September 2, 2022

The Weekly Gist: The Trapper Keeper Edition

by Chas Roades and Lisa Bielamowicz MD

Humanity lost a great genius this week, a creative mind on par with DaVinci, Newton, and Edison. At least, that is, if you were in school in the 1980s. We speak, of course, of E. Bryant Crutchfield, the inventor of the Trapper Keeper. From deep in the laboratories of Mead Paper, Crutchfield unleashed the legendary binder-folder-paper combo on the world in 1981, and within a few years, over half of all middle- and high-school students in the US had one. You could buy any number of varieties to suit your tastes—we fondly remember one with a cherry-red Lamborghini on the front that was used so heavily it eventually disintegrated in a particularly tragic locker incident. You can keep your fancy Moleskines and whiz-bang iPads, we’ll take that evocative r-r-r-r-ipp of the Trapper Keeper’s Velcro any day. RIP, Mr. Crutchfield.

THIS WEEK IN HEALTHCARE

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

  1. New COVID booster authorized, though federal financial support is running out. This week, the Food and Drug Administration approved tweaks to the COVID-19 vaccine booster doses from Pfizer and Moderna to better target the BA.5 omicron strain, currently the most prevalent in the US. Yesterday, outside advisors to the Centers for Disease Control and Prevention (CDC) recommended that these bivalent doses, which mix the original recipe with a BA.5-specific formulation, be administered to all individuals ages 12 and up, a recommendation CDC Director Rochelle Walensky quickly adopted. The federal government has already purchased 170M booster doses, but with additional COVID funding failing to pass Congress, consumers may soon be required to cover out-of-pocket costs for vaccinations.

The Gist: Given that fewer than half of the country’s fully vaccinated population has received even a first booster, the CDC will face an uphill battle in its efforts to encourage widespread uptake of a new booster. While we’re heartened by the mounting evidence that COVID case numbers have decoupled from severe illness and death rates, it’s worth asking what another fall or winter COVID wave would look like for US hospitals, given persistent staffing shortages. A successful rollout of a new booster could help prevent any worst-case scenarios, but the CDC’s vaccination rollout performance over the past few years doesn’t instill much confidence. Health systems may yet again be facing this threat on their own, without any government financial support this time. 

  1. Amazon shutters Amazon Care. Amazon announced late last week that it will stop offering Amazon Care to employer clients at the end of this year. Initially developed as a virtual care option for Amazon employees in 2019, Amazon Care grew to include virtual care for other employers in all 50 states, and earlier this year, released expansion plans to establish in-person clinics in 20 cities. Amazon shared its decision to shut down Amazon Care one month after it announced plans to acquire primary care company One Medical. Amazon Care’s failure to establish itself in the employer health benefits market appears to have driven the closure decision, raising questions about whether One Medical will serve as a replacement business, or whether the e-commerce giant has other plans for the new acquisition.

The Gist: By giving up on its employer-oriented healthcare business after only a couple of years, Amazon has handed its critics another piece of evidence that “healthcare is hard”. Perhaps it will find better success with One Medical—which operates 182 medical offices in 25 markets and has many established contracts with major employers—than it did building its own offering. But so far neither Amazon nor One Medical has figured out how to make money in primary care delivery. Though Amazon has yet to prove its “business genius” translates to healthcare, it still has deep pockets, a willingness to experiment, and a unique understanding of American consumers that will keep healthcare insiders watching its every move. Enjoy the schadenfreude while it lasts.

  1. Surprise billing ban hampered by arbitration frustrations. Eight months after the No Surprises Act went into effect, the dispute resolution process it established to settle rate disagreements between providers and insurers has settled less than three percent of 46K cases submitted to the federal mediation portal, which was established in April. Insurers have blamed providers for overloading the system with frivolous claims, while providers have accused insurers of slow-walking the submission of necessary information. Both parties have challenged the eligibility of nearly half the cases in mediation, and a recently published, more provider-friendly final rule will likely cause further delays to the process.

The Gist: The No Surprises Act is another example of what happens when an ambitious health policy fix is negotiated down to a Band-Aid solution that does little to solve the underlying causes of the problem. Instead of setting prices or regulating physician networks, the law only added another layer of administrative bloat to the already convoluted healthcare billing system. While consumer advocates can celebrate that at least it’s serving to prevent surprise bills for many—one survey from earlier this year estimates that it will prevent 12M surprise bills this year—we are left holding out hope for true reform to come.

Pluswhat we’ve been reading.

  1. Are Americans now sicker? A stagging number of Americans either postponed or avoided nonemergency healthcare across the past two and a half years, whether out of fear of COVID infection, financial concerns, or because of provider closures and scheduling backlogs. A recent Atlantic article explores the impact of this delayed care, which now threatens the health of many Americans and presents new challenges for the delivery system. While the anecdotal reports of returning patients presenting with more advanced illness are compelling, the article also cites recent research that 30-day mortality rates for non-COVID hospitalized patients rose during the pandemic and remain persistently elevated.

 The Gist: Hospital leaders today point to higher inpatient acuity levels as not only a sign of delayed care, but also a prospect for higher volumes as patients resume pre-pandemic healthcare consumption patterns. However, this rise in acuity might also simply be the result of successful diversion of lower-acuity patients to non-hospital settings, leaving only the sickest to be admitted. Nonetheless, many Americans who delayed care are still grappling with an array of problems, especially chronic disease exacerbations, which will further impact their health for years to come. Health systems must continue targeted outreach to these patients, who are disproportionately Black, Hispanic, and lower income. As the article notes, “It’s still possible to prevent an acute public health crisis from seeding an ever bigger chronic one.”


GRAPHIC OF THE WEEK

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

Medical care inflation rising as consumer sentiment hits historic low

In June 2022, US inflation reached its highest rate in four decades, with energy and food price increases leading the way. In the graphic below, we use Bureau of Labor Statistics data to examine the extent to which this post-pandemic price spike has impacted healthcare. After experiencing above-average inflation, the 12-month inflation rate for medical care (which includes both medical services and medical commodities) began falling in July 2020, just as overall inflation started its recent climb. However, after bottoming out last summer, medical care prices have risen in tandem with all goods. In other words, healthcare inflation lagged economy-wide inflation by a year, but is now catching up. Rising prices across the board have had a significant effect on the psyche of the American public, with at least one measure of consumer sentiment reaching a historic low earlier this summer. Americans are worried about medical expenses specifically: according to a recent surveyfour of consumers’ top seven affordability concerns are healthcare-related. With inflation pinching everyone’s wallets, and medical care prices no longer an exception to the rising tide, health systems should expect care deferrals to continue as consumers prioritize their reduced spending power on household necessities instead of healthcare. 


INTERMISSION

A recommendation from our weekly diet of music, movies, TV, and other good stuff.

Thee Sacred Souls by Thee Sacred Souls—From the studios of the legendary Daptone label comes this highly-anticipated debut by a sweet-soul trio hailing from sunny San Diego. It’s the perfect soundtrack for a lazy Labor Day weekend, with warm overtones of late-60s and early-70s classic R&B. Timeless, but fresh.


THIS WEEK AT GIST—ON THE ROAD

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

No Surprises Act gives insurers new leverage against doctors

Specialist physician groups have long anticipated that the No Surprises Act would negatively impact their profitability. Many of these groups, particularly large staffing firms owned by private equity investors, leveraged out-of-network billing as a strategy to increase profits, despite the implications for consumers. Lately, however, they are even more concerned about ways that large health plans are using the terms of the arbitration process to their own advantage, which could have an even greater impact on prices. Here’s the wrinkle: arbitrators are directed to use the “median in-network price” for any service as a starting benchmark for settling disputes. According to reports, payers are already looking to exclude the highest-priced specialists from their networks to bring down the median in-network rate. As one consultant told us, “It’s a double whammy for these groups. First, some of the higher-price groups will get kicked out of the network. And then the plans will leverage the resulting lower median in-network rate against them in arbitration. The impact is all these groups want to talk about.” While the resulting lower prices might be better for consumers in the long run, these moves are likely to create near-term chaos for patients and health systems if more physicians in the market shift out-of-network. As one hospital COO told us, “Our largest payer has long been threatening to boot the group that provides our ED coverage out of their network. If this happens, we’ll need to find another solution beyond having tons of claims going to arbitration.” And with the arbitration process already backed up, we’re likely to see months of uncertainty and revenue cycle challenges. It will take months, or longer, for the process to improve—and to be able to estimate the true impact of the new legislation for physicians and patients.


THIS WEEK AT GIST—ON THE BLOG

Developing an Effective Employee Value Proposition

In a recent edition, we shared an infographic outlining the key components of a compelling employee value position—a concise statement we think every health system should assemble to highlight why employees should work for them. We have expanded on these concepts in a longer-form executive briefing, which provides more detail on why an employee value proposition is a vital tool in today’s labor market—and why the process of creating one can be almost as important as the final product.


A note to readers

Wow, it really is a tight labor market, isn’t it? We’re looking to add to our growing Member Insight team, focused on distilling what matters in healthcare today and delivering guidance to healthcare leaders. And we’re still on the hunt for our next Gist Healthcare Daily host/producer. If you’re interested in these roles, or know anyone who might be, please drop us a line at careers@gisthealthcare.com. You can find more information about our open positions at the links below.

Analyst/Senior Analyst, Member Insight
Director/Senior Director, Member Insight
Podcast Host/Producer


That’s all for this week. Thanks for taking time to read the Weekly Gist—let us know what you thought! We love hearing from our readers, and we’d be especially grateful if you’d forward this to a friend or colleague, and encourage them to subscribe. But first, enjoy the holiday weekend—Happy Labor Day!

Most importantly, please let us know if we can 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