Volume 13
This week, we look at the latest trends on flu, RSV, and COVID and on hospital closures in Texas. We also examine new data on clinician burnout and venture capital investment and we discuss how mega hospital mergers affect patient care and the healthcare workforce, how the federal surprise billing regulation may benefit insurers, and whether a decision in a lawsuit against one of the country’s largest insurers will actually reform payment practices.
#1: Respiratory Viruses are Putting a Strain on Hospitals as the Holidays Near
Big Synopsis: According to the CDC, there have been at least 8.7 million flu cases so far this season and 78,000 hospitalizations and 4,500 deaths. Providers also are still dealing with COVID, and higher-than-normal numbers of RSV cases. The federal government says it is ready to help..
So What’s The Big Deal: Influenza (flu), COVID, and RSV continue to take a serious toll on emergency departments and hospitals. With an earlier-than-normal and more severe flu and RSV outbreaks, hospitals have remained full, curtailing elective services to accommodate patients. There are two main concerns beyond those for the patients: service availability and that hospitals’ fiscal position will further worsen. While the flu season typically drives hospital volumes (and revenues), hospitals typically can handle the volume without having to cut high-revenue services. This year, that’s not the case.
So What’s Next: Hospitals can leverage COVID pandemic emergency flexibilities to care for patients with flu, RSV, and COVID. While there has not been a public health emergency (PHE) announced for flu, providers can leverage the current COVID PHE. PS: Do your part. Get your flu and COVID bivalent shot.
#2: COVID Hospitalizations Rise in 32 States
Big Synopsis: Average daily hospitalizations for COVID have risen 12 percent in the last two weeks. Those numbers are up in 32 states, the nation’s capital, and Puerto Rico. Louisiana has been the hardest hit while the rise in states like North Carolina have been much milder.
So What’s The Big Deal: While we have not seen the significant increase in COVID cases yet, we will likely see a growing number after the holiday season. With a healthcare system under continued strain, a steep increase will further pressure the workforce and critical resources. Unlike in prior waves, monoclonal antibodies are not useful for these new strains (B.Q.1 and B.Q.1.1), a fact that puts immunocompromised and severely ill individuals at significant risk.
So What’s Next: There are two potential silver linings with this COVID wave. One, influenza and RSV have spiked early and perhaps will begin to abate as COVID begins to grow across the country. Two, there is a new bivalent vaccine which has strong coverage to reduce the severity of illness of the virus and prevent the virus altogether.
#3: Texas Hospitals Warn of Rural Closures, Care Delays and Service Cuts without Legislative Support
Big Synopsis: Almost half of Texas hospitals currently have negative fiscal margins and one in 10 are facing closure as a result. Two big culprits are post-pandemic increases in labor costs and in medical supply costs.
So What’s The Big Deal: While some may think that rural hospitals are the “canary in the coal mine” for fiscal woes with hospitals, other larger hospital systems like the Cleveland Clinic are facing $1.5 billion in losses in 2022 all stemming from declining volumes, service closures, and labor strains. Just last month, Atlantic Medical Center, a WellStar facility, closed its doors leaving downtown Atlanta with only one level-one trauma center, Grady.
So What’s Next: Legislative support and investment will be needed to support post-pandemic labor costs and pending Centers for Medicare and Medicaid Services (CMS) rate cuts. Without support, we will likely lose key safety net hospitals or services (like OB, pediatrics, psychiatric care) in lower income rural and urban areas.
#4: Are Patient Satisfaction Survey Designs Harming Physicians and Patients? Probably.
Big Synopsis: Many of the surveys providers use to measure patient satisfaction are out of date, and some positive results are so high that they call into question the measurements themselves. That’s a problem because surveys have an “outsized effect on behavior.”
So What’s The Big Deal: Patient satisfaction surveys have been used as tools to create financial incentives and even discipline physicians for poor survey results. But those surveys are increasingly obsolete since surveys have found clustering in the highest score values. While studies do demonstrate that a patient’s experience correlates with compliance and quality of care, other studies indicate that surveys focused on individual physicians or attempting to implement schemes to increase scores could be counterproductive.
So What’s Next: CMS, non-governmental payers, provider groups, and hospitals should consider alternative methods for evaluating quality and the patient experience. More studies are needed to identify the best methods to assess physician performance as it relates to patient satisfaction. Using outdated methods can harm providers by worsening burnout and can harm patients by increasing costs and worsening outcomes.
#5: Another Hospital Mega-Merger
Big Synopsis: Advocate Aurora Health and Atrium Health have finalized their merger. The new company, Advocate Health, will be the country's fifth-largest nonprofit health system, serving 6 million patients annually and representing $27 billion in annual revenue. But will it improve the landscape for anyone?
So What’s The Big Deal: As hospitals struggle to manage costs and revenues, some hospitals are closing or shuttering services while others are merging. With mega-mergers, patient, employee, and physician advocates warn the consolidation may not actually translate to better patient care, greater access, or improved employee satisfaction. Some studies indicate they are right: that after a merger the workforce experiences greater burnout and lower wages and patient cost and quality do not improve.
So What’s Next: We will likely see mergers continue as hospitals seek to maintain profits and control costs.
#6: Employers Look to Medicare Advantage to Cover Employees and Retirees
Big Synopsis: According to the 2022 KFF Employer Health Benefits Survey, half of large employers offering retiree health benefits to Medicare-age retirees offer coverage to at least some retirees through a contract with a Medicare Advantage (MA) plan, nearly double the share in 2017.
So What’s The Big Deal: Since 2017, MA plans have doubled for employers with more than 200 employees. This trend will likely continue since cost is the biggest driver for the employers’ decision. While moving to these plans allows employers to continue coverage for retirees, it comes with potential limitations. In some cases, MA plans greatly restrict access to providers, a problem that may create barriers to beneficiaries seeking healthcare. The move to MA for employers mirrors a larger trend in MA growth.
So What’s Next: As MA plans continue to grow, access to care, plan design, and overall patient choice will become growing concerns. CMS and bipartisan members of Congress have signaled that MA is here to stay, but that also could result in greater regulatory oversight.
#7: 50% of Clinicians Are Facing Burnout
Big Synopsis: Rates of clinician burnout rose during the pandemic. According to a three-year study of more than 20,600 clinicians published in JAMA Health Forum, in 2019, around 45% of clinicians reported feeling burnt out. At the end of 2020, that number was 50% and at the end of 2021 it was roughly 60%.
So What’s The Big Deal: Clinicians are continuing to feel burnout as the pandemic continues. But why? Many have said that the drivers of burnout have been associated with an increase in workload, but new research indicates it may be more than that. Unsurprisingly, those physicians working in “chaotic environments” like emergency departments tend to have high levels of burnout approaching 79% and attribute lack of autonomy, “high chaos”, and required home EMR use contributed significantly to burnout.
So What’s Next: The U.S. Surgeon General released a report last month highlighting the significant concerns and solutions for continued burnout with the clinician workforce. The U.S. Department of Health and Human Services (HHS) also committed $103 million in grants to address burnout.
#8: What's in Store for Healthcare Venture Capital for 2023?
Big Synopsis: Investors are losing interest in telehealth. According to a survey of 50 digital health venture capital (VC) investors, VCs plan to make roughly the same number of health tech investments this year as they did last year.
So What’s The Big Deal: Not all digital health is the same in the eyes of investors. VCs continue to have strong interest in digital health start-ups in 2023 despite broad market contractions. More specifically, VCs have particular interest in remote patient monitoring, mental health, AI enabled software, and other digital platforms that can reduce burnout and workload for providers. Interestingly, however, investors seem to be less interested in telehealth, or the platforms that create a physician-patient interface via video. This trend may be associated with revenue concerns once the PHE ends *(see prior newsletter) and declining satisfaction with telehealth from patients for many applications.
So What’s Next: Complicating the future of digital health could be interoperability concerns, the regulatory landscape, and the payer strategies. Irrespective of the aforementioned trends, digital health broadly appears to be a good investment bet as the healthcare ecosystem identifies opportunities to expand access while reducing cost and resource needs.
#9: Physicians File Another Lawsuit Against the Surprise Billing Rule
Big Synopsis: The Texas Medical Association has filed a lawsuit against the federal regulation released earlier this year implementing arbitration provisions in the No Surprises Act, the 2021 law that banned surprise medical bills. The current case is the third lawsuit against the rule. It alleges the rule is written to benefit insurers.
So What’s The Big Deal: Since a few quarters have passed since the implementation of the Surprise Medical Billing rule, a few key troubling trends have emerged:
The system is overwhelmed. More than three times the cases have been filed beyond what was initially considered.
As cases queue, provider groups end up holding large amounts of accounts receivables.
There is little incentive for an insurer to NOT file arbitration since filing forces a delay in payments for months, and maybe years.
Payers may go out of network with providers. While in-network rates were calculated back to 2019, insurers are allegedly using “ghost rates” to skew the reimbursement rates lower.
As both payers and providers collect data on historical wins/losses and adjudicated reimbursement rates, rates will likely drift southward.
So What’s Next: Two things: One, we need to see the result of this case. So far, courts have been sympathetic with provider groups, but rulings have fallen short of throwing out the regulation completely. Two, in the new Congress, leaders from both parties are interested in revisiting the HHS rule since it seems to stray from Congressional intent, giving significant advantages to health insurers.
#10: TeamHealth Sues United Healthcare Again and Wins. But at What Cost?
Big Synopsis: UnitedHealthcare has lost another billing lawsuit with TeamHealth, but TeamHealth was awarded “only a fraction of what it was undeservedly seeking,” and judges also ruled against TeamHealth on other claims.
So What’s The Big Deal: While TeamHealth can score this as a “win” from a legal perspective, financially, the “winnings'' from UHC were only $10.8 million, which is likely a small percentage of money owed when considering the held accounts receivable, legal costs, and billing losses. The bigger question remains if mounting wins by provider groups against UHC will change their corporate practices and that seems less likely.
So What’s Next: Not to sound pessimistic, but not much will change. For UHC, the $10.8 million in losses for this verdict is a little more than a traffic fine for them when considering their $5 billion (that’s billions with a B) in quarterly profits. With declining revenues (from surprise medical billing regulations and CMS rate cuts) and rising labor expenses, these payment delay tactics further weaken providers. Without Congressional intervention, provider groups, large and small, will continue to struggle.
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