|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Tentative steps toward recovering from a deadly pandemic
The death toll from the novel coronavirus continued to mount this week, with more than 50,000 deaths reported in the US, and over 900,000 confirmed cases nationwide. Globally, the disease has infected more than 2.7M people and killed nearly 200,000. On Tuesday, public health officials in California announced that two people who died in Santa Clara County in early February were victims of COVID-19, making them the earliest known fatalities in the US, and altering experts’ understanding of how long the disease has been spreading in the country. New modeling from researchers at Northeastern University this week suggested that the virus may have been spreading widely in several cities by early February, but went undetected because of restrictions on testing. National attention has remained focused on the subject of testing, as states and localities scramble to secure enough testing supplies and equipment to allow them to understand community spread and identify new cases. President Trump signed an emergency $484B relief bill on Friday that will provide $25B to ramp up testing, give additional aid to businesses forced to shutter, and send hospitals $75B in additional emergency funding.
The new money for hospitals is in addition to $100B already approved by Congress for a “provider relief fund” as part of the CARES Act. Having already distributed $30B of the initial grant money to hospitals, the Department of Health and Human Services (HHS) was expected to pay out an additional $20B today, this time according to a formula based on the net patient revenue of each hospital, rather than the earlier approach based on Medicare billings. The shift is expected to address concerns among children’s hospitals, safety-net providers, and others who were disadvantaged by the Medicare-based approach. It is unclear how the newly approved $75B of additional funding will be allocated.
Meanwhile, states began to plan for the reopening of their economies, with most governors taking a measured approach in coordination with neighboring states. A handful of states moved to loosen stay-at-home restrictions in advance of meeting the Trump administration’s “gating” criteria, including Florida, which reopened some beaches for recreational use, Oklahoma, and Georgia, which controversially allowed gyms, bowling alleys, hair and nail salons, and tattoo parlors to reopen on Friday. Many states began to put in place plans to restart elective surgeries, which had been curtailed by a patchwork of differing state and local directives. The Centers for Medicare and Medicaid Services (CMS) released guidelines this week to help local officials decide when and how to restart surgeries. Whether for healthcare services or other types of economic activity, states will (and should) be guided by the ability to conduct widespread testing, robust contact tracing, and isolation of those infected with the virus. Ensuring that ability will likely make the next phase of the pandemic a protracted and frustrating “dance” of fits and starts, likely to last into the summer months and beyond.
What we can (and can’t) conclude from antibody testing
As we move into the next phase of the pandemic, one important group to track will be those who have recovered from coronavirus infection, hopefully carrying some level of immunity that would allow them to move confidently away from social distancing. A crop of new tests aims to measure antibodies to coronavirus, hoping to ascertain how many people may have this new Holy Grail of “seropositivity”. But there’s still much confusion about just how many Americans have been exposed, and what exactly those serology tests tell us. What does having antibodies detected in a blood sample mean for any individual patient? While experts agree that previous exposure to the virus, as detected by the presence of antibodies, probably confers some immunity, no one knows how much or for how long. A positive antibody test is not a reliable predictor of active infection; tests that look for viral genetic material, or RNA, are needed. (Dr. Bob Wachter, Chair of Medicine at UCSF, provides a great primer on antibody testing here.)
Antibody tests are more useful in determining how pervasively COVID-19 infection has spread through a population. Stanford researchers measured seropositivity rates in Santa Clara, CA, one of the earliest communities affected by COVID-19, and estimated that the number of actual cases could be 50 to 85 times higher than the number of confirmed cases; a similar study of individuals in Los Angeles posited the number of infections may be as much as 55 times higher than confirmed cases. Scientists were quick to point out flaws in these analyses, questioning the accuracy rates of testing, participant recruitment processes and rush to publish—all of which could have led to overestimation of “community seropositivity”. A state-led study in New York appears to be more credible, finding that 21 percent of tested New York City residents had exposure to the virus. That’s good news for the mortality rate in the city, which would fall to around one percent under those rates of infection—but given the outstanding questions about seropositivity, the New York City Department of Health released a statement cautioning against using antibody tests to diagnose infections or determine immunity. Further analysis, refinement of testing, and larger sample sizes are needed to truly understand how many Americans may already have been exposed to the virus. Regardless, even the most affected communities are still far from the 70 percent seropositivity needed to reach “herd immunity”—hitting that benchmark will require a widely-available vaccine, still months (or years) away.
Envision Healthcare considering bankruptcy filing
National physician staffing firm Envision Healthcare is considering filing for bankruptcy, according a report from Bloomberg. Sources say the company, backed by private equity (PE) firm KKR, which acquired Envision for $9.9B in June 2018, has hired restructuring advisors and is working with an investment bank. The abrupt halt to elective surgeries and reduction in emergency room volumes due to COVID-19 has caused Envision’s business to shrink by 65 to 75 percent in just two weeks at its 168 open ambulatory surgery centers (ASCs), compared to the same time period last year. The Nashville-based company, which employs over 25,000 physicians and advanced practitioners, has already been reducing pay for providers and executives, in addition to implementing temporary furloughs. Envision is also struggling with a debt load of more than $7B, resulting from its 2018 leveraged buyout, and has been unable to convince its bondholders to approve a debt swap.
It remains to be seen whether Envision will be a bellwether for how other PE-backed physician groups will weather the ongoing COVID crisis. While Envision’s composition of mainly hospital- and ASC-based providers, coupled with its huge debt load, leave it on especially shaky financial footing, many PE-backed physician groups will struggle this year to achieve anything close to the 20 percent annual rate of return often promised to investors. If high-profile PE-backed groups like Envision end up declaring bankruptcy, it will likely impact the calculus of the many independent practices which may have previously looked to PE firms for acquisition, and temper the enthusiasm of investors, who might see physician staffing and practice roll-ups as less attractive as volumes continue to fluctuate.