THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
- Kaiser Permanente healthcare workers initiate record strike. On Wednesday, 75K Kaiser Permanente (KP) healthcare workers in five states and Washington, DC walked off the job as part of the largest healthcare strike in US history. The striking workers are a diverse group, based mostly in California, that includes support staff, X-ray technicians, medical assistants, and pharmacy workers. They will continue their work stoppage until Saturday morning, though union leadership is threatening an even larger strike in November if a new contract agreement is not reached by then. Their employment contract expired on September 30th, and while negotiations have progressed on issues like shift-payment differentials and employee training investments, union leaders and KP executives remain at odds over key wage increase demands, with the unions asking for a $25 national minimum wage, and KP proposing $21. The company has sought to minimize disruptions to patient care during the strike, bringing in temporary labor to keep critical infrastructure open, but has told its members to expect some non-urgent procedures to be rescheduled, some clinic and pharmacy operating hours to be reduced, and call center wait times to be lengthy.
The Gist: Kaiser Permanente has enjoyed solid relations with its unions for decades, making this strike a significant break from precedent, fueled by post-pandemic burnout and staffing shortages. While KP is keeping all essential services open, care disruptions are inevitable with around one third of its total workforce on strike. The stakes of these labor negotiations extend far beyond just KP and its employees, as union success could inspire other unionized healthcare workers to adopt similar tactics and demands. (Case in point: Employees at eleven Tenet Healthcare facilities in California represented by SEIU-UHW, one of the unions representing striking KP workers, just voted to authorize their own strike.) While happening alongside high-profile strikes in other industries, labor unrest is a troubling trend for health systems, whose margins remain well below historical levels amid persistently high labor and supply expenses.
- CBO report finds CMMI hasn’t saved Medicare any money. Late last week, the Congressional Budget Office (CBO) released its analysis of the Center for Medicare and Medicaid Innovation (CMMI)’s spending outlays, revealing that in its first decade of operations it produced a $5.4B net increase in federal spending instead of a projected $2.8B reduction. Moreover, CBO revised its CMMI projection for 2021-2030 from a $77.5B net spending reduction to a $1.3B increase, predicting CMMI may only begin to generate annual savings in 2031. CBO says its updated projections largely reflect revised expectations on CMMI’s ability to identify and scale models that actually reduce Medicare spending. CMMI was created by the Affordable Care Act (ACA) in 2010 to test new payment models and other initiatives for reducing the federal government’s healthcare costs, but of the nearly 50 models it has run, only four have become permanent programs.
The Gist: This critical report confirms what many in the healthcare world already believed: the ACA’s value-based care initiatives have largely struggled to reduce Medicare spending. There are plenty of policy factors to blame, including the lack of mandatory participation for providers and conflicting incentives across care models, but one factor left out of the CBO report is CMMI’s disproportionate emphasis on accountable care organizations (ACOs) to produce meaningful cost savings, even as years of data proved otherwise. ACOs are designed to reduce spending primarily through utilization management, but research has shown that prices, not utilization, are responsible for the US’s high medical spend relative to other countries. While CMMI’s mission is still laudable and important, the center must make good on its 2021 “strategic refresh” if it hopes to continue receiving Congressional support.
- Costco offers members $29 telehealth visits. Last week, warehouse club giant Costco announced it will offer its members access to same-day, primary care telehealth visits for as low as $29, as well as lab panels and therapy visits, via a partnership with NYC-based telehealth platform Sesame. Costco’s 125M members in all 50 states will have access to Sesame’s network of over 3,500 affiliated providers for virtual care services, as well as a 10 percent discount on all other Sesame services, some of which are available in person. As Sesame does not accept health insurance, the offering is targeted at cost-conscious Costco members with either high-deductible plans or no insurance who are willing to pay cash. This is Costco’s first foray into healthcare delivery, though it offers pharmacy and optical services and runs a health insurance marketplace for businesses.
The Gist: Costco’s telehealth offering most closely resembles Amazon Clinic, though its $29 price is less than half of Amazon’s $75 average price for video visits. With yet another retail giant throwing its hat into the healthcare delivery ring, consumers now have a growing number of convenient and affordable care options for low-acuity conditions, though at the potential cost of confusion and reduced coordination.
Plus—what we’ve been reading.
- How US is failing to keep its citizens alive into old age. Published this week in the Washington Post, this unsparing article packages a year of investigative reporting into a thorough accounting of why US life expectancy is undergoing a rapid decline. After peaking in 2014, US life expectancy has declined each subsequent year, trending far worse than peer countries. In a quarter of US counties, working-age Americans are dying at the highest rates in 40 years, reversing decades of progress. While deaths from firearms and opioids play a role, chronic diseases remain our nation’s greatest killer, erasing more than double the years of life as all overdoses, homicides, suicides, and car accidents combined. The drivers of this trend are too numerous to list, but experts suggest targeting “the causes of the causes”, namely social factors, as the death rate gap between the rich and poor has grown almost 15x faster than the income gap since 1980.
The Gist: This reporting is a sobering reminder of the responsibilities—and failures—borne by our nation’s healthcare system. The massive death toll of chronic disease in this country is not an indictment of the care Americans receive, but of the care and other resources they cannot access or afford. While it’s not the mandate of health systems to reduce systemic issues like poverty, there is no solution to the problem without health systems playing a key role in increasing access to care, while convening community resources in service of these larger goals.