Hospital

There’s no doubt that the COVID-19 pandemic is having an impact on health spending, including how health systems have adapted to deviations in care and utilization, how the overall health care marketplace might adapt (or not) to changes in telehealth, staffing and scope of practice, as well as potential downstream impacts on health spending policy and actions.

Secondary Impacts

In addition to extraordinary morbidity and mortality, the COVID-19 pandemic has had a far-reaching impact on the revenues and expenses of health systems, as well as on our overall national economy. Unfortunately, we may only be seeing the beginning of the health impacts. The shutdown of services, along with postponed care and screening, is likely to lead to advanced disease progression. For example, modeling from the National Cancer Institute predicts an excess of 10,000 deaths from breast cancer and colorectal cancer over the next 10 years because of the pandemic. Further, vaccination rates among children have declined as much as 50-60 percent in multiple studies. In addition, while increased use of telehealth has addressed access to care generally, there is a fear among many providers and leaders regarding a silent mental health crisis  given declines in screening and treatment, as well as increased stress and anxiety caused by the pandemic.

The most recent surge in patients in  hospital systems also highlights future concerns regarding the health workforce, particularly among nurses and long-term care providers. Burnout and stress amongst these groups is high, with indications that some are already leaving their professions, further stressing the health system.

State budgets are also being impacted by COVID-19. Decreased tax revenue along with increased costs to address the pandemic have already created major shortfalls, with budget cuts looming. The economic toll compounds these issues, as more people seek Medicaid and other state programs, which are often the first programs reduced due to budget cuts. Other economic impacts such as workforce reductions, increasing college tuition, and reductions in other assistance programs (e.g. SNAP) are likely to exacerbate the impact on access and individual’s ability for health care services.

Preparing for the Next Pandemic

The conversation at the webinar turned to lessons learned from our current experience and how we can better prepare for future pandemics or other public health crises. To begin, we must acknowledge that current payment and reimbursement systems do not incentivize hospitals and providers to stockpile supplies, particularly in great numbers needed for such an event. While some large health systems were able to bear the costs of obtaining supplies in the pandemic, many, including safety-net facilities, were not. Moving forward, the health system overall must determine how to improve the stockpile capabilities and the role of federal and state governments—and therefore budgets— in ensuring an appropriate stockpile, while also considering that the next “event” may require a different and unique set of supplies. Additionally, the global supply chain and circumstances where many of the necessary medical supplies were manufactured in the countries/regions that were initially most impacted (China/Italy) suggest that we need to rethink how and where medical supplies are manufactured and sourced.

The more recent experience with rapid vaccine development and use of novel treatments has shown the promise of our life-sciences ecosystem but required massive investments from both the federal government and many of those private companies. The federal government de-risking these investments in manufacturing, has created new timelines for development that were not realistic in the pre-COVID era. Some questions arise: what will both public and private sector investment in research and development look like when we return to normal? And should the federal government signal to manufacturers in advance of the next pandemic that they will again be financially supported and therefore should continue to invest significantly in preparing for the next  pandemic? Should that signal be sent through legislation? Further, should other research efforts beyond the development of vaccines be prioritized, such as anti-virals or other therapies that may not necessarily be for COVID-19, but to increase our future arsenal?

We should also acknowledge how the pandemic forced changes in the regulatory environment and whether some of the flexibility should remain in the system. For example, professional licensing waivers for providers to practice across states have been suggested for many years but were only enacted by states in the pandemic to address workforce shortages and burnout. Should there be a system to allow for licensure reciprocity during a public health emergency, as is proposed in the federal, bipartisan TREAT Act? Additionally, other antitrust and competition regulations were eased to allow sharing of resources and personnel across health systems. Which of these flexibilities might remain in some form and how might they impact access and payment for care? And should they also be automatic during a declared public health emergency?

It’s clear that we will be analyzing and debating the impact of COVID-19 on health care and health spending for many years to come. It’s also clear that everyone must acknowledge and learn from failures that are exacerbated by how we pay for health care as well as how large resource expenditures have been able to address the pandemic in an unprecedented manner,  but with potential longer term financial consequences.

This blog post summarizes key takeaways from a recent Going Below The Surface Forum salon entitled “Present and Future Impacts of COVID on Health Spending.” Speakers included Joe Impicciche, CEO of Ascension, the largest Catholic health system in the United States, and Amitabh Chandra, the Ethel Zimmerman Wiener Professor, Harvard  Kennedy School of Government and Henry and Allison McCance Family Professor of Business Administration at the Harvard Business School, as well as Sheila Burke, Strategic Advisor and Chair of Government Relations and Public Policy, at Baker Donelson.

Raj Sabharwal
Committee Member, Staff

Raj Sabharwal, M.P.H.

Senior Director - AcademyHealth

Mr. Sabharwal is the Director of Strategic Alliances at AcademyHealth, where he works on projects that support... Read Bio

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