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Thought Leaders: Pandemic-related business changes that will continue

Ewa Kisilewicz was featured in the April/May edition of MCOL Thoughtleaders newsletter. The question asked was:

“What changes in the business of healthcare are taking place during this pandemic that will most likely continue when the pandemic is behind us?”


It appears this pandemic has caused us to hit “fast forward” on several trends that were already in motion: the shift of care to new settings, the breakdown of regulatory barriers, and the entrance of new provider competitors. Now that “fast forward” has been hit, it will be difficult (and unappealing) to “rewind” and preserve the healthcare model we previously knew.


Headlines highlighting the rapid acceleration of virtual care are abundant – we are in a new reality in which in-person healthcare interactions have diminished appeal to consumers and, given changing communication patterns resulting from social distancing, virtual interactions are the norm. Evidence suggests that a significant portion of care can be provided at a distance: for example, in 2018, more than half of Kaiser Permanente’s 100 million patient visits were performed virtually.1 Once consumers experience the convenience of telehealth or an AI-powered interface, they are likely to continue accessing these capabilities. The same is true for remote monitoring solutions. Providers planning how to strategically reopen their clinical programs will need to adjust their business models to accommodate these trends.


That said, not all care can be or should be provided virtually. While the move of care delivery away from hospital settings has been going on for several years, COVID-19 has deepened consumer desire to stay away from hospitals. Consumer-centric providers will respond by adding non-hospital ambulatory capacity. Care models will need to be further adjusted to account for a more virtual and more ambulatory way of delivering care – and consumers will be segmented based on their desire to access these different channels.


Since mid-March, CMS and states released a set of waivers to address anticipated staff shortages caused by COVID-19. Some waivers are notable in that they have been a priority for advocacy groups: for example, American Telemedicine Association has been lobbying to remove state-by-state medical licensure requirements; at the time of the writing of this response, 43 states have issued waivers for in-state licensure requirements for telehealth.2 Several waivers also improve patient access: for example, expanded scope of practice for non-physician providers (e.g. NPs permitted to perform select medical exams for patients in SNFs), expanded use of remote solutions by providers (e.g. physicians able to serve CAHs remotely), and broader Medicare patient access to telehealth services.3 While waivers will expire post-COVID, it will be difficult to go back to the “pre-COVID norm” on the changes that improve patient access and expand scope of practice in medically underserved areas – in so far as they do not create patient safety concerns. Once these regulatory barriers are knocked down, there will be little justification to build them back up again.


Physician practice acquisition by non-traditional competitors will also be “fast forwarded” and cause health systems to rethink physician engagement. An early April MGMA survey found that 97% of medical practices “have experienced negative financial impact directly or indirectly related to COVID-19.”4 Since private practices distribute all or most of their cash at the end of the year, many are not structured to sustain prolonged revenue reductions. Medical groups will need help – and nontraditional companies, such as private equity (e.g. KKR), venture capital (e.g. Khosla Ventures) and health plans (e.g. Optum), that have been acquiring medical groups at increasing rates, will act. Given that these investors are not as financially impacted by COVID-19, they may be able to “out-bid” health systems. Adding to this evolving competitive landscape are, once again, virtual providers that will now compete directly with established groups for patients and may even hold their own patient panels. That said, there are strategic actions health systems can take, such as offering financial support to physicians and re-engaging with independents.


Hitting “fast-forward” will have multi-layered impacts on health systems, especially as they look to re-open and recover – and managed care departments will also need to adapt. Providers will need to work with payers to ensure they are reimbursed appropriately for care provided in new settings and delivered via new models. Deploying a broader pricing strategy that is sensitive to the needs of consumers, but also considers the competitive landscape, anticipated service line recovery, and site of care, will be needed to address exposures. Finally, to avoid a “rewind” on the decade-long shift to value, value-based contract terms will need to be, among other things, revised to adjust target-setting methodology, reductions in preventive care, and reporting delays. The need for change is evidenced by the recent reporting that 56% of risk-based MSSP ACOs may leave the program to avoid losses.5 Capitated and advance payment models, which add predictability to revenue, may become more prevalent.



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