|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Grim statistics mount in the battle with COVID
It was a week of unhappy milestones in the nation’s battle with the coronavirus. On Thursday, the US crossed the threshold of 4M confirmed COVID cases, just 15 days after it hit the 3M cases mark. That’s three times as fast as it took to go from 2M to 3M cases, with daily new case counts now hovering near 70,000. As the virus proliferates across the country, California has now overtaken New York as the epicenter of the outbreak, with more than 422,000 total cases reported since the beginning of the pandemic, versus New York’s 413,000. Of greater concern, the daily US death toll from COVID stayed stubbornly above 1,000 for most of the week, the highest it’s been since late May. More Americans are currently hospitalized with COVID than at any time since the middle of April, with the Gulf Coast states showing some of the highest per-capita hospitalization rates in the country. For good reason, Secretary of Health and Human Services (HHS) Alex Azar officially renewed the Trump administration’s declaration of a public health emergency for another 90 days, clearing the way for the nation’s hospitals to receive more emergency financial assistance in battling the virus, and for continued relaxation of regulations that have allowed them to provide care virtually, and in non-traditional settings.
Meanwhile, as part of its Operation Warp Speed initiative to accelerate the development of a COVID vaccine, the Trump administration inked a $1.95B deal with pharmaceutical firm Pfizer and a German biotech company, BioNTech, to purchase 100M doses of the vaccine those companies are developing, with an option to buy an additional 500M doses. That’s in addition to contracts already in place to purchase 100M doses of a vaccine from Novavax, and 300M doses from AstraZeneca. Americans would have free access to the Pfizer vaccine under the new arrangement, with the government subsidizing the entire cost of each dose, estimated to be about $19.50. Similar deals struck by the British government with AstraZeneca and GlaxoSmithKline carry a much lower per dose price tag—between $4 and $10—raising concerns of “profiteering” by pharmaceutical companies in the US vaccine hunt. The forward purchasing of millions of doses, coupled with rapid progress on vaccine development (at least 25 of the 150 potential vaccines being developed are already in human trials), raises hopes that help is on the way in our battle with the virus. On Friday, however, top White House science advisor Dr. Anthony Fauci said that he doesn’t expect a vaccine to be “widely available” to the American public until the second half of next year. Until then, our hand-to-hand combat with the virus—using non-pharmaceutical interventions such as mask wearing, social distancing, hand hygiene, testing, and contact tracing—must intensify, particularly in light of increasingly worrisome data on the spread and impact of the disease. US coronavirus update: 4.0M cases; 144K deaths; 48.8M tests conducted.
The parlous state of COVID data reporting
On Monday, the Department of Health and Human Services (HHS) launched its new coronavirus data tracking dashboard, HHS Protect. Following last week’s short-notice decision to order hospitals to stop reporting COVID statistics to the Centers for Disease Control and Prevention (CDC) and instead to use a new HHS tool (developed by private contractor TeleTracking), hospitals were left scrambling to retool their reporting processes. At launch, there were significant issues with the accuracy of the HHS Protect data—for example, as of today, the dashboard lists California’s overall inpatient bed occupancy rate at 97 percent, and Rhode Island’s at 118 percent. Not only has the reporting change created a significant additional burden for hospitals—one executive told us that the process was “far from automated” and that they were being asked to collect numerous additional pieces of data that required them to pull staff away from other duties—other public health entities that previously relied on the CDC’s existing data reports were caught short as well. The state of California, for example, had to add a disclaimer to its statewide COVID dashboard, noting that numerous facilities were not yet able to provide data because of the HHS switch.
Meanwhile, a new study from Resolve to Save Lives, a nonprofit organization led by former CDC director Dr. Tom Frieden, provided a dismal evaluation of the quality of COVID data reporting across the country. According to the study, only 40 percent of essential data points are being regularly reported, while more than half of critical indicators are not being reported at all. In particular, the study called out reporting on testing turnaround time and contact tracing activities as key areas in need of improvement. As with many aspects of the pandemic, data reporting has become a political issue—with some states intentionally withholding data from the public that could provide a much clearer picture of progress in combatting the virus. This latest dust-up between the CDC and HHS on data collection and reporting adds an unhelpful challenge, and comes at a time when we need more reliable intelligence on the pandemic, not more reasons to doubt the (limited) information that’s available.
HCA reports its “COVID quarter” earnings—they’re up
The nation’s largest hospital chain, HCA Healthcare, announced its second quarter earnings this week, giving Wall Street a closer look at how disruptions from COVID have impacted the financial health of the sector. The headline-grabbing news: compared to the same quarter last year, HCA’s earnings were up nearly 38 percent, hitting $1.08B for the period. More than half of HCA’s quarterly profits, or $590M, came from CARES Act funding distributed as part of a Congressional bailout of the industry. In total, the chain received about $1.4B in CARES Act funding in the second quarter, about two-thirds of which was from the federal government’s “general” distribution—based on Medicare billings or total revenue—with the rest from funds targeted to particularly hard-hit facilities. (HCA has also received $4.4B in advance Medicare payments, according to the earnings report.) Similar to what we’ve heard from several not-for-profit systems, the CARES Act money largely rescued what otherwise would have been a disastrous “COVID quarter”: HCA’s same-facility admissions were down 12.8 percent compared to the second quarter of last year, with inpatient surgeries down 15.7 percent, hospital outpatient surgeries down 27 percent, and ambulatory surgeries down 40 percent. While that loss in business—driven by the shutdown of non-emergent cases in most states, and consumers’ reluctance to return to healthcare settings—drove a 12.2 percent reduction in revenue, avoidance of associated costs allowed HCA to reduce expenses by 10.5 percent compared to last year’s second quarter.
The real question for HCA—and for all hospitals trying to recover from the first wave of COVID while bracing for further spikes and resurgence—is how much of the “backlog” of postponed cases will eventually return, and what volume will look like after the backlog is gone. In a call with analysts, HCA’s CEO Sam Hazen estimated that the chain has managed to “recapture” 40 to 50 percent of deferred cases, which have now either been performed or rescheduled. He reported that orthopedic procedures, spine surgeries, and general surgery have recovered fastest, with diagnostic visits lagging. As we’ve talked to hospital executives across the country, the general expectation seems to be that post-backlog volumes will eventually settle at between 85 and 90 percent of pre-COVID levels, but (because of payer and case mix shifts) with only 70 to 75 percent of pre-COVID revenue. As helpful as CARES Act funding has been thus far, there’s a new economic reality coming for hospitals—one that will require a much broader rethink of the volume-and-visits-driven financial model that most have come to rely on.