How bad is China’s covid outbreak?

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China is in the middle of what may be the world’s largest covid-19 outbreak after authorities abruptly loosened almost three years of strict pandemic restrictions in December following nationwide protests against the measures.

The sudden dismantling of China’s “zero covid” regime — enforced through mass lockdowns, testing and contact tracing — has left the country’s health system unprepared and overwhelmed. It has alarmed international health experts concerned about Beijing’s transparency and caused diplomatic friction as countries enforce travel restrictions on arrivals from China.

How many people have been infected?

So far, there are no reliable national figures for the number of people among China’s 1.4 billion population who have been infected in the current outbreak. After admitting the difficulty of tracking infections, China’s National Health Commission stopped reporting daily tallies in December.

The data is still maintained by the Chinese Center for Disease Control and Prevention, based on counts from hospitals and local health commissions. But because mandatory mass testing has been dropped, the official figure is believed to massively underestimate the rate of infection. As of Jan. 8, there have been a little more than 500,000 confirmed covid cases since the pandemic began, according to the CDC.

Statements from local governments indicate that the true number of infections is exponentially higher. Officials in Henan province estimated this week that 89 percent of the province’s 99 million residents have been infected. In Zhejiang province, officials said the province was seeing over a million new infections a day in late December. As of Jan. 8, all 31 provinces, municipalities and regions had reported covid infections, according to the CDC.

How serious is the outbreak?

The number of deaths remains unknown, even as evidence is mounting that the true death count is much higher than what has been reported — a little more than 5,200 deaths since the pandemic began and fewer than 40 since zero-covid restrictions were lifted on Dec. 7.

As of Dec. 25, the takeup of intensive care beds in secondary and tertiary hospitals across the country was about 54 percent, but that figure has since increased to 80 percent, Jiao Yahui, director of the Department of Medical Affairs of the National Health Commission, said in an interview with state broadcaster CCTV on Sunday.

Officials reassured the public by noting that the fatality rate of the coronavirus’s omicron variant is 0.1 percent. The current outbreak has mostly consisted of the omicron subvariants BA.5.2 and BF.7, the State Council Information Office said in a news conference Monday.

The lack of testing combined with the narrow definition of what counts as a covid death — positive patients who die of respiratory failure — continue to skew the statistics. Officials have said they will investigate fatalities and release the results in the future.

What is the government saying?

Authorities say the worst of the outbreak is over for Chinese cities where infections spread quickly in December. Now, they are preparing for a new surge in rural areas around the upcoming Lunar New Year holiday that begins Jan. 21.

State media has reported that cases in most major cities have started to decline. Yin Yong, acting mayor of Beijing, told CCTV on Monday that the city had reached its peak and that authorities were turning their focus to monitoring potential new coronavirus variants or subvariants of omicron, and to mitigating the impact of covid on the elderly and other vulnerable groups.

Officials also said the peak had been reached in the province of Jiangsu in late December, while in Zhejiang, authorities said, “the first wave of infections has passed smoothly,” according to Health Times, a publication managed by People’s Daily. The state-run Farmers’ Daily said that visits to 51 villages across 31 provinces showed that most residents had been infected and had recovered.

Data released by Baidu, the main search engine in China, showed that the number of searches related to covid symptoms and medical supplies had dropped since peaking in mid-December.

Yet in Henan, officials said hospitals remain overcrowded because of a rise in critical cases in the past week. Researchers at the Institute of Public Health at Nankai University in Tianjin, using data from fever clinics, project that the nationwide peak will be between Dec. 20 and Jan. 15, with two smaller peaks in the first half of this year.

Officials have predicted a second wave over the Lunar New Year holiday, when the total number of passenger trips by residents is expected to reach 2.1 billion as pent-up demand for travel is unleashed. At this point, more contagion could spread to rural areas, where severe shortages of anti-fever drugs and medical staff have been reported.

How did zero covid affect the outbreak?

China’s pursuit of zero covid, eliminating the spread of the virus through lockdowns, mandatory quarantines, travel restrictions and mass testing, has proved to be a double-edged sword. While the approach kept infections and death rates low throughout most of the pandemic, it left the Chinese population with little natural immunity to the virus.

Many elderly residents — already skeptical of vaccines, which have had a troubled past in China — did not get vaccinated, feeling that they would be protected by the zero-covid strategy. Only 40 percent of residents above the age of 80 have had booster shots.

Under China’s covid policy, the population was immunized with domestically made vaccines that are not as effective against the omicron variant as mRNA vaccines. China has yet to approve foreign mRNA vaccines, and a domestically made one is still under production.

What does this mean for the rest of the world?

Concerns about the possibility of a new variant emerging in China have prompted countries including the United States, Japan and South Korea, and many European countries, to require extra screening for arrivals from China.

Wu Zunyou, the chief epidemiologist at the CDC, told CCTV in a report published Sunday that no new variants have emerged and that new strains are being collected every day to monitor changes.

“All the strains we found so far have already been shared with international sharing platforms,” he said. “They are the ones either reported abroad, or have been introduced to China after spreading overseas. So far, no newly emerged mutated strains have been found in China.”

The World Health Organization has called on China to share more real-time data on the outbreak. Michael Ryan, the health emergencies director, said at a news conference in Geneva on Wednesday that the WHO “still believes that deaths are heavily underreported from China.” He added: “We still do not have adequate information to make a full comprehensive risk assessment.”

Beijing has criticized travel restrictions on people arriving from China imposed by other countries as “ridiculous” and politically motivated. It has threatened countermeasures and this week suspended short-term visas for Japanese and South Korean citizens.

U.S. healthcare: A conglomerate of monopolies

Posted on by • Posted in Competition, Cost Management, Cost Reduction, Dept of Justice (DOJ), Economies of Scale, Federal Trade Commission, Federal Trade Commission (FTC), Health System, Hospital, Hospital at Home, Hospital Industry, Innovation, Lack of Quality Improvement, Leadership, Market Consolidation, Mergers & Acquisitions, Monopoly, Monopoly Behavior, Quality Measures, Quality of Care, Seven-Day Hospital • 1 Comment
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The Taylor Swift ticketing debacle of 2022 left thousands of frustrated ‘Swifties’ without a chance to see their favorite artist in concert. And it also highlighted the trouble that arises when companies like Ticketmaster gain monopolistic control.

In any industry, market consolidation limits competition, choice and access to goods and services, all of which drive up prices.

But there’s another—often overlooked—consequence.

Market leaders that grow too powerful become complacent. And, when that happens, innovation dies. Healthcare offers a prime example.

And industry of monopolies

De facto monopolies abound in almost every healthcare sector: Hospitals and health systems, drug and device manufacturers, and doctors backed by private equity. The result is that U.S. healthcare has become a conglomerate of monopolies.  

For two decades, this intense concentration of power has inflicted harm on patients, communities and the health of the nation. For most of the 21st century, medical costs have risen faster than overall inflation, America’s life expectancy (and overall health) has stagnated, and the pace of innovation has slowed to a crawl.

 This article, the first in a series about the ominous and omnipresent monopolies of healthcare, focuses on how merged hospitals and powerful health systems have raised the price, lowered the quality and decreased the convenience of American medicine.

Future articles will look at drug companies who wield unfettered pricing power, coalitions of specialist physicians who gain monopolistic leverage, and the payers (businesses, insurers and the government) who tolerate market consolidation. The series will conclude with a look at who stands the best chance of shattering this conglomerate of monopolies and bringing innovation back to healthcare.

How hospitals consolidate power

The hospital industry is now home to a pair of seemingly contradictory trends. On one hand, economic losses in recent years have resulted in record rates of hospital (and hospital service) closures. On the other hand, the overall market size, value and revenue of U.S. hospitals are growing.

This is no incongruity. It’s what happens when hospitals and health systems merge and eliminate competition in communities.  

Today, the 40 largest health systems own 2,073 hospitals, roughly one-third of all emergency and acute-care facilities in the United States. The top 10 health systems own a sixth of all hospitals and combine for $226.7 billion in net patient revenues.

Though the Federal Trade Commission and the Antitrust Division of the DOJ are charged with enforcing antitrust laws in healthcare markets and preventing anticompetitive conduct, legal loopholes and intense lobbying continue to spur hospital consolidation. Rarely are hospital M&A requests denied or even challenged.

The ills of hospital consolidation

The rapid and recent increase in hospital consolidation has left hundreds of communities with only one option for inpatient care.

But the lack of choice is only one of the downsides.

Hospital administrators know that state and federal statutes require insurers and self-funded businesses to provide hospital care within 15 miles of (or 30 minutes from) a member’s home or work. And they understand that insurers must accept their pricing demands if they want to sell policies in these consolidated markets. As a result, studies confirm that hospital prices and profits are higher in uncompetitive geographies.

These elevated prices negatively impact the pocketbooks of patients and force local governments (which must balance their budgets) to redirect funds toward hospitals and away from local police, schools and infrastructure projects.

Perhaps most concerning of all is the lack of quality improvement following hospital consolidation. Contrary to what administrators claim, clinical outcomes for patients are no better in consolidated locations than in competitive ones—despite significantly higher costs.

How hospitals could innovate (and why they don’t)

Hospital care in the United States accounts for more than 30% of total medical expenses (about $1.5 trillion). Even though fewer patients are being admitted each year, these costs continue to rise at a feverish pace.

If our nation wants to improve medical outcomes and make healthcare more affordable, a great place to start would be to innovate care-delivery in our country’s hospitals.

To illuminate what’s possible, below are three practical innovations that would simultaneously improve clinical outcomes and lower costs. And yet, despite the massive benefits for patients, few hospital-system administrators appear willing to embrace these changes.

Innovation 1: Leveraging economies of scale

In most industries, bigger is better because size equals cost savings. This advantage is known as economies of scale.

Ostensibly, when bigger hospitals acquire smaller ones, they gain negotiating power—along with plenty of opportunities to eliminate redundancies. These factors could and should result in lower prices for medical care.

Instead, when hospitals merge, the inefficiencies of both the acquirer and the acquired usually persist. Rather than closing small, ineffective clinical services, the newly expanded hospital system keeps them open. That’s because hospital administrators prefer to raise prices and keep people happy rather than undergo the painstaking process of becoming more efficient.

The result isn’t just higher healthcare costs, but also missed opportunities to improve quality.

Following M&A, health systems continue to schedule orthopedic, cardiac and neurosurgical procedures across multiple low-volume hospitals. They’d be better off creating centers of excellence and doing all total joint replacements, heart surgeries and neurosurgical procedures in a single hospital or placing each of the three specialties in a different one. Doing so would increase the case volumes for surgeons and operative teams in that specialty, augmenting their experience and expertise—leading to better outcomes for patients.

But hospital administrators bristle at the idea, fearing pushback from communities where these services close.   

Innovation 2: Switching to a seven-day hospital

When patients are admitted on a Friday night, rather than a Monday or Tuesday night, they spend on average an extra day in the hospital.

This delay occurs because hospitals cut back services on weekends and, therefore, frequently postpone non-emergent procedures until Monday. For patients, this extra day in the hospital is costly, inconvenient and risky. The longer the patient stays admitted, the greater the odds of experiencing a hospital acquired infection, medical error or complications from underlying disease.

It would be possible for physicians and staff to spread the work over seven days, thus eliminating delays in care. By having the necessary, qualified staff present seven days a week, inpatients could get essential, but non-emergent treatments on weekends without delay. They could also receive sophisticated diagnostic tests and undergo procedures soon after admission, every day of the week. As a result, patients would get better sooner with fewer total inpatient days and far lower costs.  

Hospital administrators don’t make the change because they worry it would upset the doctors and nurses who prefer to work weekdays, not weekends.

Innovation 3: Bringing hospitals into homes

During Covid-19, hospitals quickly ran out of staffed beds. Patients were sent home on intravenous medications with monitoring devices and brief nurse visits when needed.

Clinical outcomes were equivalent to (and often better than) the current inpatient care and costs were markedly less.

Building on this success, hospitals could expand this approach with readily available technologies.

Whereas doctors and nurses today check on hospitalized patients intermittently, a team of clinicians set up in centralized location could monitor hundreds of patients (in their homes) around the clock.

By sending patients home with devices that continuously measure blood pressure, pulse and blood oxygenation—along with digital scales that can calibrate fluctuations in a patient’s weight, indicating either dehydration or excess fluid retention—patients can recuperate from the comforts of home. And when family members have questions or concerns, they can obtain assistance and advice through video.

Despite dozens of advantages, use of the “hospital at home” model is receding now that Covid-19 has waned.

That’s because hospital CEOs and CFOs are paid to fill beds in their brick-and-mortar facilities. And so, unless their facilities are full, they prefer that doctors and nurses treat patients in a hospital bed rather than in people’s own homes.

Opportunities for hospital innovations abound. These three are just a few of many changes that could transform medical care. Instead of taking advantage of them, hospital administrators continue to construct expensive new buildings, add beds and raise prices.

CVS invests $100M in Carbon Health

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On Monday, San Francisco-based Carbon Health—a virtual-first primary and urgent care company with 125 clinics across 13 states—announced a partnership with CVS Health, which includes a $100M investment, as well as plans to pilot its operating model in select CVS stores. The announcement came just days after Carbon reported its second round of layoffs in the past year, as it scales back on less profitable business segments to focus on expanding its primary care model. 

The Gist: It’s been over a year since CVS CEO Karen Lynch said the company was moving with “speed and urgency” to construct a physician-staffed primary care model. Last fall it purchased in-home health evaluation company Signify Health for $8B, after rumors that it had been close to acquiring One Medical.

Between its convenient retail footprint, insurance arm, and Signify’s risk-assessment tools, a nationwide primary care physician network is the last puzzle piece CVS needs to field a comprehensive and formidable primary care strategy.

While it’s currently rumored to be evaluating a $10B acquisition of Oak Street Health, this partnership with Carbon Health is a better bet to deliver value quickly, as CVS should be able to more easily integrate and leverage Carbon’s retail health expertise across its growing care delivery platform.

Intermountain and UCHealth partner to form CIN

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 Late last week, Salt Lake City, Utah-based Intermountain Healthcare and University of Colorado-affiliated UCHealth, based in Aurora, CO, shared that they are jointly developing a clinically integrated network (CIN). It will initially comprise 700 primary care physicians working at UCHealth’s 12 hospitals and hundreds of clinics, but may expand in the future. The CIN will leverage Intermountain’s value-based care expertise and its SelectHealth insurance plans. The two health systems will remain independent and operate the CIN as a separate company. 

The Gist: This partnership continues Intermountain’s expansion into Colorado, after it finalized its merger with SCL Health in April of last year. 

It’s a smart way for Intermountain to strengthen its foothold in the state, especially as further health system acquisitions in the Denver area may raise antitrust concerns. 

Intermountain will be able to tap into a larger network of physician relationships that it can use to bolster its health plan, with significantly lower infrastructure costs compared to employment. 

These types of partnership strategies may also be bed-warming for deeper relationships, with the opportunity to demonstrate value before a full-on merger.  

Adverse events in inpatient care still common

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Published this week in the New England Journal of Medicine, this concerning study found that seven percent of all inpatient hospital admissions feature at least one preventable adverse event, and that nearly a quarter of all adverse events are preventable, with drug administration errors the most frequent. While the complexities behind studying adverse events make it difficult to measure progress over time, the authors assert that these episodes are still far too common, and advocate for establishing standard approaches to measure the frequency of adverse events more reliably. 

The Gist: Health systems had been making at least some progress in their decades-long effort to reduce adverse events before COVID turned the industry upside down, drawing clinical leaders’ focus to the crisis and upending industry benchmarks. 

Today’s short-staffed, traveler-dependent labor force presents yet another challenge to hospitals aiming to achieve quality benchmarks. COVID has also accelerated the outpatient shift, heightening the importance of tracking quality metrics in non-hospital settings. 

As more complex procedures are performed in ambulatory surgery centers, and more hospital care is administered at home, there’s also a concern that hospital-based quality measures are not telling the whole story on the state of patient safety. 

A rethinking of quality metrics and processes to measure and prevent adverse events across the continuum is long overdue.  

A contentious time for payer-provider negotiations

Posted on by • Posted in Employee Staffing, Employee Staffing Shortage, Health Insurance Industry, Health System, Hospital, Hospital Capacity, Hospital Industry, Inflation, Labor Shortages, Labor Spend Management, Market Outlook, Market Power, Market Trends, Negotiation, Payer Contracting, Strategy, Supply Chain • Leave a comment

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In our decades of working in healthcare, we’ve never seen a time when payer-provider negotiations have been more tense. Emboldened insurers, having seen strong growth during the pandemic, are entering contract negotiations with an aggressive posture.

“They weren’t even willing to discuss a rate increase,” one CFO shared as he described his health system’s recent negotiations with a large national insurer. “The plan’s opening salvo was a fifteen percent rate cut!”

Health systems are feeling lucky to get even a two or three percent rate bump, well short of the historical average of seven percent—and far short of what would be needed to account for skyrocketing labor, supply, and drug costs. According to executives we work with, efforts to describe the current labor crisis and resulting cost impacts with payers are largely falling on deaf ears.  
 
This scenario is playing out in markets across the country, with more insurers and health systems announcing that they are “terming” their contract, publicly stating they will cut ties should the stalemate in negotiations persist.

Speaking off the record, a system executive shared how this played out for them. With negotiations at an impasse, a large insurer began the process of notifying beneficiaries that the system would soon be out-of-network, and patients would be reassigned to new primary care providers. The health plan assumed that the other systems in the market would see this as a growth opportunity—and was shocked when they discovered that other providers were already operating at capacity, unable to accommodate additional patients from the “terminated” system. 

Mounting concerns about access brought the plan back to the table. Even in the best of times, a major insurer cutting ties with a health system is extremely disruptive for consumers, who must shift their care to new providers or pay out-of-network rates. But given current capacity challenges in hospitals nationwide, major network disruptions can be even more dire for patients—and may force payers and providers to walk back from the brink of contract termination.