COVID-19 is laying waste to much of the health care delivery system, with potential dire future consequences
Today's Managing Health Care Costs Number is 800,000
I did a short urgent care shift last night - at Atrius Health in Kenmore Square. It's a huge site - it has an endoscopy suite, CT, MRI, and just about every specialty except for cardiac surgery and neurosurgery. The entire building has gone dark. The gates to the parking garage were up, and there was a single (of five ) floors in clinical operation. The medical assistants spend most of their time canceling appointments or converting them to telephone or video visits. Almost all visits are COVID-19 related, and clinicians must don masks, face guards, gowns, and double gloves before each visit.
The Boston Globe reported last weekend that the CEO of the organization took a 50% pay cut and physician and staff pay was cut by 10-25% due to the lack of revenue. Other physician groups have furloughed physicians and nonphysicians, suspended 401K matches and have held back already-earned variable pay.
It's like this everywhere. This is from a text message I got from a former colleague who runs a large suburban practice:
"The bottom has dropped out… we're barely making it here - furloughs, cutbacks - a real mess"
A colleague wrote me about college friends in plastic surgery, orthopedics, and oncology who reported that their offices were closed, and they were no longer able to do procedures at hospitals, which are closed down except for emergencies and COVID-19 patients.
USA Today has reported that 60,000 family practices will lay off 800,000 employees by June - many practices see a decrease in revenue of over 80%. Quorum Health, which has 24 hospitals, is preparing for bankruptcy. Here's a report about. There was a loss of 43,000 jobs in healthcare through March 12 according to the US Department of Labor; late March will be worse, and April worse still. It's a bitter irony that as we need the health care system more and more- health care delivery systems are seeing nothing but red ink because all of their high margin procedures are delayed indefinitely, but they continue to have unchanged fixed costs.
What will this mean for the health care system after the pandemic?
We will see more consolidation in the health care delivery system. Hospitals with few resources will go out of business or be incorporated into larger organizations, which will have even more bargaining leverage once the pandemic is over. Unit prices are likely to go even higher, though they are already the highest in the world.
More practicing physicians are already in employed as opposed to independent practices. That number will keep on going up - new physicians are not eager to take the risk of independent practices. Young physicians will leave independent groups and go to high-leverage hospitals, too, where they perceive lower risk of future pay cuts. This will decrease the pressure to lower hospital use, as more and more are employed by hospitals
Mental health professionals, who are more likely to be independent, will be hit especially hard. This is the golden opportunity for tele-behavioral health, but some need in-person care, and I worry that we'll have an even bigger problem of access post-COVID.
Narrow networks might be more attractive as cash-strapped employers seek an option that allows them to offer low out-of-pocket costs while lowering premiums. However, narrow networks are often populated with health systems that don't have the leverage to demand the top unit prices. If these health systems fail or are acquired by the larger systems, these good "bargains" might increasingly be unavailable.
This is the golden opportunity to do more telemedicine. Patients will hopefully see how much better it is to get care virtually for some acute medical issues like urinary tract infections or even chronic diseases. I'm hopeful that they'll stay with it. Telemed means less productivity loss, and should be lower unit cost both because volume per clinician can be higher and because telemedicine providers can't easily order labs and x-rays, which often prove unnecessary if they aren't convenient. But if more patients go for virtual visits, this will further weaken the finances of the ambulatory care system.
We'll only return fully to a pre-COVID normal once there is a vaccine, which is likely at least a year away. It's easy to think of what this means for rock concerts and movie theaters and restaurants. But the risk to the provider system is extreme. We'll need to shift our mindset as we see how the provider system evolves through this crisis. Congress should consider the ambulatory health system as critical infrastructure, and consider short-term aid to maintain the capacity we will need in coming years.