Politics. The next phase of the American health care system’s pandemic response may have begun with THC’s comments on 1Q 2022 earnings. In describing how they will balance this new conflict between labor and capital, the company said they are using “active decision making” to staff service lines and may keep certain capacity off-line if the cost of labor does not justify it.
If you know anything about health care, you know that the service lines most likely to experience capacity reductions are those on the medical floors. That is where you find the dying, the chronically ill, and what a Black minister here in Nashville, Frank Stevenson, once described as “the least, the lowest and the left behind”
THC is not alone. DVA, using the confusing distraction of seasonality, managed to get through its 1Q 2022 earnings call without being asked why average daily treatments dropped. DVA is now conducting about 2.5 treatments per patient per week. About 0.5 below the recommended level and well below FMS’ reported 3.11.
Fewer treatments, mean an increase in complications associated with renal failure, which in turn means a trip to the hospital where the medical staff may or may not be able to support the required care. It ends, finally, with excess mortality, a persistent and existential threat to DVA’s business.
At some point, word will reach CDC Director Rochelle Walensky’s office that U.S. excess deaths can no longer be blamed completely on COVID-19. Fortunately, there are scapegoats aplenty.
In terms of inoculating their business from political and regulatory scrutiny, DVA has done everything wrong. They returned CARES Act funding that many providers have used to buffer high labor costs. They continued stock repurchases, a flashpoint for some in Congress. They have failed to consider and invest in alternative approaches that limit the need for 3x weekly dialysis.
Oh, and their union, the one that got President Biden elected, hates them.
It will not end well.
Policy. Fixing a labor shortage is not easy and for most health policy people, uncharted territory. To their credit, the office of the Assistant Secretary of Planning and Evaluation has issued what will surely be many reports on the workforce challenges health care is experiencing.
The report offers a comprehensive overview of factors contributing to workforce shortage including the effects of travel nurses, mental and physical health as well as job satisfaction.
The ASPE also identifies some pretty straightforward and reasonably accomplished opportunities to address the issue like permitting allied health workers to practice at the top of their license and retaining provider flexibilities enacted in response to the PHE.
The very good news is that the pandemic created interest in the health profession and applications to professional schools have increased. As states and ASPE ready their own long-term plans, the opportunity for change and innovation in health care has never been greater.
The health care system workers come (back) to might look a little different.
Power. If it wasn’t clear from earnings commentary, the Wall Street Journal offers a nice description of the c. 1990-style battle being waged between insurers and providers.
Since the early 2000s, providers have enjoyed unimaginably stable wage rates as health care displaced other sectors to become the leading employer in most states. The cost of health care labor made many things possible including technology mandates for interoperable electronic health records, a plethora of administrative positions, and, above all, an over-dependence on old-style human capital to function.
As that all comes to a sudden end, insurers have limited choices. They can pay more and raise premiums, or they can limit their networks and invite the wrath of regulators.
What makes 2022 different from similar debates in the late-1980s and early-1990s is the availability of information on precisely how much an employer or plan pays for services. Data is far from perfect, but employers have gotten more insistent. They have cause to as they learned from a dramatic drop in benefit expense during COVID that perhaps they were overpaying a bit.
What also makes 2022 different is non-health care employers are experiencing their own wage pressures. Paying workers with benefits as was the case from about 2010 to 2020 won’t cut it any longer.
Nothing in health care changes rapidly but the insurer-provider power struggle has a new combatant, the people actually paying the bills.
Enjoy the rest of your Mother’s Day.
Emily Evans
