Chartis Top Reads – Week of September 27 - October 3, 2020

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: 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.

Financial Sustainability

The Buzz This Week

Hospitals and health systems are suffering substantial financial losses from the pandemic. Part of those losses are on the revenue side, due to dramatic declines in elective procedures that are yet to fully return. As of July, non-COVID-19 admissions remained approximately 16 percent lower than pre-pandemic volumes. Hospital executives expect that even as some elective volumes come back, a shifting payor mix toward self-pay and Medicaid from consumers losing employer-sponsored insurance will cause ongoing revenue declines.

Other losses occurred as a result of exactly what made hospitals financially successful before the pandemic — years of relentless cost and supply chain management. Prior to COVID-19, hospitals and health systems were focused on trimming unnecessary staff, implementing just-in-time supply chain practices, and enforcing strict inventory management to keep costs low. This approach gave them little room to flex, should a sharp change in demand occur. When the pandemic arrived, surges in COVID-19 patients combined with supply production and delivery shortages left hospitals and health systems dangerously underprepared — short of the necessary critical care staff; other support staff; personal protective equipment (PPE); intensive care unit medication; and other supplies and resources required to treat patients, protect staff, and help manage the pandemic. With limited supply and skyrocketing demand came a sharp increase in costs — critical care nursing and PPE were significantly more expensive than in pre-pandemic times, quickly evaporating any margins and causing many hospitals to experience negative margins.

Why It Matters

The United States continues to struggle to control COVID-19, with 32 states seeing an uptick in cases this week. In order to weather the financial storm in the short-term, hospitals will need to understand how to operate in a world where they can successfully treat both COVID-19 and non-COVID-19 patients in a safe manner for both patients and staff. Before elective procedures can return to pre-pandemic volumes, consumers will need to feel safe returning to traditional care settings, which will require commitment and communication from hospitals and health systems regarding safety practices. Even with growth in elective procedures, sustained lower revenues from a changing payor mix will force hospitals to find other sources of cost savings. A recent survey of more than 150 hospital executives indicated many intend to decrease revenue cycle costs and look to vendor partnerships, outsourcing, and process automation as areas to help reduce spend. In the longer term, more detailed strategies around supply chain management and staffing will be necessary to prevent another financial disaster for the healthcare system. It also begs the question: If the original model of financial success put hospitals in a precarious position and ultimately led to the financial devastation of so many, is it a model that needs to change?

Health Ecosystem of the Future

The Buzz This Week

Prior to the COVID-19 pandemic, many health professionals were experiencing burnout. They were continually being asked to do more with less — see more patients, complete more administrative tasks, and incorporate more technology with fewer hours devoted to patient care and life outside of work. Since the pandemic, some providers, particularly those in hospital-based settings, have seen worsening fatigue due to caring for more complex and critically ill patients, financial strain, and unmanageable patient volumes during surges. Nurses have called for lower mandated nurse-to-patient ratios, particularly in critical and intensive care units. However, meeting those ratios would mean a significant increase to wage expenses at a time when health systems are already experiencing historical financial losses. While many providers are facing worsening levels of burnout as a result of the pandemic, interestingly some physicians feel elements of burnout have been alleviated during this period. Several providers have noted they now have fewer mandatory bureaucratic tasks and requirements, often the chief reason cited for burnout, allowing them to focus more fully on practicing medicine.

Why It Matters

The healthcare workforce post-pandemic is likely to face more significant variability in tasks, workload, and physical work location than prior to the pandemic. An overburdened caregiver in any setting is unable to deliver the best outcomes. Solutions for burnout must be empathetic and multi-faceted to address the increased burden COVID-19 has placed on caregivers in the critical care setting while keeping the lightened bureaucratic workload for other providers.

In the hospital setting, predictive analytics may help to determine when increased staffing is needed, specifically during the impending flu season, allowing health systems to bring in necessary additional staff in a more cost-effective manner, preventing rapid burnout during surges. Cross-training in critical care nursing and physician fellowships can allow for a more adaptable workforce to scale up quickly in times of increased critical care need.

Aspects of the pandemic that have allowed providers to spend more time practicing medicine must remain in place. While technology and reporting requirements will not go away post-pandemic, nor should they, we should carefully consider which tasks truly improve outcomes and which simply overburden providers. Administrative tasks deemed necessary should be fulfilled in a way that maximizes the ability of staff to work to their highest credentialing. In all settings, healthcare leaders will need to listen and nimbly adjust to create a physically and mentally safe space for providers to deliver excellent care.

Provider Enterprise

The Buzz This Week

The COVID-19 pandemic has had a catastrophic effect on the state of primary care in the United States. For physicians, particularly those who are independent or in a small group, halting visits had a financially devastating impact, with an estimated $15 billion in lost revenue forecasted in June, raised to $18 billion if a second surge occurs, as reported by Health Affairs. Rebecca Etz, co-director of the Larry A. Green Center at Virginia Commonwealth University, described a second surge as an “extinction-level event,” one that would require practices to evolve or shutter. Practices that could afford to invest in digital platforms and new protocols introduced virtual care, which may remain an option even as in-person visits return. However, primary care across the United States has not yet returned to pre-pandemic levels. In its 20th survey week (September 4-8, 2020), the Primary Care Collaborative found that 81 percent of primary care clinicians “disagree emphatically with the notion that primary care has rebounded,” and one-third reported that fee-for-service visit volume is still down by 30-50 percent compared to pre-pandemic levels. At the same time, about one-half reported mental exhaustion due to working more hours in under-staffed conditions, and more than one-quarter reported that previous pandemic financial support has run out or will in the near future.

Losing primary care practices across the United States will exacerbate an existing undersupply in many geographies and a projected shortage nationwide. A commonly used target ratio of population-to-primary care physicians is 1,500:1, or about 66 primary care physicians for a population of 100,000, according to studies in Health Affairs and as reported in the Annals of Family Medicine. In the U.S., the rate currently varies by state from 48 (in Mississippi) to 123 (in the District of Columbia) per 100,000, with 16 states falling below the target. The total shortage of primary care physicians in 2033 is forecasted to range from 21,000 to 55,000 — much higher than the shortages predicted for medical specialties and surgical specialties (9,000-18,000 and 17,000-29,000, respectively), according to the Robert Graham Center.

Why it Matters

We cannot afford to lose more primary care providers and practices. Primary care is the gateway for patients to access other medical and surgical specialties, as well as mental and behavioral health services, for which demand has risen dramatically during this pandemic (see Chartis Top Reads, Week of September 6-12). A reduction in primary care access will cause the overall health of our population to suffer. The pandemic has re-ignited discussions around how to incentivize new physicians to select primary care as their specialty, recruit more physicians to practice in underserved rural areas, further leverage advanced practice professionals to relieve pressure on physicians, and increase access and optimize efficiency through newer delivery modalities, such as virtual care.

We should also consider alternative payment models. Relying on a fee-for-service model, in which the number of office visits directly impacts a practice’s revenue, caused severe financial damage to practices during the pandemic. It also incentivizes practices to see sick patients more often, rather than keep them healthy and out of the physician’s office.

The primary care crisis has caused some to advocate more strongly for other models of payment, including a “prospective payment model” (also known as capitation), which would smooth payments to primary care practices and prevent irreparable damage from a crisis like the pandemic. In such a model, physicians are paid a fixed amount per attributed patient per time period (typically monthly or annually), and the amount is tied to the practice’s panel of patients and their health status. If the practice successfully manages the health and healthcare utilization of their attributed patients, they can make a positive margin; poor management could result in financial losses, and thus physicians are incentivized to keep the population they serve as healthy and well-managed as possible. These models don’t come without complications and risks, though the possible downsides can be mitigated through careful design. For example, to discourage physicians from promoting under-utilization of services to boost margins, quality and outcomes targets or thresholds would be incorporated.

Regardless of the payment model, we need to protect, support and advance primary care in our country or risk dire consequences. In the context of COVID-19, primary care has been suggested as one of three cornerstones of a “New ‘PPE’ for a Thriving Community”: requirements for effective response to and recovery from a pandemic, public health, and health equity, as reported by Heath Affairs. We need to invest in these essential areas to help get our nation through this current pandemic, improve our population’s health, and be better prepared for future health crises.

Additional Sources

Health Affairs: Primary Care Practice Finances in the United States Amid the COVID-19 Pandemic

Robert Graham Center: The State of Primary Care in the United States

AAMC: The Complexities of Physician Supply and Demand: Projections from 2018 to 2033

Annals of Family Medicine: Estimating a Reasonable Patient Panel Size for Primary Care Physicians with Team-Based Task Delegation

Well Being Trust: Primary Care: A Gateway to Mental Health Care


Contributors

Roger A. Ray. MD
Physician Consulting Director
[email protected]

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

Abigail Arnold
Research Manager
[email protected]


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Past Top Reads

SEPTEMBER 2020
Week 4

Week 3
Week 2
Week 1

AUGUST 2020
Week 4

Chartis Top Reads - Week of September 27- October… - The Chartis Group