This week, hundreds gathered at the American Hospital Association’s 2022 Leadership Summit in San Diego. The themes in the 70-plus sessions are familiar:
· Hospitals have weathered the Covid storm admirably but are wounded by the pandemic hangover. Congress and Medicare don’t appropriately feel their pain.
· Health insurers and drug companies are gaming the system: hospitals are at a disadvantage.
· The healthcare workforce is unstable. Burnout is pervasive and wage costs are soaring. It’s hospitals’ major near-term challenge.
· Hospitals face headwinds from competitors better capitalized and more technologically savvy than traditional incumbents. Leaders must step up by innovating, partnering and disrupting their status quo but executing change is almost impossible. Boards, physicians and community leaders are ill-prepared.
· The transition from volume to value is directionally necessary and appropriate (so long as hospitals are treated fairly by insurers and the transition is predictable). The immediate need is to stabilize day to day operations and live to fight another day.
But one theme is missing: affordability.
Despite polling showing increasing consumer concern about inflation and heightened financial insecurity in half of America’s households, the Summit’s line-up of presentations is virtually absent attention to affordability for consumers. Not surprising. It’s tricky for hospitals.
· Hospitals compete for patients, not consumers. Patients, it’s reasoned, care more about safety, access and reputation than affordability. Few base their hospital decisions on prices though they’re quick to tell pollsters it matters.
· Hospitals enjoy the benefit of complexity. Consumers recognize technology, specialization and science are central to a hospital’s operation but associating these with appropriate direct costs, indirect overhead, capital efficiency, et al is abstract. Prices, therefore, are relative to factors virtually incomprehensible to consumers.
· Hospitals operate within the supply chain of products and clinical services wherein insurers, Medicare, Medicaid and employers control how they’re compensated. Affordability aka what consumers pay out of pocket, prices absorbed directly by households et al are subordinate to concerns about reimbursement and shared risk with payers. That’s what CFOs report to their boards, not discreet measures of affordability with comparisons to relevant targets. Thus, affordability gets lip service.
Might that change? Yes. But it will likely be imposed on hospitals rather than welcomed.
In the American Hospital Association’s Advocacy agenda, affordability is one of six aims. But in most hospital strategic plans, it’s more rhetoric than reality. Inflation hit a 40-year high in June; costs for gas and food have been the focus of concern but most assume relief for these spikes is on the horizon. Not so with healthcare: consumers in every demographic cohort think it’s unnecessarily expensive and they blame hospitals, drug companies and insurers collectively for putting profit above purpose. Consumers think healthcare affordability is beyond their control. For most, it’s past time for attention.
Maybe at next year’s Summit, it will take center stage.
Paul
Consumers
Study: Seniors find Medicare confusing: As of 2021, 64 million U.S residents were enrolled in Medicare and the U.S. Census Bureau projects that number will increase to 73 million by 2030. Sage Growth Partners surveyed 1,142 Medicare-eligible Americans to assess their understanding of the Medicare enrollment system in April 2022. Findings:
· 20% of Medicare-eligible individuals say they have a good understanding of Original Medicare; 31% say they have a good understanding of Medicare Advantage.
· 63% are overwhelmed by Medicare advertising; only 31% “strongly agree” that they can make effective selection decisions.
· 58% stay in their current Medicare plan each year rather than reviewing their plan options and enrolling in the best plan for their evolving needs.
· 80% answered incorrectly about the original Medicare components and 69% answered incorrectly about the Medicare Advantage components.
Hidden Crisis: The Medicare Enrollment Maze Sage Growth Partners July 11, 2022 https://sage-growth.com
CVS: Consumers value coordination by their PCP: Per the CVS Health Insights survey of 1,000 consumers:
· 81% say it’s important their primary care provider be aware of their overall happiness and level of stress.
· 85% believe personalized care is important.
· 83% said they want their primary care physician to know about their family medical history, genetics and inherited lifestyle habits.
· 17% said they are more likely now to book annual checkups and screenings than they were pre-pandemic.
· 59% said access to virtual and telehealth services is important to them, and 35% are likely to consider a virtual visit if a physical exam is not needed.
· 88% said receiving automated appointment reminders via phone and text is important to them,
· 54% said holistic options including diet, exercise and counseling are very or somewhat important to them
Health Care Insights Study 2022 CVS Health www.cvshealth.com
Demographics
UN: Global population growth slowing: The global fertility rate shrank to 2.3 in 2021, and is expected to reach 2.1—roughly the rate at which births offset deaths in populations with low mortality—by 2050. The UN’s population forecast for 2100 is 500m lower than the projection it made in 2019, largely because Chinese women are having fewer children than expected. Other findings:
· The number of newborns is expected to rise from 134m in 2021 to 138m a year in 2040-45.
· Between 1990 and 2019 life expectancy at birth rose by nearly nine years to 72.8. The share of people aged 65 and older will rise from 10% this year to 16% in 2050.
· India is expected to replace China as the world’s most populous country next year. East Asia, including China, will shrink, but South Asia—India’s region—will grow for decades. Europe began its demographic decline last year.
Which countries are driving the world’s population growth? The Economist July 12, 2022www.economist.com/the-economist-explains/2022
Health Insurers
Brookings Study: Medicare Advantage profit structure subject to gaming by parent company use of subsidiaries: The report from the Brookings Institute concluded that Medicare Advantage plans with diversified operations take advantage of the federal government’s rebate program–particularly the five biggest that collectively enroll 67% of total MA members (UnitedHealthcare, Humana, Aetna, Kaiser Permanente and Elevance Health (formerly Anthem).With payments to MA plans totaling $350 billion in 2021, the MA payment structure allows for several ways for plans to earn profits.
FYI: Medicare Advantage plan payments are expected to get an 8.5% revenue increase for 2023. This is an increase over the 7.98% proposed in the February advance notice. The 2023 growth rate is set at 4.88% in the rate announcement released today by the Centers for Medicare and Medicaid Services
Profits, medical loss ratios, and the ownership structure of Medicare Advantage plans Brookings July 13, 2022 www.brookings.edu
UnitedHealth Group reports strong 2Q revenue growth, profits: In its earnings call Friday, the company reported…
· $5.1 billion profit in the second quarter, up 19% over the same quarter last year
· Revenues of $80.3 billion–up 13% Year-Over-Year.
· Earnings from Operations were $7.1 billion–up 19% Year-Over-Year
· Cash Flows from Operations were $6.9 billion–1.3x Net Income
· Earnings of $5.34 Per Share
UnitedHealth Group Reports Second Quarter 2022 Results United Health Group July 15, 2022 www.unitedhealthgroup.com
Prescription drugs, Over the Counter (OTC)
Perrigo applies for over-the-counter birth control pill approval: If approved, the contraceptive, which is currently a prescription drug known as Opill, would be the first daily birth control pill available without a prescription in the U.S. The non-estrogen pill has been used since it was approved by the FDA in 1973. Perrigo said scientific evidence has shown progestin-only pills are effective at preventing pregnancy and safe for most women to use.
Perrigo unit asks FDA to approve first ever over-the-counter birth control pill July 11, 2022 www.perrigo.com
Covid
Long covid treatments still unavailable: A Harvard study showed that the spike protein from the virus lingered in the blood of 65% of the long Covid patients they tested for as long as 12 months after they were first diagnosed. Lingering symptoms include fatigue, shortness of breath, loss of taste and smell among others. The Centers for Disease Control and Prevention estimates that 7.5% of U.S. adults have long Covid symptoms, defined as those lasting three or more months after infection.
Long Covid Is an Elusive Target for Big Pharma Wall Street Journal July 11, 2022 www.wsj.com/articles/long-covid-is-an-elusive-target-for-big-pharma
Hospitals
CMS proposes to support rural hospitals: Last week, CMS announced several proposed actions to shore up rural hospitals:
· Establishing Payment Policies for Rural Emergency Hospitals (REH): CMS is proposing a higher payment rate for furnished REH services: REHs will receive the standard OPPS payment rate plus 5% for each REH service provided. Additionally, as required by statute, CMS is proposing that REHs would receive a monthly facility payment beginning in CY 2023 that would increase annually by the hospital market basket percentage starting in CY 2024.
· OPPS Payment for Remote Behavioral Health Services: The proposed rule would continue payment for remote behavioral health services provided by clinical staff of hospital outpatient departments after the conclusion of the PHE, ensuring access to behavioral health services for rural and other underserved communities.
· Payment Adjustments for Additional Costs of Domestic NIOSH-Approved N95 Surgical Respirators: CMS recognizes that hospitals may incur additional costs when purchasing domestically made NIOSH-approved surgical N95 respirators and is proposing additional hospital payments under IPPS and OPPS that would account for any such costs.
· CMS is proposing to update the ASC rates for CY 2023 by 2.7% for ASCs meeting relevant quality reporting requirements. This update is based on the projected hospital market basket percentage increase of 3.1%, reduced by 0.4 percentage point for the productivity adjustment.
CMS Proposes Rule to Advance Health Equity, Improve Access to Care, and Promote Competition and Transparency July 15, 2022 www.cms.gov
Bipartisan Policy Center: rural health leaders skeptical of REH model: Per the BPC report, Increasing the additional facility payment that REHs can receive and allowing them to use these payments to cover a range of services — wellness and preventive care, social supports, and transportation — will be critical to the program’s success. Policymakers should test other payment pathways for REHs in order to increase participation in the REH program and rural residents’ access to care. Stakeholders also highlighted the importance of monitoring the REH program on an ongoing basis to ensure that it supports the transformation of rural hospitals.
The Impact of COVID-19 on the Rural Health Care Landscape Bipartisan Policy Center May 2022 www.bipartisanpolicycenter.org
Study: ED facility fees vary widely: this study of hospital ED facility fees from 1600 hospitals, researchers found:
· Larger, for-profit hospitals charged higher facility fees for emergency care than not-for-profit hospitals
· Fewer than 37% of hospitals reported prices for all 5 levels of ED facility fees; hospitals that published facility fees were more likely to belong to a health system and to have at least 100 beds.
· For-profit hospitals’ relatively higher facility fees may be explained by their locations, which are often in areas that have a higher cost of living, he added.
· Facility fees for both the cash and list prices vary significantly: the median cash price for facility fees ranged from $161 to $1,097 in 2021 and the corresponding list price ranged from $263 to $1,847.
· Hospitals located in high-poverty areas charged an average of $450 less in cash price facility fees compared with those in more affluent communities.
Hospital And Regional Characteristics Associated With Emergency Department Facility Fee Cash Pricing Health Affairs July 2022 www.healthaffairs.org
S&P: not for profit hospitals have rough first half 2022: “Midway through 2022, not-for-profit hospitals and health systems face a difficult operating environment that, while easing from the extreme pressures of late December 2021 and early January and February related to the omicron surge, is still causing operating cash flow compression for many of them across the U.S.”
S&P Global Ratings www.spglobal.com/marketintelligence
Study: hospital adverse events decline: Researchers analyzed adverse events for patients hospitalized between 2010 and 2019 using 21 measures across 4 adverse event domains: adverse drug events, hospital-acquired infections, adverse events after a procedure, and general adverse events (hospital-acquired pressure ulcers and falls. Findings:
The rates of adverse events in hospitalized patients significantly declined for patients with acute myocardial infarction, heart failure, pneumonia, and major surgical procedures between 2010 and 2019 and significantly declined for patients with all other conditions between 2012 and 2019.
Eldridge et al Trends in Adverse Event Rates in Hospitalized Patients, 2010-2019JAMA July 12, 2022;328(2):173-183. doi:10.1001/jama.2022.9600
Investing
Pitchbook: VC funding in 2022 strong: “US VC funds closed on over $120 billion through June 30, which is already the second-highest total of any year. It’s highly unlikely that the remaining six months would match this pace. Fundraising tends to be lumpy like this when multiple large funds are raised within a single year… Strategic acquisitions dominated exit activity in Q2, as sponsor-to-sponsor exits slowed and IPOs all but vanished.”
Pitchbook Market Update July 16, 2022 www.pitchbook.com
Rock Health: Digital health investing slows: “As we close H1 2022, it’s safe to say that froth has turned to fade. With $10.3B raised this H1, 2022’s overall funding is on track to land around $21B1, significantly less than 2021’s total ($29.1B). And after 23 public market exits in 2021, digital health public exits came to a halt in H1 2022 (zero startups went public2), and a few publicly-listed digital health companies returned to private holdings.”
H1 2022 digital health funding: Two sides to every correction Rock Health July 10, 2022 https://rockhealth.com/insights/h1-2022-digital-health-funding-two-sides-to-every-correction
Physicians
Study: medical school matriculation rates higher for under-represented student cohorts: In this cohort study of 33,389 allopathic doctor of medicine medical school matriculants (2014-2016), students who identified as under-represented in medicine race and ethnicity, had low income, and were from under-resourced backgrounds were more likely to leave medical school.
Nguyen et al Association of Sociodemographic Characteristics With US Medical Student Attrition JAMA Intern Medicine July 11, 2022. doi:10.1001/jamainternmed.2022.2194
Care Management
Deloitte: disparities in healthcare access significant: 5 Health Disparities: From Deloitte’s
• Black adults are 60% more likely to be diagnosed with diabetes than white adults
• The percentage of women with CHD (coronary heart disease) who had a history of heart attack rose by about 4% between 2013-2016, versus a decrease of about 3% for men.
• 11% of those living under the FPL(Federal Poverty Level) received an asthma diagnosis versus about 7% for those that are >twice the FPL.
Initial diagnosis of breast cancer at an advanced stage occurred in 9% of black women versus 5% of white women.
• There is a ~65% screening rate for Black adults vs. ~60 for white adults.
Deloitte, “US health care can’t afford health inequities,” June 22, 2022
Workforce
Mental health provider shortage estimates flawed as national suicide line launches this week: Context: 150 million Americans live in a mental-health-professional shortage area, according to the Health Resources and Services Administration, part of the U.S. Department of Health and Human Services. By 2021, after a year of the pandemic, only 5% of most doctors’ visits were via telehealth compared with 40% of mental-health visits, according to data from the Kaiser Family Foundation and Epic Research.
For mental-health professionals, a shortage is declared if the ratio of people to psychiatrists exceeds 30,000 for a specific geographic area. These ratios drive a range of federal mental-health programs, such as loan forgiveness and scholarships of the National Health Service Corps for providers in shortage area
Shortages will still matter because telehealth can have critical shortages too. For example, The Wall Street Journal reported this week that one in six calls to the national suicide-prevention lifeline (launching this weekend with a new three-digit number, 9-8-8) were abandoned before they were answered, because the call centers were understaffed and overstretched.
Joshua Zumbrun Mental-Health Care Shortage Is Being Treated With Outdated Ratios July 15, 2022www.wsj.com/articles/mental-health-care-shortage-is-being-treated-with-outdated-ratios
Surgeon General: healthcare workforce at the brink: “The toll on our health workers is alarming. Thousands of them have died from Covid. More than half of health workers report symptoms of burnout and many are contending with insomnia, depression, anxiety, post-traumatic stress disorder, or other mental health challenges.2
These systemic shortfalls have pushed millions of health workers to the brink. Some 52% of nurses (according to the American Nurses Foundation) and 20% of doctors (Mayo Clinic Proceedings) say they are planning to leave their clinical practice. Shortages of more than 1 million nurses are projected by the end of the year (U.S. Bureau of Labor Statistics); a gap of 3 million low-wage health workers is anticipated over the next 3 years (Mercer). And we face a significant shortage of public health workers precisely when we need to strengthen our defenses against future public health threats. Health worker burnout is a serious threat to the nation’s health and economic security.”
Vivek Murthy Confronting Health Worker Burnout and Well-Being NEJM July 1
Just another indicator of a broken health system.