Politics. The alliteration describing the two extreme points of Tennessee has been political shorthand to describe a statewide campaign for as long as I can remember. Office-seekers travel the state visiting everyone that will have them; from prayer breakfasts to country club lunches to, my favorite, the Sure Shot Rabbit Dinner (BBQ. They gave up on the rabbits years ago.)
If you travel their route, preferably by state highway, you will find that the much-decried political polarization of America doesn’t really exist. That is primarily because the issues that get clicks and page views are not the obsessions of most people.
The single most important issue in west Tennessee is the price of cotton and other commodities. In middle Tennessee it is health care policy. In east Tennessee, support for the automotive industry will be most frequently raised to those on the journey from Memphis to Mountain City.
Issues that have come to define the news cycle like health insurance coverage, climate change, immigration and Donald Trump, and used to describe polarization and divisiveness are certainly important but for most people they are mere luxuries, a way to express affinity with a group of peers. For elected officials and non-governmental agencies these issues have proven money-good in fundraising.
Like most luxuries, the importance of these polarizing issues is quickly demoted when more immediately consequential problems emerge, like war and inflation. Climate czar, John Kerry was ridiculed last week for suggesting a hazard of war would be increased emissions. What went under-reported was Kerry’s admission that conflict like that underway in Ukraine, would cause people to “lose focus” on climate policies.
Knowing John Kerry’s career as we do, we suspect his real concern would be a loss of focus on John Kerry. Nevertheless, there still but 24 hours in the day and a fundamental economic issue like inflation is going to take more of it than anything else on the road from Memphis to Mountain City and elsewhere. The sooner the Biden administration understands that, the better.
Policy. If the State of the Union speech was any indication, the White House will be slow to recognize the shift in public priorities, if for no other reason than they seem mystified by the dynamics between supply and demand.
One major policy initiative announced at SOTU was mandatory staffing ratios at nursing facilities. Staffing ratios are a high priority cause of the health care unions, a core constituency of the Biden administration. The policy has merit, staffing at nursing facilities has been a problem for years, especially on nights and weekends. Inadequate staffing leads to poor outcomes in critical areas like infection control.
Unfortunately, for the policymakers, nursing facilities have been hard pressed to attract workers for years. In January 2018, there were 1.6M workers at nursing facilities. By February 2020 that number had fallen to 1.5M. Had it not been for COVID, the sector’s employment would have continued its slow downward trajectory. Instead, what was likely to happen over a decade, occurred in a matter of months.
The Biden administration is unlikely to be dissuaded. Mandates for staffing ratios are easily accomplished administratively. There will be lawsuits, of course, but hard to say if an injunction will prevent the inevitable; facility closures especially in less densely populated areas and among those nursing homes that serve a disproportionated number of Medicaid patients.
The states could get involved but that hardly assured. The nursing facility industry owes its existence to significant political influence in state capitols. At the same time, state and federal policy have discourage skilled nursing stays, just not too much. Bed taxes generated by nursing homes are a significant source of funding for Medicaid programs.
It is hard to judge at this point how or if the industry will get rescued and whether it should. What we do know is there is a lot of real estate held by REITs headed for distressed territory in the coming years. That train started moving before COVID and President Biden so there is probably no stopping it now.
Power. Washington's inability to connect the on-the-ground reality to its policies will have but one outcome; the health care industry will find its way forward without it. That future is made more so by the administration's pledge to track down and prosecute misused COVID-19 relief funds, as President Biden did at the State of the Union speech last week.
Never mind that the criteria for applying and accepting Provider Relief Funds, for example, was so broadly written it invited abuse. That is why a mental health and substance abuse provider, ACHC, received $24M in April 2021. It was no doubt blessed by accountants and lawyers, even if it took eight months to come up with a good argument. It may also escape scrutiny by the Office of the Inspector General. It does, however, raise eyebrows among people with a little walking around sense as ACHC does not treat respiratory diseases.
Also, never mind that the administration has made ownership-type a criteria for policy decisions as demonstrated by the language in the recently released Requests for Application for the ACO REACH model. President Biden's nursing home policy includes targeting REIT and Private Equity owners with greater transparency and reporting. The administration has identified favored providers - something I have never seen before - raising the specter of targeted enforcement.
In that context, HCA's decision in early 2020 to send back PRF as soon as it hit their bank account, makes a lot of sense. They have had their scrapes with federal enforcement and they have no plans to invite that trouble.
The federal government and its health care policies are becoming more trouble than they are worth.
Have a great rest of your holiday weekend.
Emily Evans
Managing Director – Health Policy
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