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The Keckley Report

Dark Winter for Hospitals: 3 New Challenges Facing CEOs and their Boards

By November 16, 2020March 1st, 2023No Comments

There are 6146 hospitals in the United States of which 5198 are classified as community hospitals. They employ 7.8 million including 35% of the nation’s physicians. A fourth are owned by private investors; the rest are private not for profit or public hospitals. All face a dark winter.

The second surge of the pandemic has begun: daily infection rates spiked to 184,515, 68,516 are hospitalized and deaths hit 1431 over the weekend. Public health officials estimate deaths could reach 375,000 by the end of the year, up from 246,224 yesterday. And despite promising news about emergency use authorization for vaccines from Pfizer and Moderna, widespread access is unlikely before Spring 2021. That’s where we are.

According to the American Hospital Association, hospitals saw their revenues shrink $50 billion/month in the pandemic’s first surge last spring. The suspension of “non-essential services” cut 20% from procedures and tests and essentially shut down primary care, orthopedics, dentistry, and other clinical services for almost 3 months. Some hospitals were hurt more than others: by the end of the third quarter, 2020, about half had recovered more than 70% of the services they suspended and restored day to day operations albeit with added precaution for infection control and worker safety.

For 70 years, hospitals have affirmed that…

  • ‘We are necessary to community health and economic vitality’

  • ‘We serve the public’s interest by providing high quality, cost effective evidence-based care’

  • ‘We are efficient and cost effective. We are not wasteful’

  • ‘We are underfunded and over-regulated’

Though credible studies have challenged these assertions to varying degrees, the efforts of hospitals to garner the public’s trust and confidence have worked. Polls show Americans trust hospitals and physicians (67%) for their medical needs over other options over urgent care (29%) and retail solutions (10%). And Gallup’s Institutional Confidence Monitoring Surveys show confidence in the medical system (aka hospitals and physicians) up at 51%–the highest since 1977. But despite mounting confidence and trust and a growing reservoir of good will earned in the pandemic, hospitals enter the dark winter with three unprecedented hurdles that keep their CEOs, and their Boards awake:

Logistical Access to Vaccines Poses Huge Issues for Hospitals

Frontline caregivers and seniors at highest risk are slated to be the first to receive vaccines as soon as next month, but widespread access before the spring is unlikely. The production, mass distribution and storage requirements for the vaccine are logistical challenges: each vaccine will have its own properties, and all will require patients to take multiple shots and follow monitoring protocols. In most communities, hospital and local public health clinics will handle access to vaccines: Walgreens, CVS and other retail operators will play a secondary role until widespread public access to vaccines is achieved.

Workforce Anxiety

As of Sunday, 216,049 healthcare workers have been infected by the virus; 799 have died. Those at highest risk are middle-age workers who have pre-existing conditions and direct exposure to hospitalized patients. The hospital workforce is anxious about the future: furloughs, outsourcing, and benefits cuts are taking their toll. The dark winter exacerbates their fears and imperils their ability to work, especially if shortages of PPE, masks, ventilators, and ICU beds re-occur.

Access to Capital

Hospitals are labor intense, highly regulated and capital intense: it’s a daunting combination especially when more than 60% of hospital revenues are paid by the government plans (Medicaid, Medicare) who don’t negotiate the rates they pay. Despite $175 billion through the Coronavirus Aid, Relief, and Economic Security Act (CARES) along with temporary payment increases, for most hospitals, long-term solvency is an issue. And it’s a decided disadvantage when competing with well-funded insurers, tech companies and private equity funds that target profitable slivers of the hospital market.


The dark winter adds to a growing list of imperatives facing hospitals—reducing operating costs, transitioning finances from volume to value-based payments, embracing price transparency, building a digital front-door, optimizing capital to achieve optimal scale and diversification, competing against novel entrants in health delivery and negotiating with insurers and large employers are table stakes.

Fights against reimbursement cuts and opposition to policies like lowering the age of Medicare eligibility to 60 and price transparency are understandable, but the immediate opportunity is to demonstrate the central role hospitals can capably play in managing the second surge in communities. How it’s managed, how hospitals collaborate with local primary care, public health agencies, retail pharmacies and lab testing companies is the platform on which hospitals can advocate for a new social pact with policymakers and community leaders that protects the future and avoids collapse.

It’s time for meaningful discussion about the future for hospitals. The dark winter will pass, but not before taking its toll on hospitals.


P.S. Hospital CEOs have a ton on their plate right now: most are managing the dark winter while making Post-COVID-19 plans. On 12/1 I’ll be co hosting a FREE webinar with Rudish Health, featuring 3 health system CEO’s where we take a deeper dive into these pressing matters, and much more. Nothing will be off the table! Hope you can join us. Register Today!



“Update: Characteristics of Health Care Personnel with COVID-19 — United States, February 12–July 16, 2020”Septebmer 25, 2020; CDC

CDC COVID Data Tracker

Abby Goodnough, Shelia Kaplan “Missing from State Plans to Distribute the Coronavirus Vaccine: Money to Do It”; November 14, 2020; New York Times

U.S. Bureau of Labor Statistics

“Fast Facts on U.S. Hospitals 2020” American Hospital Association

Ziemba et al “Consumers’ Association of Hospital Reputation With Healthcare Quality”; July/August 2019; Journal for Healthcare Quality

“Confidence in Institutions” Gallup

“Who do patients trust with their health? Health Care Consumer Trust Survey Report” Bright MD

“Payment and Delivery in 2018: Participation in Medical Homes and Accountable Care Organizations on the Rise While Fee-for-Service Revenue Remains Stable” Physician Practice Benchmark Survey, August 2019; American Medical Association

Bridget M. Kuehn “COVID-19 Deaths Among US Clinicians”; November 10, 2020; JAMA Network

Fisher et al “Financial Integration’s Impact On Care Delivery And Payment Reforms: A Survey Of Hospitals And Physician Practices” August 2020; Health Affairs


Study: Telehealth Resistance Significant

In August 2020, Hero Digital surveyed 1,673 people about their preferences and behaviors for interacting with healthcare providers and how they may have changed as a result of the COVID-19 pandemic. Findings:

  • Use of telehealth in any form increased from 33% of the overall population to 61% during the pandemic: digital health monitors from 39% to 50%, mail order pharmacies from 37 to 48% and at home lab testing from 21 to 31%

  • Virtual visits increased from 7% to 31%

  • 39% of the population are “resisters”:48% of these 48% more likely to have not visited a doctor since COVID started

“An emerging digital audience: First-time telehealth adopters”; October 2020; Hero Digital

Study: COVID-19 Impact on Behavioral Disorders Significant

In this electronic health record network cohort study using data from 69.8 million individuals, 62 354 of whom had a diagnosis of COVID-19 in 54 health systems, Oxford researchers assessed whether the diagnosis of COVID-19 (compared with other health events) was associated with increased rates of subsequent psychiatric diagnoses, and whether patients with a history of psychiatric illness are at a higher risk of being diagnosed with COVID-19.

In patients with no previous psychiatric history, a diagnosis of COVID-19 was associated with increased incidence of a first psychiatric diagnosis in the following 14 to 90 days compared with six other health events: 2·1 vs influenza; 1·7vs other respiratory tract infections; 1·6 vs skin infection; 1·6 vs cholelithiasis; 2·2 vs urolithiasis, and 2·1 vs fracture of a large bone. The HR was greatest for anxiety disorders, insomnia, and dementia.

Taquet et al “Bidirectional associations between COVID-19 and psychiatric disorder: retrospective cohort studies of 62 354 COVID-19 cases in the USA”; November 09, 2020; The Lancet

FAIR Health: COVID-19 Cost $2.7 billion/week

For the first 14 weeks of 2020, we analyzed multipayer deidentified claims from FAIR Health spanning roughly 75% of the commercially insured and 50% of the Medicare Advantage population. Key finding: From week 9 to 14, aggregate medical spending decreased by $2.7 billion per week, or 46.0%– −26.9% for inpatient to −86.2% for ambulatory surgical center care.

McWilliams et al “Implications of Early Health Care Spending Reductions for Expected Spending as the COVID-19 Pandemic Evolves”; November 9, 2020; JAMA Network

Study: Hospital Admissions Down 20% in Early Pandemic; Slight Improvement Since Then

In this study of approximately one million medical admissions from a large, nationally representative hospitalist group, researchers found…

  • Declines in non-COVID-19 admissions from February to April 2020 were similar across patient demographic subgroups and exceeded 20% for all primary admission diagnoses. By late June/early July 2020, overall non-COVID-19 admissions had rebounded to 16% below prepandemic baseline volume (8% including COVID-19 admissions).

  • Non-COVID-19 admissions were substantially lower for patients residing in majority-Hispanic neighborhoods (32% below baseline) and remained well below baseline for patients with pneumonia (−44%), chronic obstructive pulmonary disease/asthma (−40%), sepsis (−25%), urinary tract infection (−24%), and acute ST-elevation myocardial infarction (−22%).

Birkmeyer et al “The Impact Of The COVID-19 Pandemic On Hospital Admissions In The United States”; September 24, 2020; Health Affairs

CDC: COVID-19 Infections Impact Young Adults

An October 2 Centers for Disease Control and Prevention (CDC) Morbidity and Mortality Weekly Report documented COVID-19’s demographic changes:

Between May and July, the median age of confirmed US cases fell from 46 years to 37 years. The pandemic’s age distribution had already shifted by June, when new cases were highest among people aged 20 through 29 years. From August 2 to September 5, the weekly incidence among people aged 18 through 22 years roughly doubled from 10.5% to 22.5% of total new cases, some of which was likely due to college students going back to school.

Jennifer Abbasi “Younger Adults Caught in COVID-19 Crosshairs as Demographics Shift” November 11, 2020; JAMA Network


Survey: Consumers Prefer Online Access that’s Quick and Easy to Use

Commissioned by DocASAP, the second annual “State of Patient Access and Engagement” 2020 survey was conducted October 16, 2020 among 1000 U.S. adults among who used a healthcare provider in the last 12 months:

  • 62% of respondents missed a scheduled healthcare appointment over the last 12 months, citing various reasons, including COVID-19 (27%) up 9% compared to 2019.

  • Once a COVID-19 vaccine becomes widely available, 84% of respondents plan to get it; 3% higher than those who plan to get the annual flu shot this year (81%). When asked where you would feel safest receiving the COVID-19 vaccine, the top selection from respondents was doctor’s office (48%), followed by hospital (33%) and pharmacy (29%).

“Meeting the Healthcare Consumer with a Digital-First Approach: The DocASAP 2nd Annual ‘State of Patient Access and Engagement’ Survey Offers Insights on the Digital Front Door”; DocASAP

Study: Health-at-Home 2020: The New Standard of Care Delivery

The CareCentrix report is based on findings from 1,000 US adults and 75 health plan executives:

  • Among consumers: 72%of all respondents prefer to recover at home versus a medical facility following a major medical event and 63% would prefer getting treatment at home over going to a doctor’s office or medical facility

  • Among Payers:97%of payer respondents agree the trend toward moving health care to the home is in the best interest of insurers and members alike and 95% agree treating members at home is often more cost effective in the long-term than treating in a facility

“Health-at-Home 2020: The New Standard of Care Delivery”; July 21, 2020; CareCentrix

Study: 14% Reduction in Per Capita Difference in Highest and Lowest Spending Medicare Markets

Researchers examined the trends in geographic variation in Medicare per capita spending and growth from 2007 to 2017: key findings:

  • The difference in Medicare price- and risk-adjusted per capita spending between hospital referral regions (HRRs) in the top decile and those in the bottom decile decreased from $3,388 in 2007 to $2,916 in 2017—a reduction of $472, or 14%. The spending convergence occurred almost entirely between 2009 and 2014, during the early years of the Affordable Care Act (ACA).

  • The highest-spending HRRs in 2007 had the lowest annual growth rates from 2007 to 2017, and the lowest-spending HRRs in 2007 had the highest annual growth rates. “We also found that a greater supply of post-acute care providers, especially hospice providers, significantly predicted lower spending growth across HRRs after the implementation of the ACA.”

Yongkang Zhang, Jing Li “Geographic Variation In Medicare Per Capita Spending Narrowed From 2007 To 2017”; November 2020; Health Affairs