The Strange Intersection of COVID-19, Telehealth, and Health System Stabilization Right Now

June 16, 2020
The strange situation that patient care organization leaders find themselves right now is one where telehealth adoption has surged, but also in which payment uncertainty is clouding its future

We seem to be in a truly strange moment now in terms of hospital and health system financial health and its connection to the dynamics around telehealth adoption, as the U.S. healthcare delivery system trudges through the COVID-19 pandemic and its ensuing crises.

As everyone knows, the order on March 18 from the federal Centers for Medicare & Medicaid Services (CMS) for the leaders of patient care organizations to halt elective medical procedures, led to a crash in patient care organization finances. Beginning in mid-May, hospitals and clinics in various states had begun to reschedule those elective procedures.

But much financial damage had already been done. As a press release published to the website of the Chicago-based consulting firm Kaufman Hall noted on Thursday, May 21, “The median Operating Margin [of U.S. acute-care hospitals] fell to–29 percent—and the median Operating EBITDA Margin ended the month at –19 percent, down 174 percent compared to the same period last year and 191 percent below budget. These and other findings are highlighted in the May issue of Kaufman Hall’s National Hospital Flash Report, which draws on April data from more than 800 hospitals using the Kaufman Hall Axiom Comparative Analytics tool.”

“April was the worst month ever for hospital finances,” said Jim Blake, managing director, Kaufman Hall, said in a statement contained in the press release. “Our nation’s hospitals are in a perilous position. They are serving as the frontlines of our battle against this virus, but the pandemic is threatening their fundamental financial viability at a time when we need them most. The road to recovery will be difficult, and our healthcare system will be forever changed.”

In the midst of all of this, telehealth-based care delivery has proven to be a rather strange double-edged sword. On the one hand, it speaks to a major shift in how healthcare will need to be delivered going into the near future, for the safety of everyone concerned—patients, families, clinicians, all hospital and health system staff members. And telehealth has proven its efficacy and effectiveness.

And all that is even with a nationwide adoption so rapid that until just before the COVID-19 pandemic hit, experts at the Washington, D.C.-based Advisory Board, a division of the Minneapolis-based Optum, had been predicting as late as January of this year that telehealth adoption would remain slow and gradual.

As John League, a senior consultant in the organization, said in a webinar held on June 11, as recently as January, he and his colleagues had still been predicting a very slow and gradual uptake in the adoption of telehealth for care delivery nationwide. Indeed, he cited a study by Amwell from earlier this year in which 66 percent of consumers had reported that they were interested in telehealth, but only 8 percent had tried it, and only 23 percent of the internists and family physicians were offering video visits at the beginning of the year.

“Then came COVID-19, and telehealth was perfectly suited for it,” League said during the webinar last week, referencing the need to adopt telehealth during the pandemic, for a variety of reasons. “You can use it to assess patients remotely and use it to keep symptomatic patients at home, can use it to care for non-COVID patients, and can keep clinicians safer,” he noted. “Forrester estimates there will be 1 billion telehealth visits in the U.S. in 2020, which is enormous, considering that most physicians had been doing 1 or 2 telehealth visits a day prior to the pandemic,” he added.

League stated that “A lot of credit goes to Medicare, because of its policy provisions during the pandemic. The big change,” he said, “has been allowing patients to access telehealth from home, and no longer requiring that telehealth visits originate from healthcare facilities. In addition, allowing new patients to obtain telehealth visits; to allow telehealth visits using smartphones; to allow audio-only visits to be reimbursed; to allow all providers to provide telehealth visits, with no penalty for limiting or eliminating copays or deductibles.”

But now, League noted, we are moving into a strangely unpredictable time. Asked which of the policy relaxations around telehealth regulations he thought would be extended beyond the immediate nationwide crisis around COVID-19, League said that “The only one of those that I’m confident will stick around after the public health emergency is over, is patients accessing telehealth visits from home. The extension of eligibility for telehealth visits being extended to providers in nursing homes, etc., should probably stay. But I think the other provisions will be rolled back,” he said. And he added that he wasn’t certain that full parity for telehealth-delivered care would be achieved.

What’s interesting about all of this is the fact that the initial success of telehealth-based care delivery has been overwhelming, with few operational problems, and with broad acceptance both by patients and by individual physicians and other clinicians. And every expert that our editorial team has interviewed has stated definitively that telehealth is here to stay as a method of care delivery, across numerous care modalities.

But payment remains a major and broad issue. Per that, just today, a U.S. Senators Brian Schatz (D-Hawai‘i) and Roger Wicker (R-Miss.) led a bipartisan group of 30 senators in calling for “the expansion of access to telehealth services during the COVID-19 pandemic to be made permanent,” according to an announcement posted to the website of Sen. Schatz’s office. “Provisions from the Schatz-authored CONNECT for Health Act that have allowed Medicare beneficiaries in all areas of the country, and in their homes, to utilize telehealth services, as well as more types of health care providers to provide telehealth, were included in previous COVID-19 legislation but will expire following the pandemic unless congressional leaders act now to make those measures permanent.”

“Americans have benefited significantly from this expansion of telehealth and have come to rely on its availability,” the senators wrote in a letter to Senator Majority Leader Mitch McConnell (R-Ky.) and Senate Minority Leader Chuck Schumer (D-N.Y.). “Congress should expand access to telehealth services on a permanent basis so that telehealth remains an option for all Medicare beneficiaries both now and after the pandemic. Doing so would assure patients that their care will not be interrupted when the pandemic ends. It would also provide certainty to health care providers that the costs to prepare for and use telehealth would be a sound long-term investment.”

As the announcement on Sen. Schatz’s office’s website noted, “In their letter, the senators highlight the growing use and benefits of telehealth during the ongoing coronavirus pandemic, as patients seek to avoid traveling to hospitals and other providers and instead receive care at home. New data shows that the number of Medicare beneficiaries using telehealth services increased by 11,718 percent in just a month and a half during the pandemic. The bipartisan and bicameral Creating Opportunities Now for Necessary and Effective Care Technologies (CONNECT) for Health Act, led by Senator Schatz, was first introduced in 2016. The bill, which is cosponsored by 36 senators, is considered the most comprehensive telehealth legislation in Congress.”

Further, “In addition to Schatz and Wicker, the letter was also signed by U.S. Senators Ben Cardin (D-Md.), Mark Warner (D-Va.), Cindy Hyde-Smith (R-Miss.), Doug Jones (D-Ala.), Shelley Moore Capito (R-W.Va.), Angus King (I-Maine), Bill Cassidy (R-La.), Krysten Sinema (D-Ariz.), Jeanne Shaheen (D-N.H.), Susan Collins (R-Maine), Jon Tester (D-Mont.), Mike Rounds (R-S.D.), Michael Bennet (D-Colo.), Lisa Murkowski (R-Alaska), Tim Kaine (D-Va.), Tim Scott (R-S.C.), Jacky Rosen (D-Nev.), Amy Klobuchar (D-Minn.), Martha McSally (R-Ariz.), Maggie Hassan (D-N.H.), Sheldon Whitehouse (D-R.I.), Steve Daines (R-Mont.), Chris Murphy (D-Conn.), Kevin Cramer (R-N.D.), Chris Coons (D-Conn.), Lindsey Graham (R-S.C.), Tina Smith (D-Minn.), and Cory Gardner (R-Colo.).”

On the regulatory front, the Advisory Board’s League noted in the webinar last week that “This week, [CMS Administrator] Seema Verma said three specific things,” League responded. “She reiterated that there’s no going back; people recognize the value of telehealth. That’s a pretty strong endorsement. I think that means that we’ll see CMS covering telehealth generally. She also said that there needs to be more access to telehealth from the home, from nursing homes, etc. She did note that Congress will need to make changes to the law. She did say CMS will do what they can in their regulatory capacity. But also, she said pretty flatly that she did not see reimbursement between telehealth and in-person as being in one-to-one parity. It doesn’t seem like CMS will be operating based on a first principle of universal parity going forward.”

So, things remain very unsettled right now. The leaders of patient care organizations are moving forward with telehealth, for all the right reasons; and yet at the same time, they are moving forward in an environment of great payment uncertainty, and that leaves them vulnerable to potential financial challenges. And that question around payment parity for telehealth-delivered care is at the heart of one of the strategic planning challenges going forward for the leaders of patient care organizations nationwide.

Staffing issues remain

Meanwhile, there’s yet another set of challenges involved here, around staffing. A team of healthcare policy researchers authored a op-ed published on June 4 in The New England Journal of Medicine that argues that the leaders of patient care organizations will need to work forward strategically to ensure that they are able to attract and retain a sufficiently stable workforce going forward into the future, in the context of the COVID-19 pandemic.

In their “Perspective” article, “Ensuring and sustaining a Pandemic Workforce,” Erin P. Fraher, Ph.D., M.P.P., Patricia Pittman, Ph.D., Bianca K. Frogner, Ph.D., Joanne Spetz, Ph.D., Jean Moore, Dr.P.H., Angela J. Beck, Ph.D., M.P.H., David Armstrong, Ph.D., and Peter I. Buerhaus, Ph.D., R.N., examined a range of issues, as well as a range of occupations, including two that are critical to caring for COVID-19 patients—respiratory therapists and nurse practitioners.

As they write, “Current efforts to fight the Covid-19 pandemic aim to slow viral spread and increase testing, protect health care workers from infection, and obtain ventilators and other equipment to prepare for a surge of critically ill patients. But additional actions are needed to rapidly increase health workforce capacity and to replenish it when personnel are quarantined or need time off to rest or care for sick family members. It seems clear that health care delivery organizations, educators, and government leaders will all have to be willing to cut through bureaucratic barriers and adapt regulations to rapidly expand the U.S. health care workforce and sustain it for the duration of the pandemic.”

Still in the first wave

Of course, many hospitals and health systems that are operating in certain states and regions are still dealing with an intensified first wave of the COVID-19 pandemic. As AZCentral.com, a division of the USA Today network, reported today (June 15), “Hospitalizations in Arizona of patients with suspected and confirmed COVID-19 have hit a new record and the state's largest health system has reached capacity for patients needing external lung machines. Arizona's total identified cases rose to 25,451 on Saturday according to the most recent state figures. That's an increase of 4.4%, since Friday when the state reported 24,332 identified cases and 1,012 deaths. Some experts are saying that Arizona is experiencing a spike in community spread, pointing to indicators that as of Saturday continued to show increases — the number of positive cases, the percent of positive cases and hospitalizations. Also, ventilator and ICU bed use by patients with suspected and confirmed COVID-19 in Arizona hit record highs on Friday, the latest numbers show.”

Further, AZCentral.com reported, “Statewide hospitalizations as of Friday jumped to 1,278 inpatients in Arizona with suspected and confirmed COVID-19, which was a record high since the state began reporting the data on April 9. It was the fifth consecutive day that hospitalizations statewide have eclipsed 1,000. On Saturday morning, officials with Banner Health notified the Arizona centralized COVID-19 surge line that  Banner hospitals are unable to take any new patients needing ECMO — extracorporeal membrane oxygenation. ECMO is an external lung machine that's used if a patient's lungs get so damaged that they don't work, even with the assistance of a ventilator. The Arizona surge line is a 24/7 statewide phone line for hospitals and other providers to call when they have a COVID-19 patient who needs a level of care they can't provide. An electronic system locates available beds and appropriate care, evenly distributing the patients so that no one system or hospital is overwhelmed by patients.”

Further, the news outlet reported, “Banner Health, which is the state's largest health system, is also nearing its usual ICU bed capacity, officials said Friday and if current trends continue is at risk of exceeding capacity. Banner Health typically has about half of Arizona's suspected and confirmed COVID-19 hospitalized patients. The state's death toll on Saturday was 1,042, with 30 new deaths reported. On Friday, the tally for the first time reached four figures—1,012 total deaths— three weeks after Gov. Doug Ducey's stay-at-home order expired.”

And that situation in Arizona speaks to yet another element in all this—the inevitable variations by region across the country, and over periods of time, with regard to the pandemic.

In other words, the dynamics around the financial and operational near future for hospitals, medical clinics and health systems nationwide remain exceptionally unstable right now. No one can quite predict how all of this will shake out, and all patient care organization leaders will need to plan thoughtfully and achieve a truly exceptional level of planning agility going forward, for the time being.

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