As sheltering in place wears on, I keep all in perspective knowing others have it far worse than I. Some have lost loved ones, others their jobs and others are still facing down the COVID-19 virus on a daily basis delivering care and comfort to those that have been infected.

Personally, I’ve been having a bad case of writer’s block. Part of the problem may simply be being overwhelmed with all the COVID-19 information out there. It is incessant. What could I ever add to this? Part of it may be my own high risk to this disease and a certain fear to write would be to attract it. Regardless, I have been remiss.

That is not to say I have not
been following this crisis closely. Actually, quite the opposite. COVID-19 has
shed light on so many issues regarding the U.S. healthcare system that it can
be difficult to unravel. The pandemic has exposed or brought forth both the
good, the bad and the ugly of our current healthcare system.

The ugly begins with health
disparities, a poor public health infrastructure, and a fragile supply chain
that has put many healthcare workers needlessly at risk. The bad are the lack
of a national strategic framework for pandemic response, a fragmented, highly
localized healthcare infrastructure that is incapable of sharing information
quickly and a transaction-based, reimbursement model for providers that is
putting extreme financial strain on this sector. On the side of good, we have
seen providers the world over come together, most often through the now ubiquitous
Zoom and #medtwitter to share their experiences, their learnings to advance COVID-19
clinical care pathways and research.

While it is difficult to
predict exactly how the healthcare sector will be altered in the future as we
slowly open up the economy, there are some pretty clear signals.

Virtual-care is here to
stay. While countless pundits tout
the final coming of telehealth, I see it differently. Telehealth is yesterday’s
news. Sure, it has seen eye-popping growth as a result of social distancing
(one large EHR vendor saw telehealth visits go from 20k in Feb’20 to a whooping
2.4M in Apr’20) but telehealth is one piece of a larger, future play. That play,
which stars biometric devices, home diagnostics, AI, and engagement will move
care delivery beyond the current migration of acute to ambulatory – taking care
directly into the home.

Granted, virtual-care has
been in the background for a number of years – we even highlighted it in our 2018
Telehealth Report (now perpetually free). But thanks to COVID-19 driving
the need for physical distancing and consumers’ growing comfort and confidence
with such models of care, virtual-care will become a significant piece of the
care delivery chain in coming years.

However, what we have yet to
see arrive on the market is a robust platform to support virtual-care and all
the components that comprise it. There are a number of best-of-breed vendors
that are providing aspects of it, AmWell, MDlive, Teledoc for telehealth;
Livongo, Omada, ResMed for biometrics+care management; Validic for biometrics;
and Conversa, Babylon, ada Health on the AI-enabled consumer self-triage front.
Of course, EHR vendors are dappling in all of the above, but no one vendor
today has it all and providers are left to stitch such together for their
specific needs.

I see a real opportunity for
the platform company that can figure this one out. Even heard recently that a
P.E. firm’s latest raise will target just this arena. Stay tuned, the growth of
virtual-care adoption bears close watching.

Service transaction models
will become less prominent. The
traditional fee for service (FFS) model is taking its toll across the industry.
As office visits and elective procedures get cancelled and leery consumers avoid
the ED for fear of contracting COVID-19, the fees associated with such have
simply disappeared. There has been plenty of headlines on the dire
financial straits many providers are currently in with predictions of one
in four closing or changing ownership.

While billions of dollars in
stimulus funds have recently flowed to providers to try and keep them whole
through the crisis, this does not address the inherent problem: The FFS
reimbursement model simply does not work for providers in addressing a pandemic
– though payers are now sitting on piles of cash as they did not have to pay
for such services, being paid by employers on a member/month model.

A day of reckoning will come
as the dust begins to settle as to how to reconcile this imbalance. I foresee a
likely payment model that has some degree of capitation insuring providers get
paid a base rate for the population they manage. Who knows, maybe even
specialists, who have preferred RVU payments, will also come around to this concept,
which by and large they have abhorred in the past.

Such a change in
reimbursement is not new – it is what the industry has been grudgingly adopting
over the last decade or so via value-based care (VBC) reimbursement models. It continues
to be a struggle for most providers with one foot on the FFS dock and another
in the VBC boat. An outcome of COVID-19 will be a renewed interest in VBC and
the technology (analytics, engagement, care management) to support it.  

As a side note, many a health
IT vendor has also built their revenue model based on FFS transaction flow,
especially those in the revenue cycle management space. Would not surprise me
at all if they are now seriously rethinking that pricing model.

Just-in-time supply chain
model gets reboot, or booted out. The
supply chain mantra of lean, just-in-time delivery works well when demand is
fairly consistent (e.g., an assembly line) but is fragile and does not handle
disruptions well. COVID-19 brought that reality into stark relief as hospital
systems across the country struggled to get the supplies needed to keep
healthcare workers safe and treat patients.

PPE, Where art thou?

Looking ahead, provider
organizations will likely work with their state public health officials to
define an appropriate buffer of critical supplies such as PPE to serve their
community in advent of a future healthcare crisis. New York has already mandated
that providers have a 90d supply of PPE. The CDC may provide guidance on what
they buffer may look like, say based on population, but beyond that, the role
of the Feds will lessen significantly.

Public option gets
serious. As the ranks of the
unemployed swell (already 25% here in MA) and employers ween former employees
off their health plans, there will be crisis in insurance coverage as the ranks
of uninsured blossoms. While one may be able to buy health insurance through a
public exchange such as healthcare.gov, in many parts of the country, only one
payer provides coverage in a given region and costs are often prohibitive.

Do not be surprised if the “public option” debate rapidly rises to the surface, especially in this election year, and even more surprisingly sees bi-partisan support.

Architects and interior
designers get busy, construction crews, far less so. Doctor’s offices, waiting rooms, exam rooms, ER departments
are not designed for physical distancing. This will have to change. Provider
organizations will look to architects and interior designers to redesign their
interior spaces creating places where consumers/patients feel safe.

Light construction will be
needed to bring to reality an architectural rendering but the need for big
construction projects will diminish across the healthcare landscape. This will
be driven by two factors. First, the current financial stress all providers are
currently feeling will curtail capital projects. Second, the massive move to virtual-care
will decrease physical space requirements leading providers to rethink their physical
plant expansion plans.

Hospital system staffing
models come under intense scrutiny.
The financial pressures that COVID-19 is putting on healthcare providers of all
sizes is unprecedented. Healthcare providers of all sizes have taken measures to
bring costs in alignment with revenue and despite furloughs and layoffs, most
are still losing money.

Provider organizations have
just recently begun planning how they will phase in elective surgeries and the
like to generate revenue. However, it is unlikely that this recovery will happen
quickly and a return to pre-COVID levels of service and subsequently revenue
are at best a year away. This will lead to a very slow return to work for many
that have been furloughed and the very real prospect that those that have been
laid-off will have no job to return to. Those that are not directly involved in
care delivery, e.g., administrative staff, will suffer the most.

Stepping into the place of administrative staff will be investments in robotic process automation and AI. Significant investments by vendors into such tools have taken place in recent years. Providers will seek these solutions out to tackle many administrative tasks at a lower cost.

Thoughts on Healthcare ITIf not for the pandemic, I would likely be talking about the recently promulgated interoperability rules and their future impact on the healthcare sector. Then walked-in COVID-19.

The pandemic is having a profound impact on the healthcare sector and the IT sector will not be spared. Organizations of all sizes will postpone or cancel countless projects, minimize use of outside consultants, sunset non-critical applications with small user bases and countless other strategies as they seek to trim IT spend. Major capital IT projects will not move forward until the financial crisis subsides. McKinsey wrote a very good article on how CIOs need to respond to this new world order.

Looking ahead, some of the
key changes I foresee in the healthcare IT space are:

Accelerated move to flexible, cloud services.
Less onsite customization of solutions to minimize support costs.
Boost in spending on digital engagement solutions, including virtual-care.
Deeper integration of virtual-care into clinical workflow.
More aggressive use of analytics with tighter links to SDoH datasets for risk profiling.
More employees working from home => distributed cybersecurity.

The WrapPrior to the pandemic outbreak, it was pretty clear to most learned observers of this industry that it had some very serious structural flaws. Efforts to drive down costs were, at best, modestly successful. Health disparities remain, despite years of valiant efforts by dedicated providers and NGOs to ameliorate such. True health system-wide interoperability remains but a dream, which the new interoperability rules only go so far in addressing. The list of structural flaws is long and endless.

Yet despite this, I do
believe we have a very unique opportunity. At no time in modern history have we
been given the opportunity to truly rethink how we want healthcare to look, to
be delivered to serve the populace writ-large. This may be the industry’s, the
country’s moment to hit the reset button on what we, the citizens of this
country, truly want from this industry sector.

It is time to take advantage of
that opportunity for to let it go to waste may ultimately be more remorseful,
long-term, than the lives we have lost to date from COVID-19.

The post The Good, the Bad and the Ugly appeared first on Chilmark Research.

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