Chartis Top Reads – Week of February 7 - 13, 2021

Our research team breaks down this week’s top healthcare news.


Top Reads Overview

In an age of unprecedented change, staying current has never been more important. Our team at Chartis is curating news most relevant to the healthcare industry and tracking the topics that are trending on seven key issues: high reliability care, digital and advanced technology, financial sustainability, health disparities, the health ecosystem of the future, partnerships, and the provider enterprise. Each week, we break down what’s happening and why it matters.

Digital and Advanced Technology

The Buzz This Week

The race is on to get the world’s population vaccinated as quickly as possible to slow the spread of COVID-19. Efficient mass vaccination has become especially important as new strains have emerged that may create a need for boosters or render certain vaccines less effective. The faster we can prevent spread and new variants from emerging, the more illness and deaths we can prevent — but that means addressing challenges in the rollout of the vaccine.

Some of the key issues with vaccine rollout were known prior to the start of distribution, like the need for cold storage for MRNA vaccines, the complexity of tracking and scheduling multiple doses, and the barrier of vaccine hesitancy to reaching herd immunity. New challenges have also become clear and must be addressed, such as inequities in distribution and a wealth of misinformation on vaccine safety. Digital health, if used effectively, may have a large role in accelerating vaccination timelines and offering solutions to some of the vaccine rollout’s emerging challenges.

Numerous digital and technology companies are trying to tackle specific vaccine concerns. EventBrite and ZocDoc are working on scheduling platforms. Uber and Lyft are donating 70 million free or discounted rides to eligible parties to get the vaccine. Microsoft, Starbucks, and Costco are forming partnerships with local governments to help carry out the vaccinations. IBM and Salesforce are leading the effort around vaccination tracking and digital documentation. Google Cloud is working on end-to-end support of the vaccine process through newly launched Intelligent Vaccine, an AI and machine learning tool. The tool is built to model COVID cases in order to inform allocation of the vaccine and support scheduling, eligibility screening, and distribution, as well as track consumer sentiment about the vaccine.

Why It Matters

Even with the impressive effort technology companies have put into increasing the efficiency of the vaccine effort, there are still ways digital and technology can accelerate the process, including increasing production of the vaccine so that a larger quantity is available for distribution, improving the information supply chain, and vaccinating people where they are. Pfizer has shared that it continues to focus on operational efficiency and technology improvement and will soon cut vaccine production time from 110 days to 60 days, allowing for increased distribution sooner. An information supply chain would mean that health systems, health departments, pharmacies, and others responsible for vaccinations know well in advance through digital workflows when vaccine shipments are coming.

They would then extend that knowledge appropriately to vaccine recipients, so they have ample ability to sign up, schedule their shot, and ask questions and concerns in advance. Sharing accurate information also build consumer trust and can help to overcome vaccine hesitancy. While removing barriers to bring people to the vaccine is one way to improve efficiency, in some cases bringing the vaccine to people at home may be the better option. On-demand home health companies may be able to address this need.

As best practices and new unmet needs are identified, digital and technology companies will continue to evolve their offerings in hopes of a potential end to this devastating pandemic. But the impacts of those offerings may actually be felt just as significantly in a post-COVID world if we continue to apply them. The new MRNA vaccine technology could allow for other successful vaccine development. The need for proof-of-vaccine in an easily accessible manner now could be the impetus to have all medical records readily available on our phones later. The necessity to deliver care away from the hospital might allow for better infrastructure so that certain individuals can continue to receive care at home and remove unnecessary barriers to access in the longer term. This burst of innovation is vital right now, but the impacts could be beneficial long after the pandemic.

Partnerships

The Buzz This Week

As COVID has forced many in-person activities to move to virtual platforms, the execution of new healthcare deals and partnerships is no exception. Some of the key impacts that are changing and/or hindering the partnership deal process have been:

  • Due diligence timelines may be extended with greater scrutiny on financial recovery. As Chartis Director Rob York noted in a recent Modern Healthcare article, “There are a lot more questions on financials and recovery projections, and executives are parsing out financial performance with and without relief funding.” Additionally, the due diligence process must be conducted virtually including examination of physical assets, which is assumed to not be the preferred modality for most.
  • Videoconferencing inhibits forming deep relationships that are often foundational to merger and acquisition (M&A) activity and can also hinder the negotiating process. Body language and facial expressions are also harder to decipher over video, or through masks if an in-person meeting is possible.
  • Other priorities, namely managing the COVID crisis and now vaccine rollout, are competing for health system leader’s attention. York shared, “The case for a partnership had to be really strong, especially with the bandwidth and operational challenges. They had to focus on partnerships that had the most strategic benefits.”

Why It Matters

The challenges of 2020 resulted in less health system to health system partnership activity compared to prior years. In Q4 we started to see an increase in M&A. Given the negative financial and strategic impact of the pandemic on many health systems, we anticipate a return to partnership activity as a key focus of health system repositioning and recovery in 2021. A new survey of CFOs found only 27 percent of organizations have more than 60 days cash on hand. With weakened balance sheets at many organizations, there is limited ability to invest in recovery and new growth opportunities and requirements for health systems, making finding a potential partner an attractive option. For health systems that were able to maintain a strong balance sheet over the past year, it is an ideal time to re-evaluate existing partnership portfolios and identify opportunities to expand geographically, programmatically, or into new businesses and revenue streams across the continuum (i.e., post-acute services).

As health systems adjust to the new operating realities of 2021 and continue to turn their attention from crisis and vaccine management to longer-term strategy, we expect to see a resurgence of partnership and M&A activity. In some markets, there may be continued consolidation of hospitals and health systems, but in markets that are already approaching the limits of health system consolidation, partnership will continue through different models with non-hospital players, like digital health firms or other companies within the healthcare ecosystem.

The strategic rationale for partnership was already shifting beyond just building health system geographic and financial scale pre-COVID and will continue to do so in the current environment. York noted, “Health systems are seeking to build differentiated capabilities in areas such as virtual care, population health and cross-continuum care management. Partnership can be a potential means to help organizations on the path to recovery from the impacts of the pandemic, realize specific strategic goals/objectives and advance needed capabilities more rapidly, with lower upfront capital and resource outlays.”


Contributors

Roger A. Ray. MD
Chief Physician Executive
[email protected]

Alexandra Schumm
Principal, Vice President of Research
[email protected]

Abigail Arnold
Senior Research Manager
[email protected]


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Past Top Reads

FEBRUARY 2021
Week 1

JANUARY 2021
Week 4
Week 3
Week 2
Week 1

DECEMBER 2020
Week 2
Week 1

NOVEMBER 2020
Week 3
Week 2
Week 1

OCTOBER 2020
Week 5
Week 4
Week 3
Week 2
Week 1

SEPTEMBER 2020
Week 4
Week 3
Week 2
Week 1

AUGUST 2020
Week 4

Chartis Top Reads - Week of February 7 -13, 2021 | The Chartis Group