|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
The virus doesn’t care about November 3rd
As the “third wave” of coronavirus continued to gain steam across the US this week, the nation passed another grim milestone, with more than 9M Americans now having tested positive for the virus, and the seven-day average number of new cases hitting a pandemic record of almost 72,000 new diagnoses daily. In states that we’ll surely be discussing a lot in the next week, cases were up 33 percent in Pennsylvania, 25 percent in Michigan, 23 percent in Wisconsin, 21 percent in Florida, and 16 percent in Arizona. In a sign that the magnitude of case growth is not just an artifact of more testing, hospitalizations for COVID have risen 46 percent since the beginning of October, and are up 12 percent just this week. Nevertheless, as part of its “closing argument” to voters, the Trump administration this week touted “ending the COVID-19 pandemic” as one of its signature first-term accomplishments, although new polling data from Axios/Ipsos show that 62 percent of Americans believe the federal government is making the recovery worse, and 46 percent say the response has gotten worse since the first surge of cases in March and April. Dr. Anthony Fauci, the talismanic director of the National Institute of Allergy and Infectious Diseases, told CNBC this week that “if things do not change, if they continue on the course we’re on, there’s gonna be a whole lot of pain in this country with regard to additional cases, and hospitalizations, and deaths.”
In separate remarks, Fauci pulled back from earlier predictions for the timing of a safe and effective vaccine against the coronavirus. In comments made Thursday, he said he now expects a vaccine to be available to those in high-priority groups “by the end of December or the beginning of January.” The CEO of drug maker Pfizer, which is among the furthest along in vaccine development, urged patience as its Phase 3 trial nears full enrollment, and researchers prepare to review and submit safety data to the Food and Drug Administration. He again assured investors that the vaccine timeline would remain apolitical, stating “This is not going to be a Republican vaccine or a Democratic vaccine. It would be a vaccine for citizens of the world.” AstraZeneca, also ahead in development of a coronavirus vaccine, reported promising results regarding immune responses among participants in its clinical trials, being conducted jointly with Oxford University. With the Presidential election just a few days away, it remains clear that neither the virus nor the scientific community’s efforts to combat it are conforming to the best-laid plans of political leaders. The outcome of the looming political battle, however, will surely determine the context in which the larger fight against this pandemic takes place. Again, please vote—it’s a matter of life and death.
Russian hackers planning cyberattacks on US hospitals
This week, three government agencies warned US hospital leaders that they had become aware of a “credible threat” from Russian hackers to engage in widespread ransomware attacks across the coming weeks. First tipped off by Hold Security, a private firm that specializes in protecting against cyberattacks, officials from the Federal Bureau of Investigation, the Department of Health and Human Services, and the Department of Homeland Security warned that the hackers intended to create “panic”, at a time when the country is experiencing a dramatic rise in COVID-related hospitalizations. At least nine hospitals were reported to have experienced ransomware attacks by the Russian hacking groups, known as “UNC1878” and “Wizard Spider”, including facilities in Oregon, Vermont, New York, and Minnesota. Ransomware attacks involve the deliberate encryption of critical data, such as patient health records, which can only be unlocked if monetary demands are met. Since the pandemic began, cybersecurity experts report a 700 percent increase in ransomware attacks nationwide, including a notable episode last month that crippled the information systems of Universal Health Services (UHS), which operates 400+ hospitals, clinics, and behavioral health facilities across the US and the United Kingdom. It is unclear whether UHS ultimately paid ransom to regain access to its data, but hackers often demand payments into the millions of dollars, frequently in the form of bitcoin, to release maliciously encrypted data. Healthcare organizations have long been reported to lag other companies in their investment in data protection and cybersecurity, although the number and extent of cyberattacks against hospitals, physician groups, and other facilities has spiked in recent years. Federal agencies have published extensive guidance to assist in protecting against ransomware attacks, which have become a top security concern for US hospitals. With the health information environment becoming increasingly decentralized, as telehealth services increase and hospital employees work from home in greater numbers, the danger to American healthcare—and to patients—will surely continue to increase.
A new healthcare giant in the interior West
In the latest sign that consolidation in the hospital industry has not been slowed by the COVID pandemic, the largest health systems in Utah and the Dakotas this week announced their intention to merge. Salt Lake City-based Intermountain Healthcare, which runs 24 hospitals and 215 clinics in Utah, Nevada, and Idaho, will combine with Sioux Falls, SD-based Sanford Health, with 46 hospitals and 210 clinics, and operations across 24 states. The combined entity, which will be headquartered in Salt Lake City and helmed by Intermountain CEO Dr. Marc Harrison, will have annual revenue of more than $15B, including from each system’s fully-owned health plans. In a joint call, Harrison and Sanford’s CEO Kelby Krabbenhoft indicated that their vision is to continue to expand the reach of what will be one of the largest health systems in the Western US. “We believe there are going to be hospitals and systems across the interior West of the US that are going to want to join the team,” said Harrison, adding, “We are looking for strong organizations.” Although corporate and back-office synergies are a common rationale for mergers of non-overlapping hospital systems, which typically do not offer duplicative services in any one geography, the two CEOs said they do not anticipate layoffs following the completion of the merger, targeted for mid-2021.
Intermountain Healthcare has long been regarded as a national leader in clinical quality, and its integrated payer-provider approach is often cited as a model for US healthcare. Sanford Health, which was recently stymied in its attempt to merge with Iowa-based UnityPoint Health, has deep expertise in delivering healthcare services in rural areas, and through a recently acquired subsidiary, is also the largest not-for-profit provider of senior housing services in the nation. Sanford’s health plan boasts about 210,000 enrollees, with $1B in revenue, while Intermountain’s Select Health insurance division is a $4B company with more than 900,000 members—ensuring that the combined health plan operations of the new system will be a formidable player in the Western US. As we have written before, our view is that the burden of proof is on health systems to demonstrate that mergers will create value for patients and consumers, despite a large body of academic work indicating otherwise. We’d be willing to bet with these two innovative systems, but we’ll be watching closely to better understand their plans for improving care and reducing cost.