The Weekly Gist: The Queen Takes King Edition

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

Amid a worsening pandemic, hope

We are now in uncharted and dangerous new territory in the coronavirus pandemic, with the US recording a record-high 2,800 deaths on Thursday, along with 200,000 new cases—the second highest daily total of the pandemic so far. More than 100,000 Americans are now hospitalized with COVID-19, occupying more than 10 percent of the nation’s hospital beds, and creating capacity constraints at hospitals around the country. With the impact of Thanksgiving travel—which was the heaviest since March—yet to be seen in the numbers, and with hospitalizations and deaths lagging new case counts by several weeks (as an epidemiological rule of thumb, 1.7 percent of new cases will result in reported deaths from COVID after 22 days), we are almost certainly headed for a grim winter holiday season.

But the light at the end of the tunnel grew brighter this week, with the United Kingdom becoming the first Western country to approve a COVID vaccine. (China and Russia both rolled out vaccines prior to Phase 3 trials being completed.) Doctors and hospital staff in the UK will begin to administer Pfizer’s vaccine next week, and the US Food and Drug Administration (FDA) is expected to approve the same vaccine for emergency use on or shortly after an outside panel of experts convenes on December 10th. Moderna, whose vaccine is similar to Pfizer’s, submitted an application for emergency use this week, and it will be evaluated on December 17th. In the meantime, a group advising the Centers for Disease Control and Prevention (CDC) held a public meeting this week to craft recommendations for which populations should be prioritized to receive the new vaccines, settling on healthcare workers and residents of long-term care facilities as first in line. While state public health officials will make the final decisions about who gets vaccinated, most are expected to follow the CDC’s guidelines. The two priority groups represent about 24M people, most of whom could be immunized by the end of this month if all goes according to plan. The end of the pandemic will not come quickly, or easily, but it will come—we are near the beginning of the end.

A partial, reassuring reveal of the Biden healthcare team

With the pandemic raging, and the country gearing up for the complex rollout of vaccines that will ultimately bring it to an end, all eyes have been on the Biden team to see who gets picked to lead the healthcare agenda for the new administration. While (as of this writing) we do not yet know who the new Secretary of Health and Human Services (HHS) will be—a decision that seems overdue and has spilled into a public squabble over potential candidates—other choices have been revealed, and they’re quite reassuring. Dr. Vivek Murthy, who has been one of Biden’s key health advisors throughout the campaign, will return to his Obama-era role as Surgeon General, in which he was highly regarded as a skilled public health communicator. Dr. Anthony Fauci, who has been a beacon of calm rationality and trusted medical advice through the pandemic, will continue in his role at the National Institute of Allergy and Infectious Diseases, and will be a key health advisor to the new White House. Dr. Marcella Nunez-Smith, a Yale-based expert in issues of health equity and another Biden advisor on COVID, will lead the administration’s efforts to address racial disparities in the pandemic’s impact. And Jeff Zients, who led Obama’s National Economic Council, after being called on to rescue the botched rollout of Healthcare.gov, has been tapped to be the coordinator of the Biden administration’s coronavirus response. We admire the expertise and reputations of Murthy, Fauci, and Nunez-Smith, and can personally vouch for the extraordinary leadership abilities of Jeff Zients, with whom we share a former employer and have had the pleasure of working for (albeit many years ago). As any number of fellow alumni can attest, Jeff is a “get sh*t done” guy, who will not let a single, critical detail slip past. He’s one of the most effective managers we know, and his appointment gives us great confidence in the face of the complex and challenging months ahead.

Implementing a final round of Medicare reforms for 2021

Racing to complete its work before the clock runs out on the Trump administration, the Centers for Medicare and Medicaid Services (CMS) unleashed a flurry of regulatory changes this week. As part of its overdue final rule on how Medicare will pay for outpatient and ambulatory surgery in 2021, the agency began an anticipated phase-out of the longstanding policy of only paying for certain services—mostly surgeries—if they are performed as part of an inpatient stay. The move is expected to accelerate the shift of care from inpatient hospitals to ambulatory surgery centers, and to lower prices for many surgeries—a key component of Medicare’s strategy to create “site neutrality” in how it pays for services. That change, along with loosened restrictions on physician ownership of specialty hospitals, and a reduction in hospitals’ ability to take advantage of discounted pharmaceutical pricing, drew the ire of hospital industry lobbyists, who called the changes “misguided” and “short-sighted”.

There was plenty of discontent to go around, however, with physician specialty societies reacting negatively to the release of Medicare’s physician fee schedule for 2021. As part of that rule, CMS finalized changes to how payment is calculated for doctors, which will result in higher pay for some primary care physicians and medical specialists, but reduced payment for many proceduralists. Other changes to the fee schedule for 2021 seemed less controversial: payment for telehealth visits to “evaluate and manage” Medicare patients will now be available permanently, and payment for emergency telehealth consults will continue on a temporary basis, until the end of the COVID emergency. Some COVID-related “scope of practice” loosening—allowing non-physicians to deliver clinical services to Medicare patients—will also be made permanent. The many adjustments to Medicare payment rules, coming on the heels of other recent changes intended to promote price transparency and modernize legal restrictions on hospital-physician collaboration, seem aimed at cementing the Trump administration’s broader policy goals for Medicare, as the Biden team prepares to take over. We’d expect most of these changes to remain in place, as the new administration is likely to continue to emphasize reforms that result in greater “value”, lower cost, and greater convenience for Medicare beneficiaries.

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

Did the CARES Act rescue hospital margins?

Despite taking a huge volume hit in Q2, most hospitals have managed to maintain positive operating margins—largely thanks to a $100B cash infusion from the federal government via the Coronavirus Aid, Relief and Economic Security (CARES) Act. According to Kaufman Hall’s most recent National Hospital Flash Report, based on data from over 900 hospitals of all sizes nationwide, hospitals would have been operating at a significant loss without federal aid. As the graphic below shows, the average hospital operating margin without CARES Act relief funds would have been negative eight percent in April—and would still be in the red as of October, despite much of the cancelled elective business returning across the summer and early fall. However, with the aid, hospitals operating margins only turned negative in April and May. When compared to the same time period last year, year-to-date (YTD) gross revenue is down almost five percent, though net patient service revenue per discharge is up—the result of longer lengths of stay, the 20 percent Medicare reimbursement bump for COVID-19 patients, and suspension of the two percent sequestration adjustment on Medicare fee-for-service payments. Yet hospital expenses per discharge are also up 13.5 percent, dampening profitability.

Though the CARES Act has been a stopgap solution for the vast majority of hospitals, a handful, most notably HCA Healthcare, have proactively returned the money. While motivations for doing so are varied, we’ve been hearing that the ever-changing reporting and spending requirements associated with CARES Act funding have many hospital leaders concerned about possible future claw-backs. With COVID-19 hospitalizations now reaching record-breaking highs, potentially forcing another round of shut-downs, and with little movement on another round of federal relief, hospitals may be on their own for the time being—and the greatest hit to health system finances may still be yet to come.

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

Are we seeing a “second surge” for telemedicine?

As the entire nation navigates the current COVID surge, we’ve been watching closely to see if telemedicine volumes also rise again. After most health systems saw virtual visits peak at 40-50 percent of ambulatory volume during the spring shutdown, most saw telemedicine visits drop precipitously across the summer, with many bottoming out at less than ten percent of all visits. Patients wanted to get back to seeing their doctors—and in many cases, needed to be seen in person, for evaluation beyond what a virtual visit could provide. And many physicians were eager to move back to office-based practice, finding the balance of virtual and in-person workflows challenging. But would virtual volume return with a rise in cases? Providers in Sunbelt states who saw a summer COVID spike only reported a small rebound in virtual demand during the crisis. As one executive told us, “I’ve been saying all year that the genie is out of the bottle with telemedicine. Once they’ve gotten a taste of it, patients will demand it. But we’re stuck at ten percent—and if we stay stuck at ten percent during a winter surge, I may have to eat my words and admit the genie is back in the bottle.”

Virtual visit demand is driven in large part by consumer comfort, and people are more comfortable going in person to their doctor’s office (or really anywhere, as a drive by your local shopping center parking lot will confirm) now than they were in April. Most systems are reporting just a small rise in telemedicine volume across November, as COVID cases have hit their highest levels ever. But we’ve noticed that systems who have more coordinated and centralized virtual care offerings maintained a higher level of demand across the year, reporting a consistent 15 to 20 percent of visits delivered via telemedicine. As we look to the post-COVID future, merely offering a telemedicine option won’t be enough to sustain demand, much less to build a robust digital health business. Consumers want a seamless, easy and robust digital offering. If health systems and physicians continue to address digital needs with band-aid solutions rather than real strategy and investment, they risk losing this important consumer channel.

Encouraging, but not mandating, the COVID vaccine

With healthcare workers at the top of the list to receive the coronavirus vaccine as soon as it’s approved for use, we’ve been fielding a common question from a number of health system executives: should we make the vaccine mandatory for staff? So far, the consensus seems to be “no”. We haven’t come across any hospitals that intend to mandate the vaccine for staff—rather, they’re “strongly encouraging” frontline workers and other clinical staff to get vaccinated as soon as possible, followed by other patient-facing staff. Mandating the vaccine would create liability, staff engagement, and implementation challenges that most systems are just not prepared to deal with. (Whether to mandate the flu vaccine for staff has been a perennial issue for years among hospital leaders, with the majority choosing against mandates for the same reasons.) Even if hospital staff aren’t mandated to get the vaccine, it’s expected that most will want to, especially if they might be exposed to COVID in their work.

There will be plenty of other vaccine-related operational challenges for hospital leaders to deal with: for instance, it’ll be critical to stagger the rollout of the vaccine to staff, so that there isn’t a simultaneous wave of workers calling out sick because they’re suffering from what are reported to be nontrivial side-effects from the shot. That’s especially important, because as the current surge of COVID intensifies, staff are already stretched thin, in addition to being exhausted and emotionally overwhelmed. And of course, in addition to receiving vaccinations, hospital staff will also be administering them—on top of the challenge of delivering patient care. While it’s welcome news that healthcare workers are a top priority for getting vaccinated, it’s worth remembering that they’re in the thick of the fight right now—the vaccine rollout adds one more element to the complex choreography that most hospitals are engaged in at the moment.

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

On last Monday’s episode, we heard about new partnerships that the national physician organization Privia Health is striking with health systems, such as Rockledge, FL-based Health First, to align both employed and independent physicians.

Coming up next Monday, we’ll hear from Catalyst Health Network CEO Dr. Christopher Crow, about how the pandemic-induced recession is accelerating employer and insurer interest in changing the way they pay for care. Make sure to tune in!

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

What we’ve been writing about lately on the Gist Blog.

Talking with Iora Health, an Innovative Primary Care Provider

Recently, Gist Healthcare Daily host Alex Olgin spoke with Rushika Fernandopulle, MD, Co-founder and CEO of Iora Health. They discussed how Iora’s care model has evolved during the pandemic, allowing the organization to provide seamless, relationship-based care to seniors by blending in-person visits with video visits, phone visits, and asynchronous encounters. Half of Iora’s visits are now delivered via telemedicine or phone, according to Dr. Fernandopulle, who also shared his vision for the future direction of the company. Check out Alex’s podcast interview to hear more from this primary care pioneer, or visit our blog to read a complete transcript of their conversation.

We would’ve worked harder, but we watched this instead.

Frank Zappa was not exactly “listener friendly”. Most people, if they’re even aware of him, know Zappa for the 1982 novelty song “Valley Girl”, recorded with his then-teenage daughter Moon Unit. Or maybe they recall him as an anti-censorship crusader who battled the likes of Tipper Gore over song lyrics in the mid-80s. But Zappa was much more than that—a sui generis musical pioneer driven by a unique and demanding vision. During his lifetime, he released 62 albums, spanning the widest possible spectrum of rock, blues, pop, orchestral music, and jazz. And since his death—27 years ago today—his family has released an additional 54 albums from the vast archives of his recorded work, ranging from music he made with his landmark band The Mothers of Invention in the 1960s to live recordings captured just before his untimely passing at age 52. Now comes Alex Winter (yep, “Bill” from Bill & Ted’s Excellent Adventure—a detail Zappa would have reveled in) with a new documentary film that explores the biography, music, and lasting legacy of its titular subject. With full access to the archives, and the participation of Zappa’s family (including on-camera interviews with his late wife and muse Gail Zappa, who passed away five years ago), Winter has assembled a kind of love letter to Zappa, acknowledging but looking past his many flaws to reveal him for what he truly was—one of the greatest American composers of the 20th century. Despite being an irascible iconoclast, and a dictatorial bandleader who referred to his musicians as “trained monkeys”, Winter depicts Zappa as a true genius, from his early days as a prodigy to his later years as a record label executive and musical diplomat. Don’t be intimidated by the weird songs or the seemingly impenetrable back catalog—spend some time with this fresh take on the artist and see what those oddball Zappa superfans have been raving about all these years. For sure, for sure.

We said it, they quoted it.

“Hospitals Cancel Surgeries to Preserve Staff During Covid Surge”
Bloomberg; November 25, 2020

“More hospitals may have to press pause in the weeks ahead if Thanksgiving family gatherings ignite yet more cases. ‘We’re at the leading edge of hospitalizations and fatalities,’ said Lisa Bielamowicz, co-founder of Gist Healthcare, a consultancy working with health systems around the U.S.

Her clients are preparing for unrelenting months ahead. With holidays coming, she said, ‘and no signs that the country is going to radically reverse course on how we’re managing those things, they’re looking at well into January before this may abate.’”

Stuff we read this week that made us think.

The danger of science as a matter of opinion

We’ve always been a little skeptical of the longstanding trope that “medicine is more art than science”. Personalization and the application of knowledge to nuanced situations are undoubtedly critical, but the practice of medicine is above all driven by science. Which is why the politicization of science and medical data during the pandemic has been so jarring. The recent US Senate testimony of public health luminary Dr. Ashish Jha, Dean of the Brown University School of Public Health (who you may know from his regular appearances on network news during the pandemic), provides a perfect case-in-point. The week before Thanksgiving, Jha appeared before the Senate’s Homeland Security and Governmental Affairs Committee for a hearing about early treatment for COVID-19, and later lamented in a New York Times op-ed that his testimony was a missed opportunity. What could have been a productive discussion of promising treatments devolved into a rehashing of the utility of hydroxychloroquine, with Senators and “expert” witnesses ignoring the many studies showing the drug is not effective, and possibly harmful, in treating COVID patients. Jha was called “reckless” for countering their arguments with data, as if “the evidence itself, they seemed to be arguing, was misinformation”. Given the clinical evidence, hydroxychloroquine is a prime example of a treatment whose lack of efficacy in treating COVID would be considered settled practice—in normal times. Given the discourse during the pandemic, however, many Americans seem to consider scientific evidence subject to political interpretation. We agree with Jha that this “creeping partisan polarization of knowledge itself” endangers medical progress—and may be a lasting ramification of the pandemic that puts all of us at greater risk.

A glimpse at the superhuman schedule of “America’s Doctor”

For us, telecommuting and cancelled travel has meant more sleep, one of the few silver linings of the pandemic. Not so for Dr. Anthony Fauci, according to this fascinating piece from HuffPost, which provides a minute-by-minute look at a day in the life of “America’s Doctor”. Fauci’s grueling and unrelenting work habits, which until recently included a daily seven-mile run over lunch, have long been exceptional. That pace has only increased during the pandemic. On a typical day, Fauci, who turns 80 later this month, had his first of ten media interviews starting at 6:30 am, then rounded on patients, met with several research and policy teams, including the White House Coronavirus Task Force, and only wrapped up calls and email at 11 pm—on Thanksgiving Eve. Like many physicians and nurses we’ve met, Fauci seems to be able to perform incredible feats with only limited rest. Whether they’re bright-eyed for 6 am rounds, or (like us) need a third cup of coffee to face the morning, it’s impossible to adequately express our gratitude for the doctors, nurses and other clinicians—Dr. Fauci among them—pulling long hours to take care of critically-ill patients.

Most of all, please 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