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The Keckley Report

The End of the Pandemic Health Emergency is Ill-timed and Short-sighted: The Impact will further Destabilize the Health Industry

By May 8, 2023No Comments

The national spotlight this week will be on the debt ceiling stand-off in Congress, the end of Title 42 that enables immigrants’ legal access to the U.S., the April CPI report from the Department of Labor and the aftermath of the nation’s 199th mass shooting this year in Allen TX.

The official end of the Pandemic Health Emergency (PHE) Thursday will also be noted but its impact on the health industry will be immediate and under-estimated.

The US Centers for Disease Control and Prevention (CDC) logged more than 104 million COVID-19 cases in the US as of late April and more than 11% of adults who had COVID-19 currently have symptoms of long COVID. It comes as the CDC say there’s a 20% chance of a Pandemic 2.0 in the next 2-5 years and the current death toll tops 1000/day in the U.S.

The Immediate impact:

The official end of the PHE means much of the cost for treating Covid will shift to private insurers; access to testing, vaccines and treatments with no out-of-pocket costs for the uninsured will continue through 2024. But enrollees in commercial plans, Medicare, Medicaid and the Children’s Health Insurance Program can expect more cost-sharing for tests and antivirals. That means higher revenues for insurers, increased out of pocket costs for consumers and more bad debt for hospitals and physicians.

At the state level, Medicaid disenrollment efforts will intensify to alleviate state financial obligations for Covid-related health costs. In tandem, state allocations for SNAP benefits used by 1 in 4 long-covid victims will shrink as budget-belts tighten lending to hunger cliff.  That means less access to health programs in many states and more disruption in low-income households seeking care.

The Under-estimated Impact:

The end of the PHE enables politicians to shift “good will” toward direct care workers, home and Veteran’s health services and away from hospitals and specialty medicine who face reimbursement cuts and hostile negotiations with insurers. The April 18, 2023 White House Executive Order which enables increased funding for direct care workers called for prioritization across all federal agencies. Notably, in the PHE, hospitals received emergency funding to treat the Covid-19 patients while utilization and funding for non-urgent services was curtailed. Though the Covid-19 population is still significant, funding for hospitals is unlikely in lieu of in-home and social services programs for at risk populations.

A second unknown is this: As the ranks of the uninsured and under-insured swell, and as affordability looms as a primary concern among voters and employers, provider unpaid medical bills and “bad debt” increases are likely to follow. Hostility over declining reimbursement between health insurers and local hospitals and medical groups will intensify while the biggest drug manufacturers, hospital systems and health insurers launch fresh social media campaigns and advocacy efforts to advance their interests and demonize their foes. Loss of confidence in the system and a desire for something better may be sparked by the official end of the PHE. And it’s certain to widen antipathy between insurers and hospitals.

My take:

In this month’s Health Affairs, DePaul University health researchers reported results of their analysis of the association between hospital reimbursement rates and insurer consolidation:

“Our results confirm this prior work and suggest that greater insurer market power is associated with lower prices paid for services nationally. A critical question for policy makers and consumers is whether savings obtained from lower prices are passed on in the form of lower premiums. The relationship to premiums is theoretically ambiguous. It is possible that insurers simply retain the savings in the form of higher profits.”

What’s clear is health insurers are winners and providers—especially hospitals and physicians—are likely losers as the PHE ends. What’s also clear is policymakers are in no mood to provide financial rescue to either.

In the weeks ahead as the debt ceiling is debated, the Federal FY 2024 budget finalized and campaign 2024 launches, the societal value of the entire health system and speculation about its preparedness for the next pandemic will be top of mind.

For some—especially not-for-profit hospitals and insurers who benefit from tax exemptions in favor of community health obligations– it requires rethinking of long-term strategies to serve the public good. And it necessitates their Boards to alter capital and operating priorities toward a more sustainnable future.

The pandemic exposed the disconnect between local health and human services programs and inadequacy of local, state and federal preparedness Given what’s ahead, the end of the Pandemic Health Emergency seems ill-timed and short-sighted: the impact will further destabilize the health industry.


PS: Saturday, the Allen Premium Outlets, (Allen, TX) was the site of America’s 199th mass shooting this year: this time, 8 innocents died and 7 remain hospitalized, 4 in critical condition. Sadly, it’s becoming a new normal, marked by public officials who offer “thoughts and prayers” followed by calls for mental health and gun controls. Local law enforcement is deified if prompt or demonized if not. But because it’s a “new normal,” the heroics of EMS, ED and hospitals escapes mention. Medical City Healthcare is where 2 of the 8 drew their last breaths while staff labored to save the other 7. At a time when hospitals are battered by bad press, they deserve recognition for work done like this every day.



“KKR’s Envision Weighs Handing Control to Creditors in a Bankruptcy” Wall Street Journal April 19, 2023

Aroditis A. HIMSS. Leveraging social determinants of health data to improve accountable care delivery and gain a complete picture of patients’ needs. October 5, 2018

Anthony T. LoSasso, Kevin Toczydlowski, Yanchao Yang “Insurer Market Power and Hospital Prices In The US” Health Affairs May 2023


Re: venture investing: “Overall, the mood of the (58 VC) respondents (surveyed) could be characterized as steady and cautious. When asked how VC funding will change over the next 12 months, most participants (43.1%) said they expect either a moderate or a strong decrease in VC funding, while 32.8% said they expect funding levels to remain the same. While we believe this sentiment was largely similar before the collapse of SVB, 61.5% of participants said they believe the bank’s failure would contribute to reduced funding over the next year. Additionally, 77.6% of respondents said they expect valuations to become more attractive over the next year, indicating the group still sees some downside to the market. Still, the group signaled a marginal degree of optimism related to fundraising, with most respondents saying their fundraising plans have not changed and indicating they expect 2023 to be a strong vintage year for fund performance.”

EMERGING TECH RESEARCH H1 2023 VC Tech Pitchbook April 28, 2023 Survey

Re: Kaiser-Geisinger deal: “In 2009, when President Barack Obama was touring the country and ginning up support for what would eventually become the Affordable Care Act, Geisinger entered the mainstream.

Obama praised Geisinger, the rural Pennsylvania hospital system and health insurer “where high-quality care is being provided at a cost well below the national average.” Its image as the archetype of local, integrated care seemed peerless.

Now, 14 years later, that sheen has worn off. Failed acquisitions, antitrust scrutiny, leadership changes, growing competition from local players, and a pandemic that temporarily upended how patients got care have forced Geisinger to abandon its independence. The system is coming off a year in which it lost $240 million from its patient care and insurance operations, and it decided to run into the arms of what is essentially a bigger version of itself — Kaiser Permanente.”

Bob Herman New mega-deal highlights Geisinger’s fall, and raises concerns about where Kaiser is going next Stat April 30, 2023

Re: magnitude of bank takeover: “Regulators seized First Republic Bank and sold it to the financial behemoth JPMorgan Chase yesterday. This deal — in which a bigger bank absorbs a struggling one — is typical during a crisis. What is less typical is the magnitude of this year’s failures. Combined, First Republic, Silicon Valley Bank and Signature Bank held more in inflation-adjusted assets than the 25 U.S. banks that collapsed in 2008.”

German Lopez ‘The bank crisis could hurt the whole economy’  New York Times May 2, 2023

Workforce Access, Care Management

Trilliant study: eating disorders increase among adolescents: Hospitalizations for eating disorders spiked during the pandemic, doubling among females ages 12-17. This increase was likely exacerbated by pandemic-related risk factors such as lack of structure in daily routine, emotional distress, changes in food availability or reduced access to mental health care in light of growing demand for services…The growth in adolescent behavioral health diagnoses occurred in parallel with increased social media adoption. Visits for eating disorders, depressive disorders and self-harm among patients below age 18 increased at rates higher than the overall population since the onset of the pandemic. Key Takeaways from Trilliant’s quarterly analysis of claims data 2018-2022:

  • Adolescents are being diagnosed with significantly more behavioral health conditions (e.g., eating disorders, depression) since the onset of the pandemic.
  • Overall, patient volumes for anorexia nervosa have been increasing at a faster rate than all other eating disorders for both children and adolescents (ages 0-17) and adults (ages 18+) since the onset of the pandemic.
  • Patient volumes for anorexia nervosa were up 101.4% in Q2 2022 compared to Q1 2018 for patients ages 0-17, and 48.1% for adult patients.

Eating Disorders Among Child and Adolescent Patients Incrementally Spiked Following the Pandemic’s Onset Trilliant May 7, 2023

Study:  healthcare workforce shortages: “Overall employment in healthcare occupations is projected to grow 13 % from 2021 to 2031, much faster than the average for all occupations; this increase is expected to result in about 2 million new jobs over the decade. In addition to new jobs from growth, opportunities arise from the need to replace workers who leave their occupations permanently. About 1.9 million openings each year, on average, are projected to come from growth and replacement needs.

The median annual wage for healthcare practitioners and technical occupations (such as registered nurses, physicians and surgeons, and dental hygienists) was $75,040 in May 2021, which was higher than the median annual wage for all occupations of $45,760; healthcare support occupations (such as home health and personal care aides, occupational therapy assistants, and medical transcriptionists) had a median annual wage of $29,880 in May 2021, which was lower than the median annual wage for all occupations.”

Healthcare Occupations

Study: Home care workforce demand: “More than nine million US residents rely on long-term services and supports for help with everyday tasks such as dressing, bathing, and mobility. As about half of these people, and more than 70% of those who use paid help overall, are older adults, demand for these services is projected to grow substantially in the coming decades as the population ages…

This study presents new evidence on national trends in the size of the home care workforce, comparing growth in this workforce with growth in Medicaid HCBS enrollment. We found that although the home care workforce grew by 69%between 2008 and 2019, this growth slowed after 2013. As a result, increases in the number of Medicaid HCBS participants have outpaced workforce expansion since 2013. To sustain access to HCBS for current and future generations, new investments in this workforce are essential.”

Krieder et al “The Home Care Workforce Has Not Kept Pace With Growth In Home And Community-Based Services” Health Affairs April 19, 2023

Aya Analysis: reduced use of traveling nurses: “The shift comes as soaring pay from temporary agencies slumps. Aya Healthcare’s temporary-nurse pay is down about 28% from a year ago…Hospitals’ openings for temporary nurses were down by 51% as of late April from the same time a year earlier, according to the company.  Also contributing to nurses’ returns, hospital hiring and nursing officials said, are efforts to win nurses back by offering better pay, as well as perks such as child care, positions that aren’t as demanding and more flexible schedules.”

Melanie Evans “Nurses Flock Back to Hospitals After Leaving in the Pandemic” Wall Street Journal May 1, 2023

Study: access to cardiologists for Black Americans: Per the GoodRx analysis:

  • “More than 16.8 million Black Americans live in counties with limited or no access to cardiology specialists. Over 2 million live in counties with no cardiologist at all (cardiology deserts).
  • Residents living in cardiology desert counties may have to commute well over 80 miles to reach the nearest cardiology clinic.
  • States with the highest number of cardiology desert counties with a sizable Black American population are Georgia, Mississippi, Virginia, Alabama, and Louisiana.
  • Cardiology desert counties with a sizable Black American community are in urgent need of cardiovascular care. These counties have higher rates of obesity, diabetes, smoking, excessive drinking, and physical inactivity than counties with a cardiologist.”

More Than 16 Million Black Americans Live in Counties with Limited or No Access to Cardiologists GoodRx May 2, 2023

Study: wait times for physicians increasing: AMN/Merritt Hawkins research associates sought appointments with 10 separate physician offices across 5 specialties in 15 large metropolitan areas. Findings:

  • Average physician appointment waits times have increased significantly in the 15 large metro markets: from 2022 is 26.0 days in 2022 from 24.1 days in 2017 (+18%) and 20.9 days in 2004 (+24% increase).
  • At 45.6 days, Portland, Oregon has the highest average new patient physician appointment wait time across all five specialties of the 15 large metro
    markets surveyed. At 17.4 days, New York has the lowest average physician appointment wait time across all five specialties of the 15 major markets surveyed.
  • The average rate of physician Medicare acceptance is 82.4% for all 15 metropolitan areas, down from 84.5% in 2017, a decrease of 4%. The average rate of physician Medicaid acceptance is 54.1% in all 15 metropolitan areas, up from 53% in 2017, an increase of 2%.

2022 Survey of Physician Appointment Wait Times and Medicare and Medicaid Acceptance Rates AMN Merritt Hawkins

GAO: Waste, fraud prominent in key health programs: Of the 38 federal programs deemed at high risk for waste and fraud by the Government Accountability Office, 5 are major healthcare programs (date of first listing by GAO):

  • Medicare: Medicare program & improper payments (1990) and Strengthening Medicaid program integrity (2003)
  • Devices: Protecting public health through enhanced oversight of medical products (2009)
  • Veterans’ Health: Managing risks and improving VA health care (2015)
  • Substance abuse: National efforts to prevent, respond to, and recover from drug misuse (2021)
  • Public health: Leadership and coordination of public health emergencies (2022)



Study: insurer market consolidation impacts hospital prices: DePaul University researchers analyzed the relationship between market consolidation and prices for hospitals and insurer premiums. Findings:

  • “The higher the market share of the market leader (that is, the higher the concentration), the lower the prices that were paid to hospitals by that insurer. In states in which the market share of the dominant health insurer exceeded 71% (the “high market share” tercile), the dominant insurer payer, on average, paid 14.7% less to hospitals than market-leading insurers in more competitive insurance markets (those in the low tercile, in which the market share of the dominant insurer was less than 48%). For states with the middle level of competition (the “medium market share” tercile), the market-leading health insurer paid approximately 7% less to hospitals than market-leading insurers in more competitive insurance markets.
  • “For-profit hospitals appeared to have substantially lower negotiated prices when the market-leading insurer held a high market share: In states in which the market share of the dominant health insurer exceeded 71%, the dominant insurer payer, on average, paid 32% less to for-profit hospitals than market-leading insurers in more competitive (low market share tercile) insurance markets. Public hospitals also experienced lower negotiated prices from the market-leading insurer in high-concentration states. Not-for-profit hospitals had only modestly lower negotiated prices (in the range of 6–7% less) when the market-leading insurer held a high market share.

Anthony T. LoSasso, Kevin Toczydlowski, Yanchao Yang “Insurer Market Power and Hospital Prices In The US” Health Affairs May 2023

Study: ED visits for youth mental health issues spike: Researchers analyzed trends in mental health–related emergency department (ED) visits among children, adolescents, and young adults from 2011 to 2020. Findings:

“From 2011 to 2020, the weighted number of pediatric mental health–related visits increased from 4.8 million (7.7% of all pediatric ED visits) to 7.5 million (13.1% of all ED visits) with an average annual percent change of 8.0%…While all types of mental health–related visits significantly increased, suicide-related visits demonstrated the greatest increase from 0.9% to 4.2% of all pediatric ED visits.”

Bommersbach et al. “National Trends in Mental Health–Related Emergency Department Visits Among Youth, 2011-2020” JAMA May 2, 2023;329(17):1469-1477. doi:10.1001/jama.2023.4809

Study: Non-Profit Compensation highest for hospital CEOs compared to others: ERI analyzed 2019 Form 990 filings. Results:

  • “Median pay was mostly similar, hovering around the $100,000 mark, with the most notable
    exceptions being the “Universities,” “Hospitals,” and “Religion” bands. Median CEO pay in the
    “Universities” band was more than two and half times that mark ($285K), while median CEO pay in the “Hospitals” band ($401K) was more than four times that value. The “Religion Related” industry band had the lowest median CEO pay at just above $71,000…Hospitals,” meanwhile, is by far the largest outlier in this category, with a mean pay of just under $700,000. The very high
    standard deviation in the “Hospitals” industry band suggests that there are likely some
    CEOs with very high pay, elevating the mean pay for that industry band as a whole.”
  • Hospital CEO pay was highest among the 12 settings: Mean $698,596, 25th Percentile: $200,288, 75th Percentile: $801,440

2023 CEO Pay Trends in the Nonprofit World Economic Research Institute

Study: Out of pocket increases for hospitalization increase more than inflation rate in pre-pandemic decade: Researchers analyzed 2010 to 2019 adult hospitalization data from MarketScan commercial database. Findings:

  • Among aggregate ICU hospitalizations, total cost-sharing averaged $1079 in December and $1871 in January, a 73.4% increase.
  • Among non-ICU hospitalizations, total cost-sharing averaged $1043 in December and $1683 in January, a 61.3% increase.
  • These increases and differences between ICU and non-ICU hospitalizations were larger among patients with HDHPs. For patients with HDHPs requiring an ICU stay, cost-sharing averaged $3093 per hospitalization in January vs $1301 in December.

Kannan, Song “Changes in Out-of-Pocket Costs for US Hospital Admissions Between December and January Every Year” JAMA Health Forum May 5, 2023;4(5):e230784. doi:10.1001/jamahealthforum.2023.0784

Study: 340B program results in lower use of biosimilars: Researchers investigated whether the 340B Drug Pricing Program, which offers eligible hospitals substantial discounts on drug purchases, inhibits cheaper biosimilar uptake.

Background: Biologic drugs account for a high share of drug spending and are a major driver of drug spending growth. They accounted for 43% of US drug spending in 2019 and 83% of drug spending growth from 2015 to 2019, according to our calculations of data from published sources.

For general acute nonprofit and public hospitals, 340B program eligibility is based on their disproportionate share hospital (DSH) percentage, a federally defined formula that accounts for the share of a hospital’s admissions for low-income patients, urban and rural classification, and number of beds. Hospitals with a DSH percentage greater than 11.75% are 340B eligible. For-profit hospitals are not eligible for the 340B program.

For a given product, 340B providers receive a minimum discount of 22.5% off the manufacturer’s average sales price. However, hospitals can negotiate larger manufacturer discounts, and a recent survey suggests that discounts were, on average, 34.7%of the average sales price.

Findings: “Almost one-third of US hospitals participate in the 340B program. Using a regression discontinuity design and two high-volume biologics with biosimilar competitors, filgrastim and infliximab, we estimated that 340B program eligibility was associated with a 22.9-percentage-point reduction in biosimilar adoption. In addition, 340B program eligibility was associated with 13.3 more biologic administrations annually per hospital and $17,919 more biologic revenue per hospital. Our findings suggest that the program inhibited biosimilar uptake, possibly as a result of financial incentives making reference drugs more profitable than biosimilar medications.”

Bond et al “The Role of Financial Incentives in Biosimilar Uptake in Medicare: Evidence from the 340B Program” Health Affairs May 2023


Morning Consult: Ability to Cover an Emergency Expense: Per MC’s 2Q 2023 survey of U.S. 11,000 adults:

  • Share of U.S. adults who said they are unable to pay for a $400 emergency expense: 19% in Q1 2023 vs. 17% in Q2 2023.
  • In 2Q 2023, 48% of respondents indicated that they would cover an emergency expense exclusively with cash or cash equivalents; 35% said they would need to use some type of debt to cover the expense.
  • When asked about the actual emergency expenses they faced, respondents reported medical and vehicle emergency expenses were most costly, with median values of $318 and $324, respectively.

“Quarterly Survey of Household Emergency Expenses and Decisionmaking” Morning Consult May 4, 2023


CMS issues enhanced compliance requirements for hospital price transparency: Wednesday, CMS announced it is updating the enforcement process for its price transparency mandate. “Now, hospitals that are out of compliance with the Executive Order must submit a Corrective Action Plan within 45 days from when CMS issues the CAP request. CMS will also now require hospitals to be in full compliance with the hospital price transparency regulation within 90 days from when CMS issues the CAP request, rather than allowing hospitals to propose a completion date for CMS approval, which can vary…

CMS has increased the number of comprehensive reviews conducted from 30-40 per month to over 200 comprehensive reviews per month. As of April 2023, CMS has issued more than 730 warning notices and 269 requests for CAPs. CMS has imposed CMPs on four hospitals for noncompliance, which are posted and made publicly available on the CMS website…”

Note: A 2022 random review of 1000 hospital websites found:

  • 3% were complying with the transparency rule.
  • 9% of the hospitals posted a sufficient amount of negotiated rates, but over half were not compliant in other criteria of the rule, such as rates by each insurer and named plan.
  • 5% of hospitals owned by the three largest hospital systems in the country – HCAHealthcare, CommonSpirit Health, and Ascension – were in compliance.

Hospital Price Transparency Enforcement Updates CMS April 26, 2023

Semi-Annual Hospital Price Transparency Compliance Report February 2022

PBM bill introduced, spread pricing ban: Senate HELP Committee’s “Pharmacy Benefits Manager Reform Act” was introduced last week requiring PBMs to pass 100% of rebates from drugmakers to health plans and ban spread pricing amid other measures designed to boost transparency around the industry middlemen. The legislation goes into effect 30 months after the bill is made law, pushing the slate of changes to November 2025 at the absolute soonest.

Bipartisan bill introduced to limit drug shortages: Last week, Reps. Sara Jacobs (D-CA) and Cory Mills (R-FL) introduced the Drug Shortage Prevention Act to require manufacturers to notify the FDA if they have experienced six straight weeks of increased product demand, with an aim to boost

Deal announcements last week

  • CVS closes $10.6B acquisition of Oak Street Health (retail health, plan)
  • BCBS Vermont looks to become subsidiary of BCBS Michigan (plans)
  • Option Care Health-Amedisys (home care)


Study: PE deals significant in oncology: “Over the past 2 decades, private equity (PE) firms have become increasingly involved in the acquisition of health care practices across the US, particularly in oncology.

During 2003 to 2022, 724 oncology clinics (53% radiation, 32% medical, 15% multi-oncologic) became affiliated with a PE-backed platform company, constituting 10% of an estimated 6919 oncology clinic locations in the US. At least 2060 oncologists (64% medical, 36% radiation) were affiliated with clinics at the time of initial PE acquisition, constituting an estimated 10% (1318 of 13 531) of practicing medical oncologists and 15% (742 of 4886) of radiation oncologists. 33% percent of clinics underwent multiple changes in PE ownership, with a total of 1074 PE-backed transactions occurring during the study period.

We located 715 of 724 (99%) PE-affiliated clinics. The PE-backed transactions spanned 45 states, with many in Florida (19%) and California (16%). The PE-affiliated clinics accounted for more than 20% of all oncology clinics in 7 states, including Tennessee (28%), Florida (27%), and Nevada (26%).”

Tyan et al Private Equity Acquisition of Oncology Clinics in the US From 2003 to 2022 JAMA Intern Medicine May 1, 2023. doi:10.1001/jamainternmed.2023.0334