|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Marking a somber milestone amid a mounting catastrophe
As the nation marks the solemn 19th anniversary of the attacks of 9/11, it does so at the end of the 23rd consecutive week in which more Americans lost their lives to COVID-19 than died in those tragic events. While 7-day rolling averages of daily new case counts and deaths have subsided from their peaks in July and August, the return of millions of children and young adults to school and college has already resulted in tens of thousands of new cases, and led to the deaths of several schoolteachers. The University of Washington’s Institute for Health Metrics and Evaluation (IHME) has now updated its prediction for the toll COVID will take on the country; their model projects more than 410,000 Americans will have been killed by the virus by the end of this year. With the country seeing pandemic-era record travel numbers over the Labor Day weekend, and seasonal influenza looming, the unofficial start of fall may also be the beginning of a new and dangerous phase of the coronavirus pandemic.
In addition to social distancing, universal masking, and widespread testing, our best hope lies in the early discovery of safe and effective vaccines from among the dozens now being developed. On that score, and in the face of growing concerns about the politicization of the Food and Drug Administration (FDA), it was reassuring this week that nine leading pharmaceutical and biotechnology companies involved in vaccine development jointly issued a pledge to put safety and efficacy before politics and profit. Paradoxically, it was even more reassuring that AstraZeneca, a drug maker in the late stages of testing a vaccine it developed alongside scientists at Oxford University, temporarily halted its trial this week after one study participant suffered serious complications. The company will now investigate the adverse event (in which a vaccine recipient developed inflammation of the spinal cord, which can be triggered by infection), and determine whether the study can go forward or must be abandoned. There are eight other vaccine candidates in Phase III trials, at least 39 in clinical trials, and 93 others under active investigation. The AstraZeneca situation is a useful reminder that developing a safe and effective vaccine will happen on a scientific timeline, not according to the political calendar. Faced with the prospect of losing 75 times as many people to COVID-19 between now and the end of the year as we did during the 9/11 terrorist attacks, we must continue to trust in the work of scientists and researchers, who will be the ultimate heroes of our pandemic era.
Spending millions on the Seema Verma Experience
This week Politico broke the news of a scathing Congressional investigation into the lavish spending of Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma, centered around boosting her own “brand image” and position among inside-the-beltway Washington power brokers. According to the report, Verma sidestepped the use of CMS’ internal public relations team, and instead engaged a handpicked group of consultants, who charged the government over $6M in less than two years for their work in polishing her public profile and personal brand, arranging meetings with media, and traveling with her to events around the country. The spending line items included tens of thousands of dollars focused on “getting Seema on lists”, including Politico’s “50 Most Powerful People in DC” and Washingtonian’s “Most Powerful Women in Washington”. Consultants were paid to arrange op-eds and interviews for Ms. Verma, with outlets such as AARP, Christian Broadcasting Network, and Fox News, and $450 was spent on a makeup artist to ensure Ms. Verma was perfectly camera-ready for a two-minute video shoot. The outside advisers even charged nearly $3,000 to arrange a private “Girls’ Night” event held last November at the home of a USA Today bureau chief, to network Verma with other DC insiders.
This isn’t the first time that Verma’s spending has come under scrutiny. In July the Office of the Inspector General found that Verma’s publicity spending violated federal contracting rules, and she was widely criticized for filing a $47,000 expense request for personal items stolen on an official trip, including a $325 jar of moisturizer and a $5,900 Ivanka Trump-brand necklace. Public relations expenses to educate the public and promote official initiatives are standard fare, but Verma’s lavish spending, often focused on boosting her personal image, shows a stunning lack of judgement, if not an overt misuse of taxpayer dollars. We’d rather see those dollars put to more worthwhile uses, like educating people on how to best shop for insurance, or how to access testing and other needed care services during the largest healthcare crisis of our lifetimes.
Mednax sells off its radiology division
National physician staffing firm Mednax announced the sale of its radiology practice—which includes teleradiology company Virtual Radiologic, known as vRad—to venture-backed Radiology Partners for $885M. Publicly-traded Mednax has been hit hard by both contracting disputes with UnitedHealthcare, as well as pandemic-related volume declines. Both its anesthesiology and radiology businesses suffered big losses with the halt of elective procedures in the spring, and saw volumes decline between 50-70 percent compared to the prior year. The company began divesting in May with the sale of its anesthesiology division to investor-backed North American Partners in Anesthesia. Mednax leaders say these decisions to sell were made independent of the pandemic, and that they have been planning to return to the company’s roots of focusing exclusively on obstetrics and pediatric subspecialty care, including changing its name back to Pediatrix. Acquiring firm Radiology Partners is the largest radiology practice in the country, working with 1,300 hospitals and healthcare facilities. With this acquisition, it will have 2,400 radiologists practicing in all 50 states and the District of Columbia. Hospital-based physician staffing firms have been especially hard hit by COVID-induced volume declines. This has created a softening in valuations and opened the door for investment firms to accelerate practice purchases. We expect the pace of deals to quicken as independent practices experience continued financial strain—with large national groups leading the way, taking advantage of lower practice prices to build large-scale specialty enterprises.