Anatomy of an Outbreak: Part 5...April 7 - April 18 April 19 - May 2 May 3 - May 16 May 17 - May 30...

Presented by

Health Care Advisory Board

Nearing the peak of the outbreak, or just a deceleration?

Anatomy of an Outbreak: Part 5

April 16, 2020

© 2020 Advisory Board • All rights reserved • advisory.com

Today’s Research Expert

Christopher Kerns

Vice President, Executive Insights

Christopher oversees all senior executive research

at Advisory Board, and is responsible for developing

the research perspective, official point of view, and

overall Advisory Board message to executives from

across the health care sector.

[email protected] @CD_Kerns

http://www.advisory.com/



6

Coronavirus cases in the United States

96 million cases

4.8 million hospitalizations

480,000 deaths

Original estimates of

possible effects

At least 606,800 cases

202,208 cases in New York

At least 25,922 deaths

Current COVID-19 cases

Current as of April 15, 2020

Advisory Board interviews and analysis.

Source: “Coronavirus Disease 2019 (COVID-19) in the US,” CDC,

March 11, 2020. “One slide in a leaked presentation for US hospitals

reveals that they’re preparing for millions of hospitalizations as the

outbreak unfolds,” Business Insider, February 27th, 2020.




7

1

10

100

1000

0 5 10 15 20 25 30 35 40 45 50

Number of days since 3 daily deaths first recorded

Spain

Italy

U.S.

South Korea

U.K.

France

Germany

2000

1. Current as of 04/15/2020.

Source: Bernard S et al., “Coronavirus Tracked: The Latest Figures as the

Pandemic Spreads,” Financial Times, 2020; Roser M et al., “Coronavirus

Disease (COVID-19) – Statistics and Research,” Our World in Data, 2020.

Death tolls nearing a peak in U.S. and Western Europe?


Daily coronavirus deaths (rolling 3-day average), by number of days since 3 daily deaths first recorded1

Country Total deaths

per million

Spain 385

Italy 349

France 235

U.K. 182

U.S. 80

Germany 39

South Korea 4




8

1

10

100

1000

0 5 10 15 20 25

Number of days since 10 total deaths recorded

Michigan

New York

IllinoisLouisiana

Florida

California

Massachusetts

1. Current as of 04/15/2020.

Source: “We’re Sharing Coronavirus Case Data for Every U.S. County,” The

New York Times, 2020; Katz J, “How Severe Are Coronavirus Outbreaks

Across the U.S.? Look Up Any Metro Area”, The New York Times, 2020.

Daily deaths plateauing in New York City…


Daily coronavirus deaths (rolling 3-day average), by number of days since 10 total deaths first recorded1

…But not yet peaking in other states

City Total deaths

per 100,000

Detroit 223

New Orleans 165

NYC 157

Boston 91

Miami 69

Seattle 54

Chicago 31

Los Angeles 9




9

Source: COVID-19 Projections, The Institute for Health Metrics, April 1, 2020.

Resources and capacity expectations two weeks earlier

Prior projections painted a grim picture


Projected ICU bed shortage and dates of peak resource use by state

April 7 - April 18 April 19 - May 2 May 3 - May 16 May 17 - May 30

41 0

16

0

00

22

47829 0

357

108

207

1,506

194 0 0

0

0

32166

625

58

643

247

2,269

78363

25

792210

159122

222

6098

25

93

10,602

114

810

21

123

MD: 465DE: 73NJ: 814CT: 123RI: 80

DC: 168

MA: 652

States with greatest predicted

peak ventilator demand

States with least predicted


New York

Tennessee

Texas

Michigan

Florida

Vermont

Wyoming

North Dakota

Alaska

South Dakota

9,055

2,318

1,975

1,798

1,594

27

53

59

60

72

Updated April 1, 2020




10


Access to resources and capacity varied widely a week ago

An extraordinary mobilization of resources



April 1 - April 7 April 8 – April 14 April 15 – April 21 April 22 – April 29

0 52

0

0

00

0

00 0

0

0

12

372

0 0 0

0

0

00

0

0

282

0

0

00

0

00

159350

330

0

0

5,173

0

00

12

25

MD: 281DE: 0NJ: 2,109CT: 1,258RI: 258

DC: 0

MA: 1,596





New York

New Jersey

Massachusetts

Florida

Connecticut

Vermont

Delaware

Idaho

New Hampshire

Wyoming

5,008

2,189

1,592

1,323

1,153

13

14

20

24

26





11


Challenges ahead, but progress across the board

Today’s projections much more optimistic



March 28 - April 6 April 7 – April 16 April 17 – April 26 April 27 – May 5

0 0

0

0

00

0

00 0

0

0

0

303

0 0 0

0

0

00

0

0

218

0

0

00

0

00

000

00

0

0

4,854

0

00

0

0

MD: 0DE: 0NJ: 1,372CT: 1,351RI: 198

DC: 0

MA: 1,522





New York

Massachusetts

New Jersey

Connecticut

Florida

Wyoming

Vermont

Alaska

Montana

North Dakota

5,246

1,671

1,665

1,290

968

13

12

7

7

5





12

1. Due to data reporting lags, the daily hospitalization rate is unknown.

Source: Dwyer, J., “What Doctors on the Front Lines Wish They’d Known a Month

Ago,” The New York Times, April 14, 2020; Total Daily COVID-19 Hospitalization

Rates, NYC Health Department, April 15, 2020; “Begley, S., “With ventilators running

out, doctors say the machines are overused for Covid-19,” STAT, April 8, 2020;

Fewer patients intubated as we learn more about COVID-19

Ventilators not the panacea we once thought

342

512

642

973

12141270 1290

1440

1633

1356

1612

1239

43 54

93120

176

237223

296283

309

172

8457 21

Net change in intubations and new hospitalizations in NY Initial lessons about COVID-19 from the front line

COVID-19 appears to decrease oxygen

saturation to critically low levels, but patients

do not demonstrate shortness of breath,

confusion, or heart abnormalities

COVID-19 can create acute respiratory

distress syndrome and immune cells attack

the lungs, filling them with yellow fluid and

limiting oxygen transmission from the lungs to

blood even if a ventilator pumps in oxygen

Risks from intubation (cognitive and

respiratory damage from heavy sedation)

don’t outweigh the little data to support

ventilation in COVID-19 patients 20.5%

Ratio of new

hospitalizations

to net intubations

on March 31

6.7%Ratio of new

hospitalizations

to net intubations

on April 8


Daily hospitalizations Net change in Intubation




13

Are we finally testing enough? (Probably not)While test numbers are increasing, positivity rates indicate insufficiency

Source: The COVID Testing Project, https://covidtracking.com/, updated April 15, 2020; Our World in

Data, https://ourworldindata.org/covid-testing, updated April 15, 2020.

1. As of April 15; “last week” data includes April 1-7, “this week” data includes April 8-15

2. Since beginning of outbreak. Figures based on most recently available data as of April 15. Data sources and methodology vary by country.

COVID-19 tests performed in United States to date1 COVID-19 positivity rate by state (%)This week and percent change from last week1

Last week This week

Total tested 2,054,462 3,138,413

Total positive 392,594 605,243

Overall positivity rate 19.1% 19.3%

COVID-19 positivity rate by country2

United Kingdom

United States

Italy

Canada

Iceland

South Korea

Australia

Taiwan

Vietnam 0.2%

2.0%

1.7%

0.8%

4.7%

5.9%

14.9%

19.3%

29.4%

NA = Not available

AK 5.0 72%

AL 9.7 -35%

AR 7.1 20%

AZ 11.5 25%

CA 10.5 28%

CO 21.2 -4%

CT 36.9 2%

DC 22.9 30%

DE 22.2 66%

FL 10.2 -6%

GA 19.2 -31%

HI 2.0 -47%

IA 13.8 34%

ID 7.3 -46%

IL 23.2 3%

IN 17.5 -20%

KS 11.4 -1%

KY 15.5 288%

LA 12.0 -61%

MA 28.7 15%

MD 23.1 28%

ME 3.7 NA

MI 34.4 28%

MN 6.3 37%

MO 10.3 -4%

MS 6.8 11%

MT 3.6 -32%

NC 7.5 -22%

ND 3.2 0%

NE 10.3 56%

NH 10.6 -20%

NJ 54.5 4%

NM 6.5 48%

NV 12.5 -12%

NY 39.8 -15%

OH 13.9 17%

OK 4.8 -39%

OR 4.8 -9%

PA 25.5 28%

RI 16.0 37%

SC 11.1 50%

SD 22.1 166%

TN 6.5 -12%

TX 11.0 1%

UT 5.7 8%

VA 20.1 47%

VT 5.1 NA

WA NA NA

WI 9.3 -6%

WV 4.6 44%

WY 3.0 -46%




14

1. National Institutes of Health

Progress yet to be made before promise of antibody tests can be realized

Serology testing slowly starting up

Projection Graphic and Layout Guide

Few FDA-approvals, fewer high-throughput tests1

10,000People across the U.S. the

NIH1 is recruiting for study

using antibody tests

38,000Beaumont Health employees

in study on health care

worker susceptibility and

antibody response

Presence of antibodies doesn’t guarantee immunity 2

Serology tests measure antibodies

(IgG and IgM) in a person’s blood and

can reveal true community spread

Challenges with antibody tests for COVID-19

High threat of false positive

makes development of accurate

tests challenging

1FDA-approved, high-throughput

serology test from Ortho Clinical

Diagnostics

Large-panel antibody studies underway

"We simply don't know yet what it takes to be

effectively protected from this infection."

Dawn Bowdish, Professor Pathology and Molecular

Medicine, McMaster University




15

Combination of technology and boots-on-the-ground required to mitigate spread

Our needs extend beyond diagnostics

Projection Graphic and Layout Guide

Disease surveillance system Widespread contact tracing

Apple and Google devices to wirelessly

exchange personal testing data, notify user

of contact with infected for those who opt in

Aggregate biometric data from

internet-enabled thermometers and

fitness wearables

Screen for pre-symptomatic

employees through employer-

sponsored testing services

Train idled workers from PeaceCorps

volunteers to furloughed public employees,

and phone bank staff as contact tracers

Who is contagious and how do we stop their spread?

Technical feasibility and debate over health privacy laws to

shape extent of surveillance and methods of contact tracing




16

1

Unclear how well Bluetooth will work,

especially in crowded spaces2

Low adoption rates could limit efficacy

3Needs strong testing capacity to

determine positives

4System could amplify false positives or

be prone to bad actors

5 It could come too late

1. 2020.

Source: Kimmell J, Angers J, “5 Reasons Apple and Google's Contact-Tracing

Project Isn't a ‘Silver Bullet' for Covid-19”, Advisory Board, April 14, 2020.

However, new tool unlikely to be a ‘silver bullet’ for COVID-19

Apple and Google undertake massive contact tracing project

[Insert program name interviews and analysis.]

Uses anonymized Bluetooth

smartphone infrastructure to alert user if

they have been within close proximity

(~6 ft) of an infected person

How their tool will work

PHASE 1 (mid-May1)

Users can download third-

party apps from state-level

health agencies to participate

Users can opt in directly on

their phones, eliminating

need for app download

PHASE 2

Timeline

Significant limitations may hinder success




17

Health systems must balance tradeoffs in ensuring sufficient PPE to reopen

Imperfect solutions to a critical problem

Sustainable

scale

Major safety and cost considerations

Timeliness

Procure steady stream

of new disposables

Do I have stable,

reliable vendors?

What is the price premium

for guaranteed delivery?

Sanitize and

reuse disposables

Does sanitization break

down protective materials?

How many times can we

safely reuse?

Spectrum of options for obtaining PPE needed to reopen non-essential services

Use DIY products

from local businesses

and volunteers

Are we compromising on

individual safety?

Can we scale and sustain?

Shift to medical-grade

reusable products

How can we encourage design

and manufacturing of medical-

grade, reusable masks?

What are added costs for

procurement and cleaning?





18

As surge subsides, staffing challenges will take center stage

[Insert program name interviews and analysis.]

Immediate post-COVID staffing challenges

Frontline staffing

shortage

Senior leader

burnout

Long-term staffing unknowns

How will COVID impact organizational

culture—positively or negatively?

Will COVID impact health care’s

desirability as a profession?

Source: Advisory Board interviews and analysis.

Furloughed staff

(dis)engagement

Environment ripe for

unionization




19

Moderate COVID-19 scenario entails immediate cash crunch

For most, new revenues won’t backfill loss of electives

Moderate, concentrated COVID-19 scenario

• 1,000-bed system treats 2,000 hospitalized COVID-

19 cases over 3 months

• Peak of 440 cases in week 8 (i.e. system is surging

significantly beyond normal capacity)

• Average revenue per COVID-19 case: $15,506

$31.0 M in COVID-19 revenue

Note the revenue shortfall in the first weeks of the

scenario—if elective shutdowns and reduced

demand precede significant COVID-19 caseload,

even by a few weeks, cash flow challenge will be

immense and immediate.

The COVID-19 caseload needed to make

up for lost revenue from elective procedures

and other reduced demand is well beyond

system capacity—implying need for large

surge expenditures


Wild cards

• Actual DRG mix of IP cases

• Further changes to payment rates, including by

commercial payers

-$14

-$12

-$10

-$8

-$6

-$4

-$2

$0

Lost Revenue from Cancellations/Delays COVID-19 Revenue

Re

ven

ue

re

lative to

base

line,

mill

ions

Weekly revenue impact, 3-month scenario




20

COVID-19 Elective Surgery Cancelation Impact Estimator

Assess the financial impact of canceling elective procedures


Estimate financial impact from

COVID-19

• Postponed surgeries

• Canceled surgeries

Incorporate customizable inputs

• Varying time frames

• Crisis acuity levels

• Capacity scenarios

• Past facility volumes and capacity

Plan accordingly for future

operations

• Lost revenue

• Potential future gained revenue

• Future capacity levels

To access the top COVID-19 resources,

visit advisory.com/covid-19




21

Source: Influenza Hospitalization Surveillance Network, The Centers for Disease Control, April 14th,

2020; Rodriguez-Leor, et al, Impacto de la pandemia de COVID-19 sobre la actividad asistencial en

cardiologia intervencionista en Espana, Revista Espanola de Cardiologia, April 2, 2020.

Social distancing and fear of COVID keeping people away from health care

COVID-19 impacting non-elective utilization

5.2 5.5

4.8

3.6

2.7

4.6 4

2.7

1.1

0.2 0.1

29-Feb 7-Mar 14-Mar 21-Mar 28-Mar 4-Apr

2018-2019 2019-2020

Growth rate of laboratory confirmed influenza

hospitalizations in the U.S.

1,247

429

644

258

PCI STEMI

February 24 - March 1 March 16 - March 22

Number of cardiology interventions in Spain

before and during COVID-19 epidemic

Conditions that could require higher intensity care if people delay medical attention


Acute myocardial

infarction

Stroke and vascular

pathologies Cancer

Fractures and other

orthopedic trauma




22

1. As of April 14.

Source: HHS.gov. “CARES Act Provider Relief Fund,” April 13, 2020. Hancock, Jay, et al. KHN. “Furor Erupts: Billions Going To

Hospitals Based On Medicare Billings, Not COVID-19,” April 13, 2020. CMS. “Press Release CMS Approves Approximately $34

Billion for Providers with the Accelerated/Advance Payment Program for Medicare Providers in One Week,” April 7, 2020.

Grant amounts determined by Medicare share, not Covid or financial distress

Initial federal distribution: speed vs. need

CARES ACT allocates $100B to hospitals

First tranche: details announced April 10

• $30B being disbursed as grants to hospitals based on national

share of 2019 Medicare FFS volumes

• Health systems have 30 days to electronically sign terms and

conditions including no balance billing of patients

• Amount paid to hospitals does not take COVID-19 volumes or

acuity of volumes into account

• Systems with low Medicare volumes, high uninsured/Medicaid

population see limited benefit

Future tranches

• HHS says further tranches will focus on areas seeing

significant volumes, the costs of treating uninsured patients,

rural hospitals

• 20% bump to Medicare reimbursement rates for COVID-19

and related diagnoses

Accelerated and Advance Payment

Program offers loans

Program designed to speed cash flow in time

of public health emergency

CMS agreed to speed approval from

3-4 weeks to 4-6 days

Hospitals able to request Medicare

payment amount for 3-6 months

Has approved 21,000 applications1

up from 100 applications total across

past five years





23

Source: HHS.gov. “CARES Act Provider Relief Fund,” April 13, 2020.

Advanced payment plan incentives tend to further value-based goals

Commercial payers also adjusting policies, offering grants

United Healthcare

• Will accelerate and advance payments to medical and

behavioral care providers

• Also providing $125M in small business loans to clinical

operators with whom OptumHealth is partnered

Blue Cross and Blue Shield of Michigan

• Will accelerate payments to more than 40 physician

organizations that are a part of the Physician Group

Incentive Program (PGIP), including more than 20,000

primary care and specialist physicians in the state

Blue Shield of California

• Will provide up to $200M in direct financial support to

providers including financial guarantees, advance

payments, and contract restructures with favorable

repayment terms

• Working with two financial institutions to assist providers

with loans and payment advances on expected costs

CASE STUDIES

• Requires insurers to waive patient cost-sharing for

COVID-19 testing

Families First Coronavirus Response Act

Health systems should confirm each payers’ policies as well as

State regulations for the following:

• Cost-sharing for COVID-19 treatment: United, Cigna,

Aetna, Humana, many of the Blues

• Preauthorization waivers for COVID treatment: policies

vary greatly payer to payer

• Out-of-network transfers: policies vary greatly payer to

payer

Advanced payment programs tend to:

• Focus on physician practices

• Tie payment to cost and quality metrics

• Use funds previously tied to value-based programs





24

1. See full list of Covd-10 codes in blog post, How to bill for Covid-19 testing and treatment

Source: Rae, M., et al. “Potential Costs of Coronavirus Treatment for People with Employer

Coverage.” Peterson-Kaiser Health System Tracker. Peterson-KFF, March 13, 2020.

Accurate payment hinges upon revenue cycle performance

Critical action items

Update chargemaster with new

COVID-19 CPT/HCPCS codes

Create EMR flag to allow easy

identification of COVID-19

charts

Documentation and coding

Claims Billing

• Ensure sufficient number of billers able to work from home with remote access

• Clarify policies with state, commercial payers

• Consider billing small batch of claims to see how COVID-19 adjudication works

before more widespread billing

• Review claims to prevent balance billing and evaluate out-of-pocket costs being

billed to patients

• Train coders, CDI on new CPT and HCPCS codes, ICD-10 for diagnosis1

• Retain strongest CDI specialists for documentation rather than redeploying bedside

to ensure full CC/MCC capture

• Create documentation templates specific to COVID-19

• Deploy clear processes and revisit expectations around performance metrics, such

as:

‒ Holding charts until positive test confirmed

‒ Recalibrate query rates given MD workload

‒ Adjust number of chart reviews per day expectations according to volumes

DATA SPOTLIGHT

Range in cost of treatment per

COVID-19 patient depending on

documented case severity

$9.7K – $20.3K




https://www.advisory.com/research/revenue-cycle-advancement-center/at-the-margins/2020/03/bill-covid-19-testing-treatment


25

Patient financial experience still critical to revenue capture

Patients under immense financial pressure Adjust patient financial strategy to ensure those

that can pay, want to pay

Depending on payers’ policy, patients

may have significant obligations from

COVID-19 and other types of care

Skyrocketing unemployment means

increased self-pay population

Pandemic taking place earlier in

calendar year means deductibles

haven’t been met

Reassign/deploy surplus front office staff

toward eligibility checks to check/recheck

insurance status of all patients

Update payment guidelines and publicize

widely1

Extend length of payment plans

Offer 30-60 days payment deferment

1. Suggestions: website, patient portal, recorded call center hold message, call center scripting, etc.

Modifications to current policies increase likelihood of grateful patients





26

Assessing potential admission bumps in a post-COVID world

What will “normal” look like?

Complications from non-

elective procedures that

people delayed

Return of elective

procedures that were

postponed during COVID-19

Admissions from viral

infections if people’s

immune systems are

weakened from isolation

Surge of COVID-19

cases after social

distancing is lifted





27

Many providers will be constrained in ability to recapture, serve all backlogged cases

Volume recovery not just about turning the lights on

For Internal NNI Purposes Only, Not for Dissemination or Detail

When do we reopen

this service?

How many patients

leave the queue?

What is our post-COVID

capacity for this service?

How is post-COVID demand

for this service different?

• Safety

• Legal restrictions

• PR concerns

• Financial pressure

Longer shutdowns mean a

larger backlog of unserved

deman

For any service, recapturing and serving deferred demand depends on a four-part analysis:

Attrition in the backlog

transforms revenue delays

into actual losses, but

opportunity to attract

others’ “impatients” exists.

Providers with excess capacity

in normal times, or those that

can extend hours or otherwise

“surge,” will clear backlog

faster, avoid dropoff, and

potentially attract new share

Lower new demand would

make it easier to clear backlog,

but difficult or impossible to

sustain pre-COVID volume

• Self-resolving issues

• Care plan changes

• Defections to competitors

that open earlier, especially

asymmetric actors

• OR capacity

• Staff, especially

specialized surgeons

• PPE

Limiting factors will vary widely

across services.

• Lingering fears of visiting health

care facilities (-)

• Economic stress (-)

• Poorly managed conditions (+)

• Durable shifts in modality (e.g.

telemedicine) (+/-)

Implications




28

Speed of recovery will vary based on multiple factors

When will utilization get back to “normal”?

High impact Low impactMedium impact

Near-term

Long-term

Medium-term

State and federal orders continue to

prohibit elective procedures

Manufacturers increase availability of

PPE and tests, increasing comfort and

readiness among patients and staff

Backfilled cases lead to bed and

operating room capacity constraints,

shifts to “higher capacity” competitors

Lingering consumer anxiety/fear of

exposure to infection results in site of

care shifts or absolute reductions in use

Loss of insurance and/or job results in

delays or cancellations

Delays in care lead to exacerbation of

health issues

Closed ambulatory sites delay and/or

reduce downstream referrals

Positive experiences with telehealth

encourage first-time users to use virtual

care for future needs, possibly with

competing organizations

Lasting negative stigma of SNF sites

leads to longer LOS, less bed turnover,

and greater home health use

Regulatory flexibilities regarding scope

of practice, licensure, and SNF 3-day

stays are left in place until a vaccine is

developed, expanding capacity

Employers/plans manage premium cost

growth by increasing consumer cost

exposure for next year’s benefit year

Loss of clinical workers who were

furloughed, laid off, or quit limit capacity

Organizations proactively reach out to

patients to reschedule appointments;

effectively communicate re: safety

The availability of therapeutics and

vaccines reduces the probability of a

second Covid-19 wave—and need for

additional postponements

Reduced travel leads to less accident-

induced trauma

Mortalities in highly affected regions

reduces demand

Patients become more activated in

preventive health

Decreased utilization Increased utilization





29

1. After restart of elective surgeries (i.e. 3 months)

Clearing backlog depends on boosting supply, avoiding defection

Recovery will be a race to serve before others do

For Internal NNI Purposes Only, Not for Dissemination or Detail

Inpatient surgery scenario:

• 1,000-bed health system performing 40 inpatient surgeries per day, 6 days per week, at 80% of max capacity.

• 50% of IP surgeries considered elective

• All elective surgeries cancelled for 3 months; no cancellations of non-electives.

If supply remains at pre-crisis levels, and no patients

leave the queue for competitors or otherwise…

Time to clear queue1: Cases lost from queue:

25 weeks 0

If supply remains at pre-crisis levels, but 5% of

patients drop out of the queue each week…


13 weeks 677

If maximum capacity is 20% LOWER post-restart for 8

weeks, and 5% of patients leave the queue each week…


18 weeks 883

If maximum capacity expands by 20% after restart until the

queue is cleared, and 5% of patients leave queue weekly,


8 weeks 556




30

The top 16 open questions we’re looking at now


How will COVID-19 impact…

…the demographic makeup of

the US—and future demand?

…demand for behavioral

health services?

…the purchaser landscape

and the nation’s payer mix?

…employers’ health benefits

strategies?

…the future of value-based

care and risk-based payment?

…perception of government’s

role in health care?

…site-of-care shifts, including

to virtual channels?

…the U.S.’ approach to post-

acute and long-term care?

…the competitive landscape

efforts to “disrupt” the industry?

…expectations about U.S.

health care capacity?

…public perception of

industry stakeholders?

…future fundraising and

philanthropy efforts?

…perceptions of the value of

systemness and scale?

…the structure of the U.S.

health care supply chain?

…the future of the clinical

workforce?

…the pharma, device, and

tech innovation pipelines?




31

Today’s focus


How will COVID-19 impact…

…the demographic makeup of

the US—and future demand?

…demand for behavioral

health services?

…the purchaser landscape

and the nation’s payer mix?

…employers’ health benefits

strategies?

…the future of value-based

care and risk-based payment?

…perception of government’s

role in health care?

…site-of-care shifts, including

to virtual channels?

…the U.S.’ approach to post-

acute and long-term care?

…the competitive landscape and

efforts to “disrupt” the industry?

…expectations about U.S.

health care capacity?

…public perception of

industry stakeholders?

…future fundraising and

philanthropy efforts?

…perceptions of the value of

systemness and scale?

…the structure of the U.S.

health care supply chain?

…the future of the clinical

workforce?

…the pharma, device, and

tech innovation pipelines?




32

62%

35%

33%

31%

30%

26%

26%

22%

1. Society for Human Resource Management.

Source: Fronstin P, “The Impact of the Recession on Employment-Based Health Coverage,” Employee Benefit Research Institute,

May 2010, https://www.ebri.org/docs/default-source/ebri-issue-brief/ebri_ib_05-2010_no342_recssn-hlthbens.pdf?sfvrsn=26db292f_0;

“The Post-Recession Workplace: Competitive Strategies for Recovery and Beyond,” Society for Human Resource Management,

September 2010, https://blog.shrm.org/sites/default/files/reports/SHRM%20Post%20Recession%20Workplace_FINAL-sm.pdf.

But unlikely to be the main strategy this time

Employee cost sharing a favorite lever in the last recession


Blunt: HDHPs lead to delays and reductions

in all care below the deductible, including

preventive care

Limited: HDHPs do not encourage price

shopping for services above the deductible

Increase employee share of health coverage costs

Combine leave into PTO bank

Reduce pension plans

Reduce retirement contributions

Reduce health coverage for dependents

Eliminate paid relocation

Reduce leave annual carryover

Reduce leave accruals/balances

Likely employer benefit changes post-recession (2009)

Percent indicating likely or very likely to make

or keep changes after economy recovers

n=329 HR professionals from a random sample of SHRM member companies

Shortfalls and challenges with cost sharing

Unpopular: HDHP enrollment has generally

leveled off over the last four years

Apathetic: Less generous health

benefits risk public backlash after a

health-induced economic downturn

How will COVID-19 impact employers’ health benefits strategies?




33

1. Individual coverage health reimbursement account.

Employer actions will depend on financial health and public policy pressure

Two paths forward: public coverage or intense management

Public coverage off-ramp Creative micromanagement

Rely on the Medicaid safety net:

• 37 states (and DC) have adopted expansion

• 4 states in current legislative battles

Employer

Benefits

Strategy

Actively shift employees to Marketplaces:

• Stabilizing premiums and increasing number

of carriers per county

• New options (e.g. ICHRAs1) for employers to

offset costs while providing benefits support

Lobby for public coverage

expansion or replacement?


High-touch navigation support

Forced

steerage

Reference

pricing

Network

alignment

• HMO gating

• Virtual visit-

based triage

• Second

opinion service

• Value-based

cost sharing

• Advance price

information

• Hyper-narrow

networks

• Dedicated (or

owned)

providers




34

Source: FiveThirtyEight, How Americans View The Coronavirus Crisis And Trump's Response, April 2020. Kaiser Family

Foundation, Public Opinion on Single-Payer, National Health Plans, and Expanding Access to Medicare Coverage, April 2020

COVID-19 is likely to become the central focus of the race for the presidency

A presidential election in the midst of a pandemic

How will COVID-19 impact public perception of government’s role in health care?

American’s split on Trump’s COVID response

Approval of President Trump’s response to the

coronavirus pandemic

30%

50%

70%

3/1 3/11 3/21 3/31 4/10

Approval Disapproval

35%

34%

10%

15%

6%

American opinion of public option

Majority support Biden’s public option proposal

Somewhat

favor

Strongly

favorSomewhat

oppose

Strongly

oppose

No response April 14

Disapproval: 48.6%

Approval: 47.8%





35

Source: Morning Consult, 41% of Public More Likely to Support Universal Health Care Amid Pandemic, March 2020.

APCO, Resilience in the Face of Challenges: America’s Healthcare System, April 2020.

Public wants gov’t to play larger role in coverage and emergency preparedness

Cries for both more—and less—government intervention

Less government involvement More government involvement

Hospitals’ financial and resource challenges

laid bare by the crisis offer an argument

against replacing private insurance with

government plans that have lower

reimbursement

Percent of survey respondents who said that

the pandemic has made them more likely

to support universal health care, in which

all insurance was provided by the

government

Percent of survey respondents that want the

government to ensure that private

companies are meeting the public

demand for medical equipment to combat

the COVID-19 crisis

41%

89%Regulations that have burdened

providers for years are being loosened to

accommodate COVID response–may be

little enthusiasm to bring them back after the

pandemic





36

COVID brings renewed focus to the health care industry Could perception of the industry change like it did after 9/11?

Source: “Fewer in U.S. See Health System as Having Major

Problems,” Gallup, December 2, 2019; Business and Industry Sector

Ratings, Gallup, August 14, 2019

DATA SPOTLIGHT

How health care industry

is rated by consumers,

compared to 25 other

major industries

23rd/25


How will COVID-19 impact public perception of industry stakeholders?

0

10

20

30

40

50

60

70

80

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

% State of crisis/ major problems % Minor problems/ no problems

Negative view of health system mostly holds steady

Is the U.S. health care system today in a state of crisis, has major problems,

has minor problems, or it does not have any problems?

n= 1,015 adults in all 50 states

49%

63%

37%




37

Early polling indicates span of changing perceptionsProviders and provider organizations get early boost for COVID response

Clear early winners

Source: “Resilience in the Face of Challenges:,” APCO Worldwide, April 2020; Coronavirus Response: Hospitals Rated Best, News Media Worst, March 25,

2020;Most Americans are confident hospitals can handle the needs of the seriously ill during COVID-19 outbreak, Pew Research, March 26, 2020


Clinicians

68% have a more positive view

of providers because of how

they’ve reacted to the crisis

Neutral (but trending positive)

Pharmaceutical companies

48% have not changed their

perception based on the COVID

crisis

However, those who did change their

perception of health plans or pharma are

two-times more likely to feel more positive

Negative change in perception

Hospitals and health systems

65% have a more positive view

of hospitals and health systems

because of how they’ve reacted

to the crisis, 88% approve of how

they are responding to COVID

Health plans

55% have not changed their

perception based on the COVID crisis

Post-acute

Just 54% say they at least somewhat

confident that nursing homes in their

area can handle the needs of seriously

ill people during the outbreak

The Guardian

“'We're living in fear': why US nursing

homes became incubators for the

coronavirus”

Wall Street Journal

“One Nursing Home, 35 Coronavirus

Deaths: Inside the Kirkland Disaster”




38

Longer-term changes likely more nuanced Actions taken by individual organizations will dictate perception in coming months

• Following mandated

infection control

measures

• Home health serving as

an alternate care site

• Getting PPE to staff

• Only accepting COVID-

negative patients with

multiple tests

• Failing to communicate

with families

• Large losses in staff

volume due to infection

Hu

rt p

erc

ep

tion

Health systems Health plansClinicians

• Executive pay cuts

• Lower-than-expected

death rates

• Stepping up amid gov.

inaction

• Fighting to secure PPE

Pre

dic

ted

im

pa

ct

He

lp p

erc

ep

tio

n

Pharma Post-acute

• Staff cuts/ furloughs

• Aggressive billing for

COVID patients

• Vocal clinicians upset

about response

• Care rationing/

restricting end-of-life

visitation

• Medical volunteers

stepping up in hard-hit

areas

• Media highlighting

clinician’s plights

• Hero narrative

• Patients blaming

clinicians for inability to

get tested/ treated

• Possible decline in

patient relationship over

telehealth

• Being blamed for COVID

deaths

• Waiving COVID cost-

sharing, treatment costs

• Facilitating advanced

provider payments

• Cutting telehealth copays

• Promoting Medicaid

• Self-funded employers

choosing not to cover

COVID treatment

• Slow prior-auth1 process

for moving COVID

patients

• High patient bills

• Future premium increases

• Quickly developing a

COIVD treatment

• Forgoing patent

exclusivity

• Collaborating across

organizations

• Bad side effects of a

treatment/ vaccine

rushed to market

• Price gouging/ attempts

to patent vaccine

• Fumbling vaccine rollout

• Blamed for FDA delays





39

Erosion of Medicare cross-subsidization taxes nursing facility model

$216

Average SNF revenue per patient day

CY 2019

Reliance on Medicare cross-subsidization

leaves SNFs underfunded…

Source: Medicare Payment Advisory Commission, Annual Report to Congress Chapter 8: Skilled Nursing Facility Services, March 2020; National Investment Center for Seniors

Housing and Care, Skilled Nursing Quarterly Report, January 2020; Rutledge, Cory, et al. 34th SNF Cost Comparison and Industry Trend Report. Clifton Larsen

Allen LLP, 2019; Post-Acute Care Collaborative 2019 turnover benchmarking initiative.

Post-acute and long-term care financials, staffing model inextricably tied

9% increase in Medicaid patient days

between 2012 and 2019

68% Medicaid patient day mix in Q4 2019

$544

…and discourages investment required for

higher-level care

Two-thirds of nursing hours are

provided by aide-level staff

53.1% of staff turn over annually,

on average

Majority of facilities lack adequate

space for private rooms, patient cohorting

Traditionally less medically complex

patient population meant few facilities

had invested in large stores of PPE

Medicaid patient days are increasing in SNF

Medicare

Medicaid

How will COVID-19 impact the U.S.’ approach to post-acute and long-term care?





40

Covid-19 continues to spread rapidly in nursing homesAt least 3,466 long-term care facilities have reported cases of Covid-19


0 nursing homes 1-50 nursing homes 51-100 nursing homes >100 nursing homesSource: Khimm, Suzy, et al. “More than 2,200 Coronavirus Deaths in Nursing Homes, but Federal Government Isn't Tracking Them.” NBCNews.com,

NBCUniversal News Group, 16 Apr. 2020, www.nbcnews.com/news/us-news/more-2-200-coronavirus-deaths-nursing-homes-federal-government-isn-n1181026;

“Coronavirus in the U.S.: Latest Map and Case Count.” The New York Times, 3 Mar. 2020, www.nytimes.com/interactive/2020/us/coronavirus-us-cases.html.

Not reporting

136 cases linked to

nursing home in

Massachusetts.

115 cases

associated with

rehabilitation center

in Tennessee.

128 cases linked to

nursing home in

Washington.

83 cases linked to

Texas nursing

home.

92 cases

associated with

post-acute center in

Kansas.

98 cases linked to

Maryland nursing

facility.

Number of nursing homes with Covid-19 cases, by state




41

Source: Connolle, P., Rep. Wexton Pushes to Make Funding for LTC Facilities a Priority in COVID-19 Fight, Provider Magazine,

http://www.providermagazine.com/news/Pages/2020/APRIL/Rep--Wexton-Pushes-to-Make-Funding-for-LTC-Facilities-a-Priority-in-COVID-19-Fight.aspx.

Will current crisis lead to more funding for SNFs, or accelerate the shift to home?

Shaping the future of the post-acute continuum

Advocates begin to rally for more

funding in long-term care……but an accelerated shift toward home-based care is more likely

Representatives Jennifer Wexton

(D-VA) and Abigail Spanberger (D-VA)

spearheaded a new effort this week to

include more dedicated funding for

post-acute and long-term care

providers in the next stimulus bill.

INNOVATION

The COVID-19 pandemic adds to trends supporting home-based care models

Post-acute providers are unlikely

to get substantial increases

given limited available funding

Proliferation of value-based payment models

supporting lower total cost-of-care

Increasing consumer preference to age in place

Rapid development of at-home patient monitoring technology

Growing stigma associated with long-term care due to frequent

COVID-19 outbreaks; causes patients, families, and providers

to opt for home care over facility-based





42

Startup Health Insights, “2019: The Year for Health Innovation,” Startup Health, 2019.

Despite short-term slow-down, threat of disruption will persist

COVID-19 may give incumbents short respite from disruptors


Short-term impact

• Some start-ups face liquidity issues leading to lay-offs and

closures; government-funded grants and private equity

commitments may lessen impact

• Digital health companies will be partially immune to short-term

negative impacts, while disruptors at large will experience

stalled growth

Medium-term impact

• Venture capital firms will continue to invest funds they have

already raised, but with greater scrutiny

• Consumers will exhibit more selective spending habits as

economic downturn persists, dampening success of direct-to-

consumer ventures

Long-term impact

• Well-capitalized and “too big to fail” companies remain, and in

some cases, will acquire distressed assets

• Demand returns for solutions focused on long-standing issues,

such as chronic disease management, expanded primary care

access, and an aging population

Impact of crisis on disruptors

$6.2 B

$8.2 B

$11.7 B

$14.7 B

$13.7 B

568

688

881

789727

0

100

200

300

400

500

600

700

800

900

1000

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

2015 2016 2017 2018 2019

Funding Number of Deals

Health innovation funding and number of deals pre-COVID-19

Fundin

g (

in b

illio

ns)

Num

ber

of deals

How will COVID-19 impact the competitive landscape and efforts to “disrupt” the industry?




43

Outbreak will create new opportunities for disruption

New normal from stay-at-home

economy and lifestyle

Second-order effects from financial

pressures and an economic recovery

Growth of direct-pay models

Consumers seek primary care membership models

or low-cost self-pay options to compensate for loss

of insurance

New users of telehealth

Virtual visits and remote monitoring may be here to

stay if first-time users have a good experience and

payment parity stays in place and/or reimbursement is

secured through other arrangements

Changes to benefit design

Employers take a more activist approach to managing

costs, and become receptive to COE programs,

digital therapeutics programs, and stronger virtual

care incentives

Momentum for home-based care

Consumers may attach to the convenience of home-

based care; Hospital at Home companies will have case

for receiving reimbursement

Renewed focus on value-based payment

Payers may refocus their attention on value-based

programs to address cost pressures, opening the

door for wellness and population health management

companies

Adoption of self-administered diagnostics

Technologies enabling consumers to submit diagnostic data

garner awareness during pandemic, while proving ease,

safety, and convenience





44

COVID-19 to have unprecedented psychological impact


While need skyrockets, most barriers to treatment remain

Source: Mental Health Care Health Professional Shortage Areas (HPSAs),” Kaiser Family Foundation; Honberg R, et al., “A Long Road

Ahead: Achieving True Parity in Mental Health and Substance Use Care,” NAMI; Coe EH and Enomoto K, “Returning to Resilience: The

Impact of COVID-19 on Mental Health and Substance Use,” McKinsey; Brooks SK, et al., “The Psychological Impact of Quarantine and How

to Reduce It: Rapid Review of the Evidence,” The Lancet, 395, no. 10227 (March 2020): 912-920; Lai J, et al., “Factors Associated With

Mental Health Outcomes Among Health Care Workers Exposed to Coronavirus Disease 2019,” JAMA Network Open, 3, no. 3 (March 2020).

State of BH1 pre-COVID

Denial rates of

private insurance

for BH compared

to medical care

2X

Shortage of

mental health care

professionals2,3

56%

► Physician and nurses concerned

about maintaining licensure

► Financial insecurity and job loss

exacerbate unaffordability problem

1. Behavioral health.

2. Mental health professionals include psychiatrists, clinical

psychologists, clinical social workers, psychiatric nurse

specialists, and marriage and family therapists.

How will COVID-19 impact demand for behavioral health services?

Clinicians and first responders

• Extreme stress and trauma with

frontline staff in China reporting

high rates of depression (50%),

anxiety (45%), insomnia (34%),

and distress (72%)

COVID-19 patients and their families

• Quarantining can cause post-

traumatic stress symptoms,

confusion, and anger with possible

long-lasting effects

COVID drivers of BH need

General population

• Collective grief, fear, and

loneliness; 80% of Americans report

moderate or high levels of distress

• Financial crises are linked to

increased depression, anxiety,

substance misuse, and suicides4

People with BH conditions

• Limited access to BH treatment

• Stress, isolation, uncertainty, etc. can

trigger or exacerbate symptoms

3. As of January 2017.

4. There was a 13% increase in suicides attributable to

unemployment during the Great Recession in 2008.

► Stigma and discomfort seeking care

for behavioral health




45

1. Telebehavioral health is the remote diagnosis and treatment of mental health and

substance use disorders. Behavioral health providers include psychologists, psychiatrists,

licensed clinical social workers and licensed practicing counselors, among others.

Source: Ravindranath M, “America’s Having a Nervous Breakdown. Can Telemedicine Fix It?,” Politico, https://www.politico.com/news/2020/04/09/mental-

health-online-coronavirus-177499; Shane L, “Veterans’ Remote Mental Health Appointments Skyrocket Amid Coronavirus Outbreak,” Military

Timeshttps://www.militarytimes.com/news/2020/04/13/veterans-remote-mental-health-appointments-skyrocket-amid-coronavirus-outbreak/.

Tele-BH1 a necessary short- and long-term investment


Expanded field of providers

• Trump administration allows

therapists and social workers

to video chat with patients

Reimbursement parity

• Some insurers reimburse for

virtual treatment at the same

rate as in-person treatment

Regulatory changes

ease implementation

4XIncrease in the VA’s phone-

based mental health check-ins

and consultations, from 40K in

February to 154K in March

130%Increase in tele-BH visits from

telehealth company Doctor on

Demand over this time last year

Recent tele-BH surges

indicate willingness High-priority populations

for tele-BH during COVID-19

• Patients diagnosed with

COVID-19 and their families

• People at high risk of

infection

– Frontline clinicians

working with COVID

patients

– First responders

• People already receiving

BH treatment




46

Source: Gold J, “The Covid-19 Crisis Too Few are Talking about: Health Care Workers’ Mental Health,” STAT,

https://www.statnews.com/2020/04/03/the-covid-19-crisis-too-few-are-talking-about-health-care-workers-mental-health/.

Self-service and on-demand support required to meet surge in demand

Investment required beyond tele-BH

Advisory Board interviews and analysis

Medium

High

Medium

On-demand support

• Help lines for navigation

or immediate care

• Crisis support

Intermountain’s emotional

health relief hotline navigates

callers to self-care tools and

treatment options

Medium

Medium

High

Ongoing treatment

• Virtual screening

• Individual or group therapy

• Medication management

• Text messaging or emails

Atrium Health’s 24/7 help line

is staffed by master’s level BH

clinicians and RNs to offer

immediate care and referrals to

ongoing tele-BH support

Self-service resources

Low

High

Medium

UCSF's curated resource

page for employees includes

digital health apps made free

to providers, wellness tips,

and methods to seek treatment

• Digital health apps

• Educational materials

• List of local resources, such

as mental health centers

Investment

Reach

Impact



https://intermountainhealthcare.org/blogs/topics/covid-19/2020/04/free-emotional-health-relief-hotline/

https://atriumhealth.org/medical-services/prevention-wellness/behavioral-health

https://psychiatry.ucsf.edu/coronavirus


47

Your top resources for COVID-19 readiness


To access the top COVID-19 resources,

visit advisory.com/covid-19

CDC and WHO Guidelines

Compiles evidence-based information on

hospital and personnel preparedness, COVID-

19 infection control recommendations, clinical

guidelines, and case trackers

Coronavirus scenario planning

Explores twelve situations hospital leaders

should prepare for and helps hospital

leadership teams pressure test the

comprehensiveness of their preparedness

planning efforts and check for blind spots

Managing clinical capacity

Examines best practices for creating flexible

nursing capacity, maximizing hospital throughput

in times of high demand, increasing access

channels, deploying telehealth capabilities, and

engaging clinicians as they deal with intense

workloads

How COVID-19 is transforming

telehealth—now and in the future

Explores how telehealth is being deployed

against COVID-19 and essential next steps for

telehealth implementation




Meet our experts

Christopher Kerns

Vice President, Executive Insights

Christopher oversees all senior executive research

at Advisory Board, and is responsible for developing

the research perspective, official point of view, and

overall Advisory Board message to executives from

across the health care sector.

[email protected] @CD_Kerns



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