Coronavirus update – 4-22-20

I hope that your week is off to a good start, and you and your family are remaining healthy. 
While the pace of change has slowed a bit in the last week, we have a number of useful pieces of information for you. 

Stimulus 3.5 and 4.0:

You’ve likely seen that a bill passed the Senate yesterday and expected to pass the House which is largely focused on refunding the PPP and additional help for hospitals.  
There have been a lot of ideas thrown around to include in stimulus 4.0, including this one that requires that group health plans cover treatment (not just testing) for COVID-19 at 100%.  It also provides funding to offset the member cost sharing so that there is no additional liability to the plan.  

Virtual Physical Therapy:

We hosted a webinar with ATI Physical Therapy last week outlining how you can integrate virtual PT into your plan.  You can find a recording of the session here.

PwC CFO Survey:

PwC released their third bi-weekly survey of CFO’s on 4/13 and it has a number of valuable insights.  Most importantly as the magnitude of the impacts of the coronavirus has had on the world economy becomes more apparent and we get a clearer picture of what China is looking like as they come out on the other side, 78% of finance professionals believe it is going to take 1-3 months or longer to recover.  

Additionally, 75% of respondents listed the financial impact including effects on results of operations, future periods, and liquidity and capital resources as their primary concern. 

One additional key take away that leads into my next two points is the following:
PwC surveyed more than 1,600 adult consumers in the US and found that half are trying different grocery brands, and many expect their new health and wellness behaviors to last.

Piper Sandler Survey of Physicians: 

The focus on fighting the novel coronavirus has caused volumes of other types of patients to plummet, according to a new survey of physicians by Piper Sandler. Analysts spoke to 160 physicians across 16 specialties in four states — California, Massachusetts, Washington and New York. About half are in private practice. 

Key findings:

  • Patient volumes are down 65% and expected to still be 12% one year from now.
  • At the same time, more than half of patient encounters will be through telemedicine through the foreseeable future. And while that will help some practices in the short term, many doctors are considering furloughing or laying off employees.
  • Telemedicine is expected to comprise up to 54% of patient encounters in the near future — a more than five-fold increase from volumes prior to the pandemic, according to the survey. (I can confirm that the experience with a West MI hospital as been similar as well). 
    • The growth in use of Telemedicine is projected to have a favorable impact on costs in more than one way.  One example is that the use of telemedicine may drive down the volume of unnecessary tests and procedures that originate with in-person visits.  
  • Along with an unprecedented drop in patient volumes, prescription writing has also dropped by 47%. It is expected to be down by a similar percentage in April, reach 80% of normal in September and 90% of prior volumes in March 2021.

Key health care thoughts for employers:

I fully understand that all employers currently have no shortage of fires burning from managing cash flow to determining how to restart your business in the near future.  That said, I encourage you to take a few minutes to think about what this crisis means for your health plan and as I shared last week, don’t let this crisis go to waste.  Here are some important observations that I’d like you to consider: 

  • As recently as February of this year, many employers put their health plan in the “if it ain’t broke, don’t fix it” bucket.  While most will agree that our current health care system has a lot of flaws, if it isn’t entirely broken, a tight labor market and a relatively vibrant economy took the focus off of the health plan even though it represents a substantial part of the overall budget. 
  • Coming out of the this crisis, there are very few things throughout our society that are going immediately return to “normal” and many won’t ever be the same again.  As indicated by the PwC survey consumers have changed and are continuing to change, and I would argue they are expecting health care to change as well.  At a minimum, they won’t be surprised if it does which leads to my main point. 
  • If ever there were a time for an employer to make meaningful, substantial changes to their health plan, this is it.  Employers will be able to quickly make highly impactful changes to their health plan which likely would have been made over a period of years before.  
  • The changes I am describing have nothing to do with plan design (implementation of a high deductible health plan, etc.), but rather a wholesale rebuilding of the plan to bring complete transparency and strategic management to the plan. 
  • One of the biggest changes an employer can make, with the potential for immediate and dramatic cost reduction, is high quality medical management.  Put in simple terms, effective medical management is the traffic cop getting patients the right care at the right place.  The degree of medical management your plan has is an adjustable dial with an inverse relationship to employee “noise”.  The more aggressive the management (“no, you can’t get that procedure until you try these more clinically appropriate steps first” or “no you can’t get that procedure at X provider, but we will pay 100% of it at Y provider”) the greater the cost savings for a plan but the potential for employee pushback is greater too.  
  • There will be no better time to make changes to a modern, effectively managed health plan, than the immediate post coronavirus world.  Change will be the norm for the short and mid-term and it will be expected.  Employers have never been in this strong of a position to rethink their health plans.  You have patient volume and health care providers are desperate to regain lost business as one example.

Don’t let this crisis go to waste without at least considering what opportunities exist for you to dramatically reduce costs and improve care. 

Recent & Related

Study Pegs Group Benefits Return on Investment at 47%

Study Pegs Group Benefits Return on Investment at 47%

A recent study has found that employers who offer health insurance coverage to their staff had an average return on investment (ROI) of 47%, meaning that for every $1 an employer spends, it will receive $1.47 in benefits. The analysis by Avalare, a wellness plan...

read more