On June 26th, the Rockefeller Institute of Government hosted its inaugural webinar, bringing together practitioners and policy experts to discuss the lessons learned through COVID-19 about the state of healthcare systems in the United States. The goal of the conversation was to explore the trends that have driven strategic decision-making by healthcare providers and public health officials over the past decades, the efficacy of responses to COVID-19, and how the lessons learned can be applied as the healthcare ecosystem moves forward.
This post explores four important topics that emerged in the panelists’ discussions: the gradual shift by healthcare systems to market-oriented decision making, the erosion of the public health infrastructure, the dramatically quick adoption of telemedicine technologies, and the difference in treatment and outcomes for the haves and have nots. By building on these topics in greater detail, we can identify the issues healthcare leaders and policymakers should consider as they reimagine healthcare moving forward.
- Healthcare systems have gradually shifted toward a more market-oriented focus leading to prioritization of revenue generation and underinvestment in preparedness.
One of the driving factors in healthcare since the 1980s has been the effort to control cost increases related to high levels of inflation. Insurers sometimes attempt to control costs by setting limits on reimbursements to providers. Public health insurers were noted as the most restrictive in terms of these limits; for example, providers in New York receive 73 cents on the dollar for treatment of Medicare patients. Together, these higher costs and limits on revenue lead to a drive for efficiency, in which healthcare providers have sought opportunities to take advantage of economies of scale. The result has been dozens of mergers annually, with significant growth in the last decade. In the first decade of the 2000s, there were 604 mergers. Between 2010 and 2017, there were 780. More mergers are still happening today and the size of the merging entities is growing.
“Our model of healthcare management and policy doesn’t provide incentives to plan for a rainy day.”
As healthcare systems increasingly developed a market-based culture there has been a drive to demonstrate strong financial performance. With limited resources, investment has been focused on expanding revenue-generating departments, such as cardiac and orthopedic surgeries, leaving fewer resources for loss-leading departments, such as infectious disease care management, and leaving hospitals with limited to no incentives to grow inventories for different types of equipment for potential use. Panelist Barry Eisenberg, professor at SUNY Empire State College, showed how these trends led to the lack of preparedness in early 2020 as the COVID-19 health crisis emerged: “Our model of healthcare management and policy doesn’t provide incentives to plan for a rainy day. What hospital would invest in 75-150 ventilators and acres of personal protective equipment? How would they pay for it? Where would they store it? It doesn’t fit in this competitive, corporatized, market-driven model that has been developed over the years.”
- Declining investments in public health at the federal, state, and local level meant that the healthcare system was not prepared to coordinate a response.
Panelist Michael Gusmano, associate professor of health policy at Rutgers University, noted a long-term trend of declining support for public health. Federal funding for health security has contracted over the past decade. In 2006, the Centers for Disease Control and Prevention (CDC) allocated $1.2B for public health emergency and hospital preparedness funding, but only $855 million in 2020. At the state and local level, local health departments have eliminated more than 50,000 jobs between 2008 and 2017.
While there are systems in place for coordination during emergencies, such as natural disasters, the infrastructure required to respond to a nationwide crisis was not in place leading up to the spread of COVID-19 and there were great variations in coordination across regions and states.
The underinvestment has resulted in a deterioration of the public health infrastructure required for emergency management. Gusmano noted the lack of CDC funding “has become a problem because our ability to track the disease, the basic epidemiological surveillance and data sharing that is crucial and will continue to be crucial as we roll out contact tracing efforts, has been eroded.” This declining support has contributed to a lack of coordination between providers and public agencies. While there are systems in place for coordination during emergencies, such as natural disasters, the infrastructure required to respond to a nationwide crisis was not in place leading up to the spread of COVID-19 and there were great variations in coordination across regions and states.
- Telemedicine was an emerging trend in the healthcare sector that has been accelerated as a result of COVID-19.
Prior to COVID-19, the Health Care Association of New York State (HANYS) identified the rise of telemedicine as one of the most important trends in healthcare. Panelist Courtney Burke, chief operating and innovation officer of HANYS, shared data showing the number of telehealth visits increasing by 600 percent between 2008 and 2015. Burke noted, however, that COVID-19 has dramatically accelerated this trend. Prior to the crisis telemedicine accounted for only 1 percent of healthcare visits. Just a few weeks into the crisis that share had grown to 12 percent of all appointments. As Burke stated, telehealth has grown more in eight weeks than it did in the last four years.
While concern for patient and provider health was the primary driver of the rapid transition to telemedicine, the urgency of the COVID-19 response removed a number of barriers for adoption on a temporary basis. The federal government lifted regulations to maximize flexibility in COVID-19. Private and public insurance plans committed to reimburse providers at the same rate for telehealth as for office visits. Patient adoption has also been driven by insurance companies waiving copays. Once the crisis is past, policymakers and healthcare providers will have to explore how best to allow for the continued use and adoption of telemedicine technologies.
- The COVID-19 pandemic and initial relief funding has demonstrated the divide between the haves and have nots.
All of the panelists noted how the COVID-19 pandemic starkly exposed the inequities in care provided by modern healthcare systems. As healthcare systems relied more on market-based incentives, the investments made in healthcare infrastructure were targeted in communities of the greatest strategic financial value. Location decisions for new hospital construction has been driven by population growth, with a specific focus on growth in middle- and higher-income populations that are traditionally well insured. The results of these trends are less access to medical resources in rural communities and lower-income urban communities. While the largest and wealthiest hospitals have seen dramatic growth in revenue and outpatient volumes, the financially distressed hospitals have experienced decreases in inpatient volume and stagnant revenue over the last decade. These distressed hospitals are essentially safety-net providers serving vulnerable populations with public or no insurance.
As the COVID-19 situation evolves, we will gain a better understanding of how inequities in socioeconomic conditions and quality of care impact health outcomes.
Wealthier hospitals had the funds required to mount an effective response to COVID-19 through the purchasing of required equipment and the ability to hire quickly. The financially distressed hospitals, however, lacked the funds to access critical resources at dramatically inflated prices. As the federal government distributed funds through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), disparities in funding were exacerbated. Hospitals in the top 10 percent of private insurance revenue received more than twice as much per bed than those in the bottom 10 percent of insurance revenues. The safety net hospitals that serve vulnerable populations were among the least likely to get the support required.
It was clear in the earliest weeks of the COVID-19 crisis that there was variability in the impact the virus had on different racial and ethnic groups. Indigenous and Black people experienced higher hospitalization and death rates than other racial and ethnic groups. Two potential explanations of this disturbing trend emerged. The first is that the social determinants of health, such as socioeconomic factors, physical environment, and preexisting conditions left certain racial and ethnic groups more vulnerable during the pandemic due to underlying inequities. The second theory presented is that the lower quality of care available to vulnerable populations resulted in less favorable outcomes. As the COVID-19 situation evolves, we will gain a better understanding of how inequities in socioeconomic conditions and quality of care impact health outcomes.
Areas for Reimagination
Even as the global healthcare systems and public health offices continue to address the COVID-19 pandemic, several areas for reimagining have emerged. A weakened public health infrastructure and the disproportionate investment of private healthcare entities in revenue-generating opportunities has resulted in systems that were not fully prepared to mount a coordinated response to the global crisis. Policymakers, experts, and healthcare stakeholders will need to rethink how we can better prepare for the next crisis.
COVID-19 has made apparent the differences in the healthcare available to segments of the population. An individual’s income level, race, and ethnicity directly corresponds to their likelihood of contracting COVID-19 and their health outcomes. To build equitable healthcare systems, we must identify policy interventions and investments that can work to close the care gap.
Finally, COVID-19 has changed how many patients interact with their care providers. The rapid adoption of telehealth has the potential to expand access to care in the future. Healthcare systems should take the opportunity to evaluate the results from this crisis and plan a path for digital care.
ABOUT THE AUTHOR
Laura Schultz is executive director of research at the Rockefeller Institute of Government