April 22, 2022

The Weekly Gist: The Timing is Everything Edition

by Chas Roades and Lisa Bielamowicz MD

Timing is everything. After two years of working from our basements, we finally decided in February, as the Omicron wave began to subside, that we were safe to plan an in-person Gist retreat for the end of April. So, from our various locations, we’re all going to converge next week for a couple of days to unplug, debrief, and (for some of us) meet each other in person for the first time. Looks like we tempted fate, though. Suddenly this week, masks became optional (read: rare) on planes, an even more contagious variant took hold, and one of us (the old guy) got COVID. Time to improvise—we’re switching to outdoor meals, testing before team events, and setting up (ugh) a Zoom link for Chas. Still looking forward to a great get-together—we’ll be off next week, and will see you with our next edition in two weeks. Keep masking and stay safe!

THIS WEEK IN HEALTHCARE

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

  1. Feds poised to fight to preserve mask mandate for travel. The Department of Justice (DOJ) is appealing a Florida judge’s Monday decision to strike down the mask requirement for public transportation. Federal judge Kathryn Mizelle ruled the Centers for Disease Control and Prevention (CDC) exceeded its authority under the Public Health Service Act of 1944. Meanwhile, giddy passengers and flight crew have been discarding their face coverings as airlines, the Transportation Safety Administration, several local transit authorities, Uber and Lyft, all removed their mask requirements.

The Gist: Despite DOJ’s appeal, which appears to be aimed at preserving its own authority to act during health crises, rather than reinstating the current mask requirement (which was set to expire in two weeks anyway), the tone of the Biden administration is clearly shifting. Earlier this week President Biden told reporters that the decision to wear a mask is “up to them,” meaning individual Americans. In the bumpy transition out of the emergency phase of the pandemic, we now have a patchwork of rules for masking. This is even true within healthcare facilities: some, including Houston Methodist and Iowa-based UnityPoint Health, are no longer requiring masks for visitors or employees who are not involved in patient care. With COVID cases now rising in 41 states as mask mandates fall, the next month will prove critical in determining whether “endemic” COVID remains manageable, or once again stresses the healthcare system and other critical infrastructure. 

  1. Medicare proposes 3.2 percent inpatient pay bump. The Centers for Medicare and Medicaid Services (CMS) released its 2023 Inpatient Prospective Payment System (IPPS) proposed rule this week, which includes a 2 percent hospital payment increase. The American Hospital Association called the increase “simply unacceptable,” given the economy’s current inflation rate. With proposed reductions to disproportionate share and other payments, some hospitals will actually see a net decrease in reimbursement next year. CMS also plans to adjust penalties for its readmissions and hospital-acquired conditions programs, and to add new reporting measures based on social determinants of health and opioid-related adverse events. The proposed rule is open for public comment through June 17th.

The Gist: Inflation in healthcare prices tends to lag the broader economy, as commercial insurance contracts are often negotiated one or more years in advance. But there is no delay for spiking supply and labor costs. If Medicare payment can’t be counted on to keep up with inflation, health systems will face even more significant margin pressures heading into next year, compelling leaders to act more quickly to reconfigure unsustainable elements of their legacy business models amid mounting cost pressures.  

  1. Insurtech Bright Health stumbles amid fast growth. The Minneapolis-based insurer was fined $1M by the Colorado Department of Insurance for failing to complete basic health plan functions, including paying claims, communicating with members, and processing consumer payments. Bright claims its rapid growth, along with COVID-related challenges, contributed to its failures in the Colorado individual and family plan market, where it serves about 50,000 enrollees. But there are also signs of other problems. After posting $1.2B in losses in 2021, Bright laid off five percent of its employees in March, and says it plans to exit the individual market in six states, which make up less than five percent of its revenue. Bright is instead focusing on integrating its provider arm, NeueHealth, into its insurance business in fast-growing markets like Texas, North Carolina, and Florida. 

The Gist: While Bright, along with other insurtechs, has garnered attention with promises of an enhanced customer experience and lower costs, its stumbles with basic health plan functions in Colorado may signal more systemic problems. This news could deter health systems and other providers from partnering with the insurer. After years of hype, most insurtechs still have minimal market share, and most have yet to turn a profit. Unless performance improves, it may not be long before Bright, Oscar, and others become acquisition targets for larger, more established players.

Pluswhat we’ve been reading.

  1. Departures of younger nurses driving nursing shortage. While reports of Baby Boomer nurses opting for early retirement have led many hospitals to focus their retention strategies on older, more tenured nurses, a new piece in Health Affairs shows that the decline in registered nurse (RN) employment in 2021—the sharpest decline in the last 40 years—was largely driven by nurses younger than 35, and was exclusive to the hospital employment setting. From 2019 to 2021, the RN workforce under the age of 35 shrank by four percent, contributing to an overall 1.8 percent decline in the total RN workforce over two years.

The Gist: COVID has exacerbated a long-known problem of high attrition among early-career, hospital-based nurses. Many new graduates’ training was disrupted by COVID. Challenges for new nurses continued with truncated onboarding and residencies, along with fewer support programs. While nursing school enrollment is still up, growth has slowed across the last year. Hospitals must work to reverse educational gaps and the early-career employment dip, doubling down on efforts to support and sustain younger nurses after two years of pandemic stress.


GRAPHIC OF THE WEEK

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

Healthcare’s impact on global warming

In honor of Earth Day, our graphic this week breaks down healthcare’s carbon footprint. Each year, the US healthcare sector emits around 540M metric tons of carbon dioxide equivalents (a measure that standardizes the warming effect of greenhouse gasses), making up just under 10 percent of domestic emissions, equivalent to roughly one-half of the annual output of all cars driven in the US. According to a comprehensive study of the United Kingdom’s National Health Service, around two-thirds of healthcare’s carbon emissions come from its supply chain, meaning far more greenhouse gasses are released indirectly through the manufacturing and shipping of medicine and supplies (which are often single-use) than through the delivery of care. However, especially amid rising supply costs, health systems looking to reduce their carbon footprint may want to focus first on emissions within their direct control. According to experts, hospitals have opportunities to improve their carbon footprint with little to no impact to their bottom lines by being more thoughtful about their energy consumption. Likewise, by limiting the use of certain anesthesia gasses with particularly strong greenhouse effects, they can reduce emissions at no extra cost or compromise of clinical quality. While increasing numbers of health systems are taking initial steps to reduce their carbon footprint, the Biden administration is also signaling that it may soon require hospitals to meet new emission standards. 


THIS WEEK AT GIST—ON THE ROAD

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

When consumer health technology leapfrogs medical science 

At a recent health system physician leadership retreat, two cardiologists presented a fascinating update on the electrophysiology (EP) service line. Electrophysiologists use advanced heart mapping and ablation technologies to diagnose, pinpoint, and treat abnormal heart rhythms, and the field has made dramatic advances over the past decade. The success rate of interventions has risen, and procedures which used to take hours in a cath lab are now performed in a fraction of the time—with some patients even able to go home same-day. This increased efficiency has expanded the EP program’s capacity, but the system still finds itself overwhelmed with demand. The system is located in a high-growth market, and demand is also fueled by shifting demographics, with more aging Baby Boomers seeking care. But a key driver of growth has been the spread of “smart watches” like the Apple Watch and Fitbit, which tout the ability to detect abnormal heart rhythms like atrial fibrillation. With “half of the community walking around with an EKG on their wrist”, the number of patients seeking evaluations for “a-fib” has skyrocketed: at this system, over 50 percent growth in patient volume, leading to 25 jump in procedures during the pandemic.

While the doctors were excited about growth, they also stressed the need to rethink care pathways to make sure that electrophysiologists’ time was prioritized for the patients who needed it most. The system should look to develop care pathways and technology that enable other physicians to readily triage and manage routine atrial fibrillation. But smartwatch-driven self-diagnosis raises larger questions about how doctors and hospitals must adapt when consumer technology outpaces the science evaluating its effectiveness, and the health system’s ability to meet new demand. With private equity firms now focused on acquiring cardiology practices, this massive spike of demand, coupled with the ability to move more heart rhythm procedures outpatient, is seen by investors as a significant profit opportunity—making it even more critical for doctors, researchers, and hospitals to ensure that sound clinical guidelines are developed to drive high-quality, appropriate management.


THIS WEEK AT GIST—ON THE PODCAST

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

CVS Health has moved quickly to build out its new clinical trial services unit, announcing a partnership with decentralized clinical trial software platform Medable and opening research sites across the country. Last Monday, General Manager of CVS Clinical Trial Services Tony Clapsis discussed the unit’s growth, and plans to build a nationwide research network.

Next week, we’ll be revisiting of some of our favorite episodes. Tune in to hear from Janelle Lee, VP of Human Resources at Missouri-based Mosaic Life Care, on the impact of schedule flexibility and new benefits on staff retention. We’ll also hear from Shawn Morris, CEO of Privia Health, about the company’s plans to partner with health systems, and move more physicians to value-based payment.

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


That’s all for now! As mentioned, we’ll be off next week at our team retreat, but we’ll see you back here the following week for more healthcare news and insights. Thanks for taking time to read our work, and please remember to share the Weekly Gist with friends and colleagues, and encourage them to subscribe. And tell them to give a listen to our daily podcast, too—it’s great!

Let us know if we can be of assistance in your work, as always. 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