March 27, 2020

The Weekly Gist: The Living Our Best Zoom Lives Edition

by Chas Roades and Lisa Bielamowicz MD

How’s everyone holding up? We’re settling into our new normal of working in our basements, spending the day on Zoom calls, and trying to moderate our consumption of terrible news to just a few doses a day. We continue to be so inspired by the hard work of the healthcare professionals we have the privilege to serve. Each day’s bad news is balanced by incredible stories of leadership and courage from our members and others. One daily routine we’ve implemented for our own small team is setting aside a part of every morning’s all-hands call to share what each of us plans to do that day to stay sane. Hope you’re finding your own well-being rituals as well.

Another brutal week in the coronavirus war

The US continued its inexorable march up the now-familiar coronavirus infection curve this week, and on Thursday the country reached the unenviable mark of having the most reported cases of the virus worldwide. New York quickly emerged as the most heavily impacted state, with hospitals in the greater New York City area reporting they had become overwhelmed with COVID-19 cases. While production and distribution of testing supplies ramped up significantly, along with the supply of personal protective equipment (PPE) for healthcare workers, widespread shortages of these critical supplies continued to plague communities across the nation. Of particular concern, hospitals in New York and elsewhere projected a coming shortage of ventilators, forcing a growing public discussion of triage and potential rationing.

The impact of the virus varied widely across geographies, with NYC one of several “hot spots”—others included Seattle, New Orleans, Chicago, Detroit, and Atlanta. Meanwhile, President Trump sparked a debate over when and where to loosen “social distancing” restrictions, floating the idea of targeting Easter (April 12th) as a potential date for “opening” the US economy, and proposing to implement county-by-county ratings of readiness to return to normal. Having largely ceded decisions about shuttering businesses and schools to governors, the administration faced questions about how much control it could exercise over loosening restrictions, and faced pushback from public health experts about the wisdom of pulling back restrictions too early. As a result of the widespread closings, new unemployment claims skyrocketed to unprecedented levels this week, leaving millions of Americans out of work and potentially without health insurance. The week ahead is likely to bring even more grim news, as the health and economic crises show no sign of slowing in the near future.

President Trump approves a $2T stimulus package

To respond to the coronavirus crisis, the US Congress passed a $2T stimulus package this week, which the President signed into law on Friday afternoon, intended to provide relief to individuals, small businesses, and large corporations impacted by the shutdown of the economy. Approved on a 96-0 vote in the Senate, and by voice vote in the House, the CARES Act includes $100B to reimburse hospitals for lost revenue and the cost of caring for COVID-19 patients, $20B to bolster veterans’ healthcare, and billions more to replenish the strategic national stockpile, provide funding for community health centers, and fund drug development and disease mitigation efforts. The bill also provides further flexibility for providers to offer telemedicine alternatives to in-person care, requirements for insurers to cover certain COVID-related diagnostic tests, and a number of “extenders” to healthcare-related programs that would have seen funding expire in the next few months. (A full summary of the healthcare measures in the CARES Act can be found here.)

Notably absent from the final version were specific measures designed to prop up independent physician practices, although they would be eligible to access the Act’s $350B in relief loans for small business operators. Rural and safety net hospitals, which typically operate with much less financial cushion than larger health systems, also expressed concern about their ability to access CARES Act funding in time to avoid running out of cash and being forced to close or lay off staff. As the crisis continues to spread across the nation, providers are likely to need more financial and regulatory relief from the federal government, but the CARES Act (already one of the most expensive pieces of legislation in American history) is an important first step toward buffering the impact of the pandemic on healthcare delivery.

The murky mess of predictive modeling

Last week the Imperial College of London’s analysis of possible COVID-19 spread predicted 2.2M US deaths if limited action was taken, which motivated leaders to quickly implement more restrictive measures and scramble to increase ventilator production. This week, news broke that Neil Ferguson, the lead researcher behind the model, had changed his guidance, when he testified to the UK Parliament that his country might only experience 20,000 deaths rather than the 500K posited in the earlier paper. Ferguson tweeted today to try to clear up the confusion, noting that his original analysis ran a number of scenarios, and the lower numbers behind his testimony were predicated on following through on the strict social distancing practices currently in place—without them, the UK could easily see the higher number of deaths. Meanwhile, amid the confusion, the Trump administration downplayed the worries about ventilator shortages in Thursday’s press conference, with White House coronavirus response coordinator Dr. Deborah Birx stating, “Please, for the reassurance of people around the world, to wake up this morning and look at people talking about creating DNR situations—do not resuscitate situations for patients—there is no situation in the United States right now that warrants that kind of discussion”—much to the consternation of doctors in hard-hit areas, who say her statement conflicts with what they’re seeing in their hospitals.

Stepping back, the whiplash highlights the limitations in making policy from predictive models, which are constantly evolving based on new data and technical refinements. Another case-in-point: health systems around the country are using on a model for surge capacity planning generously shared by Penn Medicine researchers,  who are continuing to work out kinks and improve the analysis daily. It’s a reminder that no model is perfect, and must be refined over time. Any strategies based on prediction models must use them as guidelines, and when working to protect the health and safety of our communities we must always plan for the worst, even as we hope for the best. 


GRAPHIC OF THE WEEK

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

A closer look at ventilator allocation protocols

As COVID-19 surges in parts of the country, what happens when lifesaving resources—particularly ventilators—become scarce, and life-or-death decisions have to be made? The graphic below displays New York State’s three-step adult ventilator allocation guidelines, developed by a 2015 task force. In times of limited ventilator availability, patients entering the intensive care unit are first excluded if their existing medical conditions will likely result in near or immediate mortality. They are then placed in one of four groups for ventilator priority based on a point system determined by clinical measures of major organ function. Lastly, non-clinical factors are taken into account, including random selection from groups of patients with equal mortality risk. This three-step protocol is then reassessed daily after the first 48-72 hours, and patients whose conditions are not improving are removed from ventilators.

We’ve seen versions of this protocol across many states; however, there is not a universal understanding on how to make ethical ventilator selection decisions based on non-clinical factorsrecent article in NEJM makes recommendations based on utilitarian principles—maximizing the overall health of the community by directing crucial resources to those likely to benefit the most. Some of the ventilator triage recommendations include giving priority to younger patients, parents, healthcare workers, and COVID-19 research participants. All hospitals preparing for this pandemic should review and agree upon a ventilator and scarce-resource allocation protocol for their facilities well before a “surge” may hit, and then be as transparent as possible about it with their providers as well as other entities. Hospitals should also assign “triage officers” or committees responsible for making allocation decisions based on non-clinical factors, in order to relieve the burden on frontline providers of having to make decision ad hoc.


THIS WEEK AT GIST—ON THE ROAD PHONE

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

A healthcare workforce under quarantine?

This week, health system leaders we’ve spoken with are feeling like they’re standing on solid ground, “more ready” for a likely surge of coronavirus patients, having spent the past few weeks in intense preparation. But as they watch reports from hard-hit areas like New Orleans, where Ochsner Health System announced this week that 60 staff are COVID-positive and 300 are in quarantine, their up-at-night worry is how to maintain staffing. “I can easily see a scenario where half of our key staff—emergency and critical care doctors, nurses, respiratory therapists—are either infected or in quarantine,” one CMO told us. “It’s the new problem I have no idea how to solve.” Hospitals are developing protocols to centralize tasks and minimize the number of staff in contact with coronavirus patients and the amount of PPE used. Looking outside the US for guidance, Dr. Atul Gawande provides a ray of hope, showing how South Korea and Singapore have tracked transmission to staff, and have been able to lower spread among healthcare workers without mass quarantines or fully depleting precious PPE.

Primary care practices on the precipice of closure

While hospitals are preparing for a surge in patient volumes, many of the country’s physician practices are feeling the opposite effect. With patients being guided to cancel all non-essential visits and move questions to phone or virtual visits, primary care practices are reporting that their volumes are down as by as much as 75 percent. Just under half of the nation’s doctors work in independent, physician-owned practices. For some doctors, particularly those in smaller practices, the drop in volumes could force them to close in a matter of weeks. Primary care physicians (PCPs) are taking advantage of changes in federal regulations to rapidly implement telemedicine capabilities, but these visits are often reimbursed at a lower rate. Given that their practices are high-overhead operations, with fixed expenses accounting for over two-thirds of revenue, doctors tell us they would be under water even if they could move all of their volume to virtual care. Typical practices have less than a month of cash-on-hand. While small business loans available through the stimulus package will help, many practices may need to lay off staff or even close in coming months.

Dr. Christopher Crow, President of Catalyst Health Network, which works with nearly 1,000 PCPs across Texas, is working with commercial payers to rapidly change the payment model, providing PCPs a monthly upfront payment based on historical trends. Crow told us this week that, “this would give doctors the support and flexibility to maintain primary care access during the crisis and set the stage for a long-term payment model that is much more sustainable than the one we have today.” PCP practices provide a critical layer of support for patients worried about COVID-19 infection as well as the millions with ongoing care needs who must be supported through the crisis. Unchecked, the current situation will hasten the movement of independent doctors toward affiliation with larger networks, or employment by payers and health systems.

Thinking ahead to “what comes next?”

We’ve had several conversations this week with health system strategic planners, whose focus has shifted from traditional activities like assembling business models, managing “dots on the map”, and analyzing partnership opportunities, to playing more of a utility role across the executive team. Some are collaborating with supply chain leaders to source critical equipment, others are assisting with crisis command center analytics and running point on media and communications. But a question we heard this week from each of them was, “What comes next?” Having fast-forwarded telemedicine strategies once planned for a three-year rollout but now implemented in just two weeks, and having shuttered many of the elective procedural business lines that took years to assemble, there’s a legitimate question looming about which changes are just temporary, and which will become permanent.

The telemedicine issue is a big one: now that we’ve got patients using FaceTime to get care from our doctors, how would we ever get them to “go back” to the old way of receiving care? Answer: we won’t. And about those profitable elective procedures—which will we bring back online, when? And where? Drawn-out discussions of the “shift to ambulatory” are suddenly urgent—is now the time to rethink our service distribution strategy, before simply going back to “business as usual” at some point this year? How much capacity will we have to reserve for future surges in demand, particularly if the coronavirus turns into a seasonal event? And what about the regional safety net? Some strategists are already fielding calls from smaller, rural facilities looking for closer affiliation, a trend that will only intensify as community hospitals come under increasing financial pressure. There are Big Strategy Questions ahead—ones that we’re already working with our members to think through. More to come on this important topic.


THIS WEEK AT GIST—ON THE PODCAST

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

On last Wednesday’s episode, we heard from Aledade’s CEO and co-founder Dr. Farzad Mostashari about how primary care practices are struggling as patients stay home and cancel appointments. He fears what would happen to patients with chronic conditions if primary care practices shuttered en masse, as described above.

On Thursday’s episode, we heard from Dr. Nick Zenarosa, CEO and founder of Dallas, TX-based emergency medicine group Integrative Emergency Services (IES). He talked about the challenges emergency medicine providers are facing on the front lines, and how IES is working to rapidly share reliable clinical information with providers.

On today’s episode, we heard from Steve Lefar of Strata Decision Technology about how the COVID-19 pandemic could impact inpatient hospital margins. Since many hospitals have canceled elective procedures, he says, the paradoxical reality is that those who treat more COVID-19 patients will better weather the storm financially. More discussion of Strata’s model below.

Stay tuned for more interviews with newsmakers and thought leaders coming up next week!

[Subscribe on Apple, Spotify, Google, or wherever fine podcasts are available.]


ON THE GIST TURNTABLE

Give this a spin—you might like it.

Just in time for your weekend Zoom happy hour, there’s new music out today from The Chats, perfectly suited for pogo-dancing with one fist in the air and a can of lager in the other. Pick a sunny beach background for your webcam to match the Queensland, Australia origins of this punk trio, whose debut album High Risk Behavior delivers 28 minutes of straight-ahead, beery-lad punk in the best tradition of The Buzzcocks and the Sex Pistols. Three twenty-somethings who met in music college, The Chats have produced a collection of short, sharp tracks (none over three minutes) full of fun observations about twenty-something life in Oz, from the perils of internet drug-purchasing (“Identity Theft”), to the adrenaline-rush of ditching restaurant tabs (“Dine and Dash”), to the risks of unprotected sex (“The Clap”). It’s simple, hyper-literal joy—that track about STDs is backed with handclaps from the band—with a three-chords-and-the-truth style that’s been engineered to shoot straight to your musical pleasure centers. There are no mosh pits in social distancing, but that doesn’t mean you can’t slam-dance in your basement, to the soundtrack of simpler times. Best tracks: “Identity Theft”; “Dine and Dash”; “Drunk N Disorderly”. (Bonus track: Don’t miss their 2017 “hit single” about taking a smoke break, “Smoko”. A masterpiece.)


WHAT WE’RE READING

Stuff we read this week that made us think.

Hospitals bracing for significant COVID-19 margin hit

According to a recent analysis by healthcare financial analytics firm Strata Decision Technology, the average health system can expect a $3M operating loss in the next 30 days alone, due to the loss of elective surgeries combined with the high estimated cost of treating COVID-19 inpatients. Strata estimates the vast majority of hospitals stand to lose an average of $2,800 per COVID-19 casewith many losing much moreEven after factoring in the CARES Act’s 20 percent increase in Medicare reimbursement for these cases, the average loss will still be $1,200 per case. While COVID-19 patients are more likely to be on Medicare, researchers used mean reimbursement across all payer types for each of the 38 health systems in their sample—as a result, this model may actually underestimate the magnitude of negative margins from these cases. Strata’s model assumes institutions will operate at 110 percent of normal capacity and that cost per case will be 25 percent higher for COVID-19 patients than for similar DRGs—two variables that will differ greatly from region to region as the pandemic unfolds and more information becomes availableThe assumption that these cases will have unusually high costs is one we’ve been hearing in our conversations with hospitals in recent weeks—driven mainly by longer lengths of stay, greater use of critical care resources, and richer nursing ratios to care for these patients, but also by increased imaging needs, drug and supply costs, and expanded facility cleaning regimens.

Many health systems across the nation are already estimating the financial hit from the coronavirus will exceed $100M. New York City’s largest health system, NewYork-Presbyterian Hospital, had budgeted an operating income of $246M but is now forecasting operating losses of $104-454M. In Michigan, Beaumont Health estimates that cancelling 80 percent of their elective surgeries and imaging visits, combined with caring for a higher volume of lower-reimbursed medical inpatients will reduce their revenue by 20 to 40 percent. It is too early to say with certainty how large the COVID-19 impact will be on margins, given that the US infection rate is still unclear, but this wave of COVID-19 will surely take an enormous toll on America’s hospitals.

A Texas grocery chain shows how to prepare for pandemics

While our local grocery stores have long since run out of bread, eggs, bananas and other staples (not to mention toilet paper), our friends in Texas report that the shelves at H-E-B, rated the state’s favorite grocery chain, have remained mostly full. A piece by Texas Monthly details the advance planning and leadership which has enabled H-E-B to be a steady—and stocked—source of foodstuffs across the past few weeks. The chain began full-on preparation for its COVID-19 response the second week of January, when human-to-human spread was first announced in Wuhan, China. Led by their director of emergency preparedness (a full-time, year-round company leader), H-E-B’s response team drew on long-standing flu pandemic plans that were refined after the 2009 H1N1 flu outbreak, constantly revising their response based on reports from China and using data from Wuhan to model possible timing and extent of impact in Texas. They contacted grocery suppliers in China, Italy and other hard-hit areas to understand the impact on demand and supply chain, and used that information to expand their network.

Predicting that many restaurants would be forced to close, H-E-B reached out to their suppliers weeks ago, and worked to reroute their stock to stores. Once demand surged, the company was early to implement limits on key items like hand sanitizer and toilet paper, and they implemented flex staffing that has brought corporate staff to the front lines stocking shelves and running registers. The coronavirus pandemic has cemented the role of grocery stores as community pillars, and their workers as “first responders”. H-E-B’s remarkable preparedness not only enabled them to respond nimbly, but also demonstrates the kind of foresight and planning that will be essential for all companies as we navigate and recover from the current crisis. Read the interviews—they’ll make you feel good, and you’ll wish you could shop for groceries in Texas!


That’s where we are as this week draws to a close. Thanks again for all the amazing work you’re doing, and the stories you’re sharing with us. We’re truly grateful that you’ve taken time to read our work, and we’d love for you to share it with your colleagues and coworkers, and encourage them to subscribe (and to check out our daily podcast).

Please let us know what we can do to be of assistance in your work, especially during this difficult time. 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