A Post COVID-19 United States
Looking back on the previous blogs in this series, we, like almost everyone else, are quite simply stunned at the incredible crisis the world is facing. For months, we have been pointing out that a large part of the U.S. economic stability comes from the strength and resilience of our healthcare sector, it represents 18% of GDP.
We believe that the U.S. healthcare system will change materially; more so, we believe it will be transformed by the COVID-19 pandemic virus. Each day, we are witnessing changes in the daily briefings conducted by President Donald J. Trump and many Governors from coast to coast. Many regulations have been suspended, and many more may be eliminated. The U.S. healthcare system has shown some critical shortfalls that must be addressed.
The shortfalls this crisis has uncovered, to date, fall into the following general areas:
- Supply chain issues with foreign entities providing many essential products including pharmaceutical and medical devices
- Hospital preparedness and capacity is nowhere near enough
- Lack of scalability in patient care management
- Uncoordinated testing procedures
- Lack of training for healthcare workers for such an event
- Entire industry’s challenges in using both existing and opportunistic technologies efficiently
- Byzantine state and federal regulations that both limit hospital capacity and efficiency
- Outdated and now dangerous collaboration restrictions via antitrust laws
Now that the private sector companies are engaged and have been incentivized, we believe they will soon flood the market with masks, personal protective equipment (PPE), 500,000 (or maybe more) ventilators, and 100,000 plus temporary hospital beds. The same economic engine that built the B-24 Liberator (a four-engine bomber) – at a rate of one per-hour during WW II – is now focusing on COVID-19. Ford has noted that it can use parts from the iconic F-150 truck to design respirators that we know are dramatically under-supplied and now in high-demand due to COVID-19.
The United States depends on a healthcare infrastructure that is comprised nationally of a total of 5,686 hospitals and 914,613 beds. In addition, there are nearly 1,000,000 doctors (MDs and DOs) that serve both in the hospital and in private practice.
As a point of reference, we now know (mostly from New York data) that the average COVID-19 patient admitted to a hospital-stay is 12 days and generates a bill of at least $72,000. The Governor of the State of New York, alone, says that his state needs $15 billion to deal with the COVID-19 crisis. Governor Cuomo has also said his state needs 40,00 more ventilators.
In the recently passed stimulus package, hospitals in the United States will receive $117 billion to deal with COVID-19. As a result of the cost to treat their members, insurance companies have alerted that commercial healthcare premiums could rise by a median of 20% in 2021, while some economists are predicting increases could go as high as 40%.
The system is under severe threat and we expect major changes going forward that will include, but not be limited to:
- Substantial expansion of the national strategic healthcare stockpile, including material enlargement of what the stockpile contains (e.g., PPE, ventilators)
- New rules that mandate minimum community-based infrastructure, which we foresee impacting hospitals and providers
- Creation of a new national strategy for alerts to emerging hotspots – a “sentinel” system
- Expansion and revision of OSHA regulations
- The creation of strategic hospitals in key regions fully stocked, maintained and operated in standby mode; that can be ready for the future pandemic
- A “ready reserve” of trained healthcare workers ready to become active in a disaster or crisis like the National Guard
- Incentives for companies to build technology solutions and options. The goal: to connect patients using smart and connected EHRs, numerus IoT devices (person, home and vehicle) and video connections that will create options and material capacity extension to treat patients from smart wellness equipped homes and care centers anywhere in the country
- Material increases in reimbursement for providers. These would be triggered in a future pandemic to replace (in part) due to adverse selection from having to treat patients that may not have private insurance or have Medicare/Medicaid with much lower reimbursement rates
- Material reduction in Certificate of Need (CON) regulations to build new hospitals, diagnostic facilities, laboratories, etc.
- Mandate price transparency, and severe regulation for “out of network” charges or what is commonly referred to as “surprise bills”
- Dramatic investment by Venture Capital (VC) firms into healthcare companies that want to change healthcare with better and more use of technology
These topics could each be easily addressed in separate blogs which we may do in the future. What we see is a transformation for patients, providers, and payors after which I expect the government to follow.
Furthermore, we see that most of what the government mandates have nearly eliminated innovation and thereby eliminating competition. Government must give way, and instead of mandates and “prescriptive” rulemaking, produce “descriptive” rulemaking and allow the innovation and ingenuity inherent in the American “grain.” That drive enabled a car company to build a bomber at a rate of one per hour, 24 hours a day, that helped win a World War.
There is much to be done in preparation for the next pandemic that is sure to come. The seven areas, mentioned at the beginning of this blog, are just the tip of the iceberg. For example, nearly all healthcare technology companies will do well if they can penetrate the high walls around the healthcare delivery system. This has proven to be “the bane” for the many that attempt to bring technology to healthcare, especially for the ones with little or no healthcare experience. Even such major tech-giants as Google, Yahoo, and Microsoft will attest to this. If insurance companies, hospitals, and providers cannot be persuaded to adopt new technologies; we as an industry have a problem.
There will be winners and losers in the U.S. healthcare industry, post COVID-19.
We will see an even greater focus on personal health and wellness. We envision EHR platforms that can connect a care team with the integration of both home and wearable IoT devices and telemedicine. We also see great promise in care-coordinators, case managers, and all connected by platforms and medical equipment manufacturers. All will likely see a rapidly expanding market landscape.
We see a historic opportunity for leading-edge doctors to aggregate into groups to provide a full range of services that include office visits, remote monitoring and telemedicine, along with concierge medicine. The independent physician space will contact materially, as they don’t have the resources needed today.
We believe one of the single largest opportunities will be around homecare, that includes telemedicine, but this will be just the beginning. “Smart communities” will spring up with residents separately domiciled but connected with technology. This can provide tremendous scalability to our hospitals and be a viable option to keeping a recovering patient (requiring minimal care) recuperating at home under constant monitoring versus being in the hospital.
In an environment of social and generational distancing, millions of isolated elderly individuals have been using video calls to stay connected with family members and friends. This, we believe, will help them to be more receptive to a virtual visit by their doctors and with connected IoT devices; all will be not only possible, but assured.
Additionally, we will see some patient-centric companies that deal with navigating insurance benefits and provider selections and price transparency will do well, as the entire industry shifts to consumers direct impact.
Losers are likely to be hospitals and medical practices that may spend more without reimbursement or receive low reimbursements from government programs that do not cover their cost of care.
We also believe that this crisis and the pending changes we foresee, will have thousands of doctors who have just survived this COVID-19 crisis, realize they’re losing money fast, losing sleep, and working harder for less money. Thousands will not go back to their pre-COVID conditions. This will mostly drive interest in changing their model, resulting in a huge consolidation of medical practices.
We see specialists under tremendous financial pressure, as elective surgeries in hospitals will continue to be postponed, and an entire society will be re-focused on wellness and preventive care.
Another area we see a major contraction coming is in congregated living; from independent living and assisted living, to even nursing homes.
This COVID-19 pandemic will take all the underlying trends we predict and accelerate them. We may not have to wait until “Healthcare 2030” (as we coined it) to see this transformation is likely be many years earlier. We predicted that wat could have taken 10 years to realize, may now happen in 10 quarters.
-Noel J. Guillama, President