessly at risk. The bad are the lack of a national strategic framework for pandemic response, a fragmented, highly localized healthcare infrastructure that is incapable of sharing information quickly and a transaction-based, reimbursement model for providers that is putting extreme financial strain on this sector. On the side of good, we have seen providers the world over come together, most often through the now ubiquitous Zoom and #medtwitter to share their experiences, their learnings to advance COVID-19 clinical care pathways and research.

While it is difficult to predict exactly how the healthcare sector will be altered in the future as we slowly open up the economy, there are some pretty clear signals.

Virtual-care is here to stay. While countless pundits tout the final coming of telehealth, I see it differently. Telehealth is yesterday’s news. Sure, it has seen eye-popping growth as a result of social distancing (one large EHR vendor saw telehealth visits go from 20k in Feb’20 to a whooping 2.4M in Apr’20) but telehealth is one piece of a larger, future play. That play, which stars biometric devices, home diagnostics, AI, and engagement will move care delivery beyond the current migration of acute to ambulatory – taking care directly into the home.

Granted, virtual-care has been in the background for a number of years – we even highlighted it in our 2018 Telehealth Report (now perpetually free). But thanks to COVID-19 driving the need for physical distancing and consumers’ growing comfort and confidence with such models of care, virtual-care will become a significant piece of the care delivery chain in coming years.

However, what we have yet to see arrive on the market is a robust platform to support virtual-care and all the components that comprise it. There are a number of best-of-breed vendors that are providing aspects of it, AmWell, MDlive, Teledoc for telehealth; Livongo, Omada, ResMed for biometrics+care management; Validic for biometrics; and Conversa, Babylon, ada Health on the AI-enabled consumer self-triage front. Of course, EHR vendors are dappling in all of the above, but no one vendor today has it all and providers are left to stitch such together for their specific needs.

I see a real opportunity for the platform company that can figure this one out. Even heard recently that a P.E. firm’s latest raise will target just this arena. Stay tuned, the growth of virtual-care adoption bears close watching.

Service transaction models will become less prominent. The traditional fee for service (FFS) model is taking its toll across the industry. As office visits and elective procedures get cancelled and leery consumers avoid the ED for fear of contracting COVID-19, the fees associated with such have simply disappeared. There has been plenty of headlines on the dire financial straits many providers are currently in with predictions of one in four closing or changing ownership.

While billions of dollars in stimulus funds have recently flowed to providers to try and keep them whole through the crisis, this does not address the inherent problem: The FFS reimbursement model simply does not work for providers in addressing a pandemic – though payers are now sitting on piles of cash as they did not have to pay for such services, being paid by employers on a member/month model.

A day of reckoning will come as the dust begins to settle as to how to reconcile this imbalance. I foresee a likely payment model that has some degree of capitation insuring providers get paid a base rate for the population they manage. Who knows, maybe even specialists, who have preferred RVU payments, will also come around to this concept, which by and large they have abhorred in the past.

Such a change in reimbursement is not new – it is what the industry has been grudgingly adopting over the last decade or so via value-based care (VBC) reimbursement models. It continues to be a struggle for most providers with one foot on the FFS dock and another in the VBC boat. An outcome of COVID-19 will be a renewed interest in VBC and the technology (analytics, engagement, care management) to support it.  

As a side note, many a health IT vendor has also built their revenue model based on FFS transaction flow, especially those in the revenue cycle management space. Would not surprise me at all if they are now seriously rethinking that pricing model.

Just-in-time supply chain model gets reboot, or booted out. The supply chain mantra of lean, just-in-time delivery works well when demand is fairly consistent (e.g., an assembly line) but is fragile and does not handle disruptions well. COVID-19 brought that reality into stark relief as hospital systems across the country struggled to get the supplies needed to keep healthcare workers safe and treat patients.

PPE, Where art thou?

Looking ahead, provider organizations will likely work with their state public health officials to define an appropriate buffer of critical supplies such as PPE to serve their community in advent of a future healthcare crisis. New York has already mandated that providers have a 90d supply of PPE. The CDC may provide guidance on what they buffer may look like, say based on population, but beyond that, the role of the Feds will lessen significantly.

Public option gets serious. As the ranks of the unemployed swell (already 25% here in MA) and employers ween former employees off their health plans, there will be crisis in insurance coverage as the ranks of uninsured blossoms. While one may be able to buy health insurance through a public exchange such as healthcare.gov, in many parts of the country, only one payer provides coverage in a given region and costs are often prohibitive.

Do not be surprised if the “public option” debate rapidly rises to the surface, especially in this election year, and even more surprisingly sees bi-partisan support.

Architects and interior designers get busy, construction crews, far less so. Doctor’s offices, waiting rooms, exam rooms, ER departments are not designed for physical distancing. This will have to change. Provider organizations will look to architects and interior designers to redesign their interior spaces creating places where consumers/patients feel safe.

Light construction will be needed to bring to reality an architectural rendering but the need for big construction projects will diminish across the healthcare landscape. This will be driven by two factors. First, the current financial stress all providers are currently feeling will curtail capital projects. Second, the massive move to virtual-care will decrease physical space requirements leading providers to rethink their physical plant expansion plans.

Hospital system staffing models come under intense scrutiny. The financial pressures that COVID-19 is putting on healthcare providers of all sizes is unprecedented. Healthcare providers of all sizes have taken measures to bring costs in alignment with revenue and despite furloughs and layoffs, most are still losing money.

Provider organizations have just recently begun planning how they will phase in elective surgeries and the like to generate revenue. However, it is unlikely that this recovery will happen quickly and a return to pre-COVID levels of service and subsequently revenue are at best a year away. This will lead to a very slow return to work for many that have been furloughed and the very real prospect that those that have been laid-off will have no job to return to. Those that are not directly involved in care delivery, e.g., administrative staff, will suffer the most.

Stepping into the place of administrative staff will be investments in robotic process automation and AI. Significant investments by vendors into such tools have taken place in recent years. Providers will seek these solutions out to tackle many administrative tasks at a lower cost.

Thoughts on Healthcare IT
If not for the pandemic, I would likely be talking about the recently promulgated interoperability rules and their future impact on the healthcare sector. Then walked-in COVID-19.

The pandemic is having a profound impact on the healthcare sector and the IT sector will not be spared. Organizations of all sizes will postpone or cancel countless projects, minimize use of outside consultants, sunset non-critical applications with small user bases and countless other strategies as they seek to trim IT spend. Major capital IT projects will not move forward until the financial crisis subsides. McKinsey wrote a very good article on how CIOs need to respond to this new world order.

Looking ahead, some of the key changes I foresee in the healthcare IT space are:

  • Accelerated move to flexible, cloud services.
  • Less onsite customization of solutions to minimize support costs.
  • Boost in spending on digital engagement solutions, including virtual-care.
  • Deeper integration of virtual-care into clinical workflow.
  • More aggressive use of analytics with tighter links to SDoH datasets for risk profiling.
  • More employees working from home => distributed cybersecurity.

The Wrap
Prior to the pandemic outbreak, it was pretty clear to most learned observers of this industry that it had some very serious structural flaws. Efforts to drive down costs were, at best, modestly successful. Health disparities remain, despite years of valiant efforts by dedicated providers and NGOs to ameliorate such. True health system-wide interoperability remains but a dream, which the new interoperability rules only go so far in addressing. The list of structural flaws is long and endless.

Yet despite this, I do believe we have a very unique opportunity. At no time in modern history have we been given the opportunity to truly rethink how we want healthcare to look, to be delivered to serve the populace writ-large. This may be the industry’s, the country’s moment to hit the reset button on what we, the citizens of this country, truly want from this industry sector.

It is time to take advantage of that opportunity for to let it go to waste may ultimately be more remorseful, long-term, than the lives we have lost to date from COVID-19.

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