|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Beginning the long, winding journey back from coronavirus
It was another brutal week in the coronavirus pandemic, with more than 2.1M cases and nearly 150,000 deaths worldwide. The US continued to be the hardest-hit country, reaching a daily record 4,591 deaths from COVID-19 on Thursday. The national death toll is now more than 35,000, though there are signs that the number of new cases in the US has begun to plateau, raising hopes that the worst days may be drawing to a close. Meanwhile, with strict stay-at-home measures continuing in most places across the country, the economic toll of the virus mounted. New unemployment claims rose by another 5.2M, bringing the estimated number of American jobs claimed by the virus to 22M, eliminating a decade’s worth of job growth, and raising the unemployment rate to an estimated 17 percent.
As the growth in new cases flattened, attention turned this week to plans to “reopen” the American economy. Despite insisting early in the week that he alone would decide when and how to reopen the country, President Trump yesterday unveiled a set of non-binding, “Opening Up America Again” guidelines for state and local officials to use in judging when to loosen restrictions. The guidelines suggest a three-stage, gated approach, gradually allowing individuals and employers to return to normal activities based on criteria including disease trends, hospital capacity, and the availability of robust testing. Progressing from one stage to the next is predicated on maintaining a downward trajectory in new cases—with any signs of a resurgence indicating a need to reimpose restrictions.
Missing from the White House plan are specific details about how states, cities, and healthcare providers are to procure and pay for the many millions of tests and extensive contact tracing that will need to be available to allow businesses, public transport systems, and other essential services to resume activity. By week’s end, about 3.5M coronavirus tests had been conducted nationally, but the daily number of tests conducted has plateaued, and the test-positivity rate is still troublingly high. Public health experts continue to warn that testing must ramp up significantly before any steps toward reopening can be considered, a difficult challenge given widespread reports of shortages of testing supplies and trained lab technicians. To bolster testing capacity, the Centers for Medicare and Medicaid Services (CMS) this week nearly doubled the amount it will pay laboratories to analyze tests using high-throughput equipment.
Three coalitions of states—in the Northeast, Midwest, and West Coast—were formed this week to coordinate regional efforts to reopen the economy. Among the issues they’ll need to address: interstate travel restrictions, coordinated purchasing of critical supplies, investments in contact tracing capabilities, and ongoing surveillance of the virus’ spread. With federal agencies taking a back seat to states (“You are going to call your own shots,” the President told governors on a call this week), it became clear that the road back from the coronavirus pandemic will be circuitous, with a patchwork of different timelines and approaches in different locations based on local conditions and resources. In the words of William Gibson, “The future is here—it’s just not very evenly distributed.”
Not jumping to conclusions on coronavirus treatment
Early reports of hastened recoveries among patients taking the antiviral drug remdesivir sent manufacturer Gilead Sciences’ stock soaring over 8 percent this morning, and contributing to an overall uptick in the market. The gains came after a scoop by healthcare news site STAT, which obtained a copy of an internal webinar from University of Chicago Medicine, where an infectious disease specialist discussed positive results from their early experience with remdesivir. The system recruited 125 patients into Gilead’s Phase 3 clinical trials for the drug; 113 patients had severe disease. The presenting physician reported rapid reductions in fever and improvements in respiratory symptoms, noting that just two patients had died, and most of the participating patients had already been discharged—on average after just six days, suggesting a long course of drug treatment may not be necessary.
The STAT leak comes on the heels of a NEJM article late last week, which reported clinical improvement of over two-thirds in COVID-19 patients who received remdesivir. Critics were quick to point out numerous flaws in the study, including lack of a control group, cherry-picking of patients, and the deep involvement of the manufacturer in study design, many of which also apply to the University of Chicago report. In the thick of the pandemic, doctors and patients’ families are understandably motivated to get very sick patients access to any treatment that may help—but the resulting frenzy following the publication of early results may make it even harder to get good data to understand what works, and what doesn’t. In the words of one expert, “Fast trials are generally not very interpretable, interpretable trials are generally not fast”. In the search for a “COVID-19 cure”, it’s highly unlikely that any single drug will provide a cure for the viral illness, and the only way we’ll know if a treatment is truly working is to wait for the results of randomized, controlled trials—despite how frustrating it is to muster the patience to do so.
A landmark post-COVID physician group acquisition in California
Blue Shield of California announced last Friday that its healthcare services division, Altais, is acquiring Brown & Toland Physicians, a multispecialty network of 2,700 physicians serving 350,000 patients in the greater San Francisco Bay Area. Brown & Toland, formed in 1993, is a clinically-integrated network of independent physicians that has received much attention nationally for its risk-based contracting as both a Medicare Pioneer Accountable Care Organization, as well for its landmark contract to manage state workers and retirees in the California Public Employees’ Retirement System (CalPERS). While few details of the deal have been released, Altais says it will provide Brown & Toland with both capital for growth, and a technology platform that includes practice management, analytics tools, telehealth and electronic health record assistance. Brown & Toland’s CEO, Kelly Robinson, said the partnership would enable the group to expand geographically.
While Blue Shield’s purchase of Brown & Toland is the first noteworthy payer acquisition of physician practices we’ve seen in the post-COVID era, it’s likely just the first of many to follow in coming months. As we reported last week, the majority of physician groups—especially smaller independent practices—are suffering significant financial strain, which will likely make groups of all sizes more open to partnership options. Recent reports suggest that payers in particular may be weathering the economic shocks of the crisis relatively well. This week UnitedHealth Group (UHG) announced it exceeded Q1 earnings targets, and would maintain its pre-COVID earnings guidance for the year, citing savings from cancelled routine care and elective procedures. Should payers continue to fare well, it’s likely that UHG and other health plans could enjoy an advantage in deploying the capital necessary to roll up distressed physician practices.