July 17, 2020

The Weekly Gist: The Fauci Footwear Edition

by Chas Roades and Lisa Bielamowicz MD

Dr. Anthony Fauci, the legendary infectious disease expert who’s become a household name for his no-nonsense advice to political leaders and American citizens confronting the coronavirus pandemic, made one thing clear this week—he’s winning. The sock game, that is. Fauci’s sporting a star-studded pair on the cover of the fashion magazine InStyle. (The latest digital edition—Drew Barrymore is on the newsstand version this month.) Photographed poolside at his residence, where he sat for an interview with journalist Norah O’Donnell, Fauci also rocked wraparound shades and a Tron-era digital watch for the cover shoot. It’s a look that screams, “I dare you to write another specious attack on me in USA Today, or whatever. Come at me.” All kidding aside, the interview is a lovely peek at what life is like for the 79-year old doctor, as he faces the final, and perhaps greatest, challenge of his storied career. We’re lucky to have Dr. Fauci at this terrifying time—may he grace magazine covers for years to come.

THIS WEEK IN HEALTHCARE

What happened in healthcare this week—and what we think about it.

A dust-up over data reporting in the COVID era

As coronavirus infections continued to rage nationwide, with a record 75,600 new cases recorded Thursday alone, and COVID-related hospitalizations and deaths mounting across Sun Belt states, a controversy emerged this week over the way key data about the impact of the virus is collected, reported and disseminated. The Department of Health and Human Services (HHS) instructed hospitals to stop reporting data on admissions, supplies, and bed availability to the Centers for Disease Control and Prevention (CDC), in favor of reporting directly to HHS using a new collection tool developed by two private companies, TeleTracking and Palantir. That change came as part of an initiative—known as “HHS Protect”—to address concerns about the cumbersome process for collecting and reporting data using the CDC’s National Healthcare Safety Network. The switch in reporting requirements came as a surprise to many hospital leaders: hospitals were previously able to report much of the required data directly to state health officials, who then transmitted the data to the CDC. Under the new process, hospitals would more frequently need to do the data reporting themselves, adding to what we’ve been told is an already hefty COVID data reporting burden. (Hospitals’ struggles to report timely data have become such a concern that the Trump administration this week floated the idea of deploying the National Guard to assist.)

The change in process garnered a wave of media and political criticism, sparking concerns that the CDC was being “cut out” of collecting data on the nation’s response to the virus, and being shut out of the larger national COVID-19 response effort. Those concerns were exacerbated further when a widely used dashboard of key COVID statistics was removed from the CDC’s website, only to be restored a day later. By week’s end, it appeared that the entire episode was yet another example of poor communication and coordination among the nation’s various public health agencies—a further unwelcome wrinkle in a difficult week as the nation contends with the pandemic. US coronavirus update: 3.7M cases; 140K deaths; 43.4M tests conducted.

Two health systems join forces in Washington State

On Thursday, two Washington State-based health systems announced plans to merge into a new joint operating company. Seattle’s Virginia Mason, long renowned for its pioneering work on adapting lean manufacturing principles to healthcare delivery, will combine with CHI Franciscan, the Tacoma, WA-based subsidiary of CommonSpirit Health, a nationwide Catholic hospital system that runs 137 hospitals across 21 states. The new 50-50 venture will have a combined 12 hospitals and 250 care sites in Washington, with the CEOs of the two organizations jointly leading the new company. The co-equal structure is similar to one in Colorado and Kansas, where CommonSpirit is partnered with Florida-based AdventHealth to run Denver’s Centura Health. (Centura Health is a member of Gist Healthcare.) Virginia Mason and CHI Franciscan have previously collaborated on a clinical affiliation in oncology and have been working toward the launch of a jointly-run obstetrics program as well. As reported by Modern Healthcare, CHI Franciscan’s $2.5B in revenue accounts for about 10 percent of CommonSpirit’s national revenue, and Virginia Mason will bring around $1.2B of additional revenue to that total. More importantly, CHI Franciscan and the broader CommonSpirit system could benefit by learning from the success Virginia Mason has had over the years in standardizing and streamlining operational and clinical processes—a critical need given the economic pressures hospitals now face. The ability of the newly combined company to capture that opportunity will come down to execution, which could prove challenging given the complexities of its proposed ownership structure. We’ll be watching this story closely as it develops.

Primary care provider Oak Street Health files to go public

Chicago-based Oak Street Health, which runs consumer-centered primary care centers mainly for the Medicare Advantage (MA) population, filed for an initial public offering (IPO) of its shares late last week, hoping to raise up to $100M in capital. If all proceeds as planned, it will be the second primary care clinic operator to go public in 2020, after One Medical, whose stock price has surged since its market debut in January. Founded in 2012, Oak Street employs 260 primary care physicians in its 54 centers across eight states, and currently serves about 85,000 patients, mostly under capitated contracts with MA payers. The company’s S-1 filing shows the benefit of those contracts, especially in the COVID era: the 35 percent of patients Oak Street serves through fee-for-service contracts accounted for less than one percent of its revenue in the first quarter of 2020, with the rest in more lucrative capitated contracts. While Oak Street had invested little in telemedicine prior to the pandemic, focusing instead on providing senior and lower-income patients transportation to clinic visits, they have now pivoted sharply toward virtual care. As of May they provided 85 percent of all visits virtually, down from a COVID peak of 93 percent. Oak Street also benefits from close ties with Humana, the second-largest seller of MA plans: Humana accounts for nearly half of Oak Street’s capitated revenue, leases a number of center locations to the company, and is also a main investor in the company. Oak Street’s IPO seems well-timed to take advantage of the current surge in investor interest in primary care during the pandemic. The economic recession will likely accelerate seniors’ interest in MA plans, driving more growth opportunities for in current and new markets. The ultimate question—as always in this space—is whether the model can scale quickly enough to meet public market expectations.


GRAPHIC OF THE WEEK

A key insight or teaching point from our work with clients, illustrated in infographic form.

Payers relatively unscathed by COVID thus far

Stay-at-home mandates and shifting consumer behavior drove hospital and physician spending to its lowest point in more than a decade between March and May, leaving health insurers with an exceptional surplus of unspent cash that may allow them to emerge from the pandemic unscathed. The left-hand side of the graphic below shows Aetna’s reported 30 percent drop in overall utilization in April, with other, non-pharmaceutical services like lab and radiology down 50 percent—numbers in line with what other private payers reported this spring. The Kaiser Family Foundation estimates that insurers will issue $2.7B in rebates to purchasers this year, and many have already started to pay that money out. The right side of the graphic shows analysis from an April Moody’s report on the potential impact of COVID on future payer earnings across three different pandemic severity scenarios: mild, medium, and severe (under which two, ten, or 40 percent of the population is infected, respectively). In the mild scenario, all payers would benefit financially due to reduction in healthcare services delivered. In the severe scenario, payers would be financially impacted based on the level of their business that is administrative services only (like Aetna), versus commercial underwriting where they are extremely exposed to the high costs of COVID care (hence the greater exposure of Blue Cross Blue Shield of Michigan). These estimates seem to be bearing out thus far: UnitedHealth Group (UHG) announced this week that it nearly doubled its earnings in the second quarter, primarily due to savings from deferral of care. On top of its unequal impact on different demographic groups and parts of the country, the coronavirus is playing out very differently across sectors of the healthcare industry—with insurers the clear beneficiaries so far.


THIS WEEK AT GIST—ON THE ROAD PHONE

What we learned this week from our work in the real world

Why we’re not hearing about physician burnout    

Recently it struck us that in our dozens of conversations with doctors about physician strategy across the past few months, leaders rarely mentioned “physician burnout”. Prior to the pandemic, burnout and practice fatigue were always top concerns. One might posit that the COVID crisis would cause increased burnout, particularly in hard-hit areas of the country, as many doctors worked long hours, worried about safety, faced shortages of supplies, or were thrust overnight into a full-time telemedicine practice. When we talked this week with two health system chief clinical officers, they agreed, counterintuitively, that their doctors were expressing fewer signs of burnout now than before the pandemic. “We have found a new sense of shared purpose,” one said, “and whether you’re in the ICU with COVID patients or a PCP doing virtual visits, there’s a new feeling we’re all in this together, and that has been energizing.” Another doctor highlighted the difference between the stress of hard work and burnout. “Doctors have always worked long hours,” she said. “The frustration was that much of our time was spent doing things that felt futile. In some ways, COVID has freed us to focus on what’s important.”

But both physician leaders we spoke to expressed concerns that this new energy could be short-lived. Can the sense of shared purpose be sustained through multiple COVID surges? Will familiar frustrations emerge as doctors return to the grind of a full schedule of office visits? Physician leaders would be wise to anticipate these challenges. Staving off an even greater wave of burnout as the pandemic wears on will first and foremost require protecting and resourcing our clinical workforce with the PPE and supplies they need to do their jobs. We’ll also need to find ways to hardwire the quick decision-making and clinical innovation skills developed in redesigning care delivery for the pandemic toward a sustainable and efficient model that will improve practice in the long term.

Adapting leadership for the virtual world

Recently, a senior executive shared a concern with us about his leadership style during the pandemic: “I have always thought of myself as a good leader. For the first time in my career, I feel like I’m failing.” His worry was less about making the big decisions needed in a crisis, and more about the ongoing engagement and “forward motion” of his team. When in-person meetings transitioned to Zoom calls, he was struck by how much of leadership and team building relies on in-person interaction, whether it’s formal group sessions to drive a decision, or the hundreds of informal one-on-one interactions every week in the office. As our small firm went virtual, it’s something we noticed, too. Virtual interactions require a different structure and pace, and it takes more work to engage the full group. And while no one enjoys an hours-long videoconference, more frequent, shorter calls can build momentum. Dedicating time to sharing personal updates builds the connections lost when we’re not physically together. But despite the risks, one CEO shared that in a crisis like COVID-19, showing up in person matters: “You can’t always stay at home or in your office. As a leader you have to be out and talking to staff. I know it’s risky but that is really what it takes. Being there to clearly articulate the go-forward plan.” We’d love to hear your insights about how you’re adapting your leadership approach to navigate this balance, keeping your teams engaged through this difficult and unfamiliar time.


THIS WEEK AT GIST—ON THE PODCAST

All the headlines in healthcare policy, business, and more, in ten minutes or less every weekday morning.

We hope you enjoyed our week of “best of” interviews from our conversations with healthcare leaders and innovators. Next week—the podcast returns to regular programming! Coming up on Monday’s episode, we’ll hear from Torben Nielsen, CEO of Zoom+Care, about how the ground-breaking urgent care chain with clinics in Oregon and Washington has handled the explosive growth of virtual care during the COVID pandemic. Nielsen tells us it’s caused Zoom+Care to rethink whether opening more physical clinics is necessary to serve more patients, or whether telemedicine opens up a new path to growth. Tune in!

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ON THE GIST TURNTABLE

Give this a spin, you might like it.

Just in time for a steamy summer, there’s new music from Cuba, by way of Berlin, by way of 18th century Vienna. Sarah Willis, the acclaimed horn player from the Berlin Philharmonic, recently ventured to Havana to teach a French horn masterclass and learn some salsa moves, and found there a vibrant classical music scene and native musical tradition that inspired her to create Mozart y Mambo. Working with the Havana Lyceum Orchestra, Willis assembled a group of local musicians to record some of Mozart’s best-known horn compositions, along with a handful of classics of the Cuban son and mambo songbooks. (Fun personal connection: Sarah’s an elementary school classmate of mine from the late 70s, when our fathers both worked in Moscow.) Mozart is as cherished in Havana as everywhere else. Putting beloved pieces like his Horn Concerto No. 3 in “conversation” with pieces like “El manisero” (the Moisés Simons song that introduced Americans to Cuban music in the 1930s) and “Dos gardenias” (a bolero best known from its 1996 recording by Buena Vista Social Club) turns out to be a stroke of genius worthy of the master himself. As Sarah puts it, “Mozart would have been a good Cuban”—alive with inventive musicality. Most alluring are two new arrangements that fuse familiar Mozart pieces with mambo beats—how can you not get up and dance when “Eine Kleine Nachtmusik” suddenly leaps into lively Cuban rhythm? Check out this offbeat and fun recording, and take a peek behind the scenes at the story of its creation. Mambo! Best tracks: “Sarahnade mambo”; “Rondo alla Mambo”; “El manisero”.


WHAT WE’RE READING

Stuff we read this week that made us think.

Modeling the ominous impact of testing delays

With delays in getting test results growing in many areas of the country, a new analysis in the Lancet shows just how destructive increased turnaround times for COVID tests can be. Researchers modeled the impact of the timeliness and completeness of contact tracing, finding that minimizing testing delay—shortening the time between symptom onset and a positive test result—had the greatest impact on reducing future spread of the disease. Digging into the details, if infected individuals who develop symptoms are isolated within one day of symptom onset, the R0 (“R-naught”) can be reduced to 1—each existing infection seeds one new case—stabilizing the level of infection in a population. With contact tracing, the R0 can be reduced to 0.8, meaning the disease will decline. And researchers found with a testing delay of three days or more, even the most efficient isolation and contact tracing is essentially futile, powerless to bend the curve of transmission rates. Ominous findings for many states, where average test turnaround times are again approaching one week, showing just how far we are from being able to implement the basic public health strategy of “test, trace and isolate”, which has proven effective for so many countries around the world.

Anticipating a post-pandemic “Renaissance Era”

The primary measures we’re using to control the spread of COVID-19—masks, social distancing, isolation—have changed little from those used to mitigate the Spanish Flu in 1918, or even the bubonic plague in the Middle Ages. (In fact, the word “quarantine” comes from the Italian quaranta giorni, the forty-day period of time that arriving ships were required to anchor off the Venetian coast to prevent the spread of the Black Death.) We were intrigued by a recent piece in the New Yorker that looks at another impact of the plague that ravaged the world in the 14th and 15th centuries: the Black Death likely ushered in an era of unprecedented social change and knowledge advancement. Devastated economies recovered to become stronger than before, with greater equality. With half of the population wiped out, workers’ wages rose, leading to the rise of a new class of artisans and innovators. With a shortage of adult men to fill jobs, women found meaningful employment in many trades. Science and medicine moved from a spiritual and astrological orientation to a more knowledge-based approach. The “quarantine enforcers” birthed a public health infrastructure. And so the Renaissance was born. But the author also points out that great upheavals, whether caused by disease, depression or war, lead to radical social adjustments—which can be a good thing or a bad thing. Our current pandemic offers glimpses of both possibilities. Will distrust of science, government ineptitude, and political divisiveness become further entrenched? Or will society emerge stronger, with advances in technology and medicine, a stronger economy and a renewed social system that addresses deep-rooted inequality—our own post-pandemic Renaissance? It’s up to us.


That brings us to the end of another edition of the Weekly Gist. Thanks for joining us this week and taking the time to read our thoughts. We’d love to hear yours! Send us your feedback and ideas, and don’t forget to forward this to a friend or colleague and recommend that they subscribe, and tune to our daily podcast, too!

Most of all, we want you to let us know if there’s anything we can do to be of assistance in your work. You’re making healthcare better—we want to help!

Best regards,

Chas Roades
Co-Founder and CEO
chas@gisthealthcare.com

Lisa Bielamowicz, MD
Co-Founder and President
lisa@gisthealthcare.com