Our research team breaks down this week’s top healthcare news.
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: clinical quality and risk, 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.
Following Pfizer’s positive COVID-19 vaccine news last week, Moderna has announced preliminary results of 94.5 percent efficacy from their trial of more than 30,000 people. While both vaccines utilize a new to market messenger RNA technology, showed no safety concerns, require two doses (three weeks apart for Pfizer, and four for Moderna), and included key subsets of the population like the elderly and people of color in their trials, Moderna’s technology has shown stability at refrigerator temperatures for 30 days, a potential game changer for distribution as it likely won’t require special freezer facilities like Pfizer’s vaccine.
Moderna and Pfizer are not the only two companies in the market with vaccines in development. There are several others, including AstraZeneca, Johnson & Johnson, and Sanofi/GSK, that use a different method of action than mRNA technology. With over 7.5 billion people in the world, one player will not be able to adequately produce and distribute vaccines for everyone by the end of 2021, so the more successful vaccine trials, the better chance of vaccinating a larger proportion of the world’s population. In fact, while it is not yet clear exactly when and how a vaccine will be distributed, there is only likely to be enough for 35 million people around the world by the end of the year. Even by 2021, Moderna and Pfizer are only expected to have enough doses for just over 1 billion people, less than 20 percent of the globe’s population.
The news of two vaccines with successful clinical trials should be celebrated, but at best projections indicate a potential vaccine may be ready for some distribution to non-frontline healthcare workers in the spring of 2021. Distributing the vaccine is a crucial question — how should the Centers for Disease Control and Prevention (CDC), and other federal and state agencies determine a fair process for who should receive the vaccine first?
Within the United States, the first tranche to be vaccinated will almost certainly be healthcare workers. With 20 million Americans qualifying as frontline healthcare workers, they will likely exhaust the entirety of the United States’ 2020 supply. After frontline healthcare workers, there is much discussion and difference of opinion on which vulnerable groups should be prioritized next. Some argue the 50 million people over 65 should be first priority because of their vulnerability to the disease. Other opinions suggest those with pre-existing conditions (e.g., cancer, diabetes, hypertension) or those who are pregnant, nearly 100 million Americans, be prioritized because of higher mortality risk. And a third opinion is that the 40-60 million essential workers (e.g., police, firefighters, delivery workers) should be the next in line because of their requirement to continue work outside the home during the pandemic.
Many have also reasonably suggested that people of color be prioritized, as those communities were hardest hit by COVID. Lawrence Gostin, a global health professor of law at Georgetown University noted, “Having a racial preference for a COVID-19 vaccine is not only ethically permissible, but I think it’s an ethical imperative. The reason is both because of historic structural racism that has resulted in grossly unequal health outcomes for all kinds of diseases, and because COVID-19 has so disproportionately impacted the lives of people of color.” However, there are concerns that a vaccine distributed on the basis of race would not hold up in court. The CDC could instead recommend that the vaccine be prioritized by communities with the highest score on the social vulnerability index — an analysis which includes poverty, unemployment, and health insurance rates in geographic assessment.
How distribution is suggested to work and how it may actually play out in practice unfortunately could differ. Each state and local area has been creating their own suggested priority distribution plan without guidance from the federal government. Distribution to the vast population of the United States is no small task and will require significant manpower and funding, particularly for harder-to-reach, susceptible populations. In practice, there is also the issue of skepticism around vaccination. Estimates are that 75 percent of Americans need to receive the vaccine to effectively end COVID in the U.S. The flu vaccine generally hovers around a 40 percent vaccination rate of the adult population. Additionally, distrust around the vaccine’s safety (due to the speed to market and how politicized the process became) may prevent some of those who are eligible to decide against receiving the vaccine. People of color, groups that have been disproportionately impacted by COVID, have expressed higher levels of uncertainty around whether they will take the vaccine, often citing historical mistreatment by the healthcare system. Vaccinating the U.S. population will require both a thoughtful, equitable prioritization of vaccination, as well as a carefully articulated plan to reach a diverse set of patients utilizing public health, government, and health system resources.
The week before the presidential election, Intermountain Health, based in Utah, and Sanford Health, headquartered in South Dakota, announced plans to merge. The combined entity would include nearly 70 hospitals across six states: Idaho, Iowa, Minnesota, North and South Dakota, and Utah. Importantly, the merger would also combine the two entities’ health insurance companies for a total of 1.1 million people. Intermountain is known for innovative coordinated care, while Sanford is one of the largest providers of rural health in the country. The two stated in their press release that, if consummated, the merger “enables our organizations to move more quickly to further implement value-based strategies and realize economies of scale. Through coordinated care, increased use of telehealth and digital health services, we will make healthcare affordable for our communities.”
This development is the latest in a string of mega-mergers announced over the past few years. In 2018, Bon Secours Health System and Cincinnati-based Mercy Health combined to form $8 billion Bon Secours Mercy Health; Dignity Health and Catholic Health Initiatives combined last year to form $29 billion CommonSpirit Health; and just this past October, Atrium Health and Wake Forest Baptist Health — including the Wake Forest School of Medicine — merged to form an $11.5 billion clinical and academic enterprise. However, not every large merger has come to fruition — Beaumont Health called off its merger with Summa Health in May, then entered talks to merge with Advocate Aurora Health, a deal that was canceled in August. Geisinger and New Jersey-based AtlantiCare decided to split about five years after they merged. A four-hospital merger on the south side of Chicago was called off in May after government funding essential to the deal fell through. The Federal Trade Commission (FTC) recently filed an opposition to a proposed merger between Le Bonheur Healthcare and two Memphis-area hospitals owned by for-profit Tenet Healthcare Corporation.
The COVID-19 pandemic put many merger talks on hold. However, it has also materially changed some markets and unveiled new opportunities as well as new needs. This is leading some hospitals and health systems to seek a partner. However, as has been seen with several unsuccessful mega-mergers, the process is highly complex and can fail for a variety of reasons, including conflicting values or goals, resulting in failure to reach deal terms amenable to both sides, as well as opposition from various stakeholders. All the more reason to take a holistic approach to exploring partnerships to avoid wasting time pursing a deal that won’t go through or entering a deal that doesn’t make sense. We outline this approach in our recent paper, “How to Build a Winning Playbook to Guide Health System Partnership Strategy.” Furthermore, any merged entity should have a clear “playbook” that lays out various paths to achieving value, taking into account various anticipated contingencies that may require a shift in path or focus.
Many hospitals and health systems are considering integrated partnerships more urgently than they have in the past — and perhaps with partners that have historically been considered unlikely.
With the economic challenges created and exacerbated by COVID-19, many comprehensive integrated delivery networks (IDNs) must rebuild their balance sheets and are actively reassessing their service line portfolio as one means for doing so.
The pandemic has brought disruptive changes to how and where patients access care. Health systems now must reconfigure their networks with a view of the considerable shifts in the demand model.