Politics. As we grind through the final episodes of the stimulus reality show, waiting with bated breath to see if Speaker Pelosi gets a rose from Leader McConnell, public health continues to take a beating out on the campaign trail and in the public eye. The latest salvo involves the integrity of COVID-19 vaccine development. Fortunately, the high stakes are not lost on the FDA and other public health advocates.
At Tuesday night's Vice Presidential debate, nominee Kamala Harris indicated that she would not take any vaccine that the president endorsed. We cannot be sure who looks to political figures for advice on their health, but Sen. Harris was, in fact, reflecting the views of many Americans. A September poll by Kaiser indicated that over half of respondents would not take a vaccine approved before election day. Interestingly, the view is non-partisan with Republicans more reluctant that Democrats.
The concern the president will undermine the FDA's standards for vaccine approval to secure a much needed win before election day creates a long term public health dilemma. In the public's mind, one politicized vaccine can quickly call into question all vaccines. From there other public health measures that city and state governments rely on to control infectious disease outbreaks also can easily become suspect. Those infectious disease outbreaks made more likely by the reduced vaccination rates which have already been surpressed by delayed school openings and reduced access to health care services.
These future scenarios are not lost on the FDA which last week moved to require two months of follow-up data for Phase Three participants before issuing an Emergency Use Authorization. The new requirement has two important implications for public health. First, it likely delays until after the election distribution and administration of a vaccine. Second, the monitoring data for adverse events creates additional assurances to the public. In short, the FDA has decided taking heat from the White House is worth the trust the public requires to support a widespread vaccination program.
Helping things along is Dr. Albert Bourla, PFE's CEO who hit his own campaign trail last week. In an effort to limit the skepticism, Bourla has met with members of the scientific and medical communities to assure them that, regardless of the regulatory process, PFE's vaccine would meet the FDA's safe and effective standard.
It is too early to say whether the damage to public health's reputation can be limited. State and local responses to the outbreak have been all over the board, creating skepticism from varying perspectives about their appropriateness. The hope is in those regulators at the FDA and Dr. Bourla who are taking the long view.
A welcome development for certain.
Policy. It is looking like delayed vaccinations are going to be only part of the challenge for American health care. On Thursday, HCA issued 3Q guidance that, in some respects, beat consensus. Their press release cited increases in patient acuity as partially responsible. We know from our discussions with health system and hospital leaders that the seven months and counting the COVID-19 outbreak has restricted capacity, imposed disruptive sanitation protocols and resulted in workforce shortages driven by delayed school reopenings and safety concerns, is having an impact. Patient reluctance remains another major factor in limiting hospital throughput.
In one case, a large hospital leader indicated to us that high acuity patients that are normally 2% of census, now account for 7-8% due to the combined effects of a decline in low acuity patients and the impact of delayed care. This anecdote is supported by a report issued last week by McKinsey & Company that indicated surgery volumes are not expected to recover in 2020 and remain at 10% or more below 2019 levels. The report also indicated that orthopedic, otolaryngology and plastic surgeries have experienced the largest declines.
The implications for these reduced volumes, combined with some well timed policy changes we detailed on our call last week with a venture fund, Jumpstart Foundry, spell more than temporary trouble for health systems. The same McKinsey report, and our own contacts, believe it will be years not months before the backlog is cleared.
Meanwhile, patient acuity continues its rise.
It is going to take a massive public health campaign to return things to normal. Many hospitals have undertaken such efforts as part of branding and marketing campaigns but thus far the public health system, preoccupied wtih COVID matters, has not engaged. Recently, CMS held an early evening conference call to highlight the deleterious effects on Medicaid enrolled children but that appears to be the extent of the effort at this point.
When the alarm bells finally ring at health departments around the country and after a less than stellar performance during COVID, the critical question will become, "will anyone listen?"
Power. On Thursday, CMS released new guidlines on repayment of loans to providers under the Medicare Accelerated and Advance Payment Programs. Under the new authority created by the recently passed Continuing Resolution, repayment of loans that was to begin in August has been extended to one year from the date the loan was originated.
Providers will now be given a total of 29 months to repay. Plenty of time, in other words, for the program to be amended again. After the first year CMS will automatically recoup 25% of the loan balance during the subsequent 11 months. During the next six months, recoupment will increase to 50% of the providers' Medicare reimbursement. If, after 29 months, the provider cannot pay Medicare back due to financial hardship, CMS will extend the loan with a 4% interest rate.
The same day, HCA announced that they were going to return or repay early about $6 million in Provider Relief and Medicare Accelerated Payment funds. Beating expectations while hanging on to $6 billion of the taxpayers' money is not a good look, as many bulge bracket investment banks learned when Occupy Wall Street, the progenitor of our current left leaning social unrest, came calling. HCA and other health care providers probably think they have enough trouble beating back Medicare-for-All/Some. So, kudos for at least some political strategy cooking over at Park Place.
But let us also recognize the money HCA is returning has some uncomfortable strings attached that limit what management referred to as "financial flexibility." Those strings include restrictions on layoffs and executive compensation as well as prohibitions on stock buybacks, dividend payouts and other capital distributions. Given the dramatic realignment of services necessary to address the new throughput realities, the first of those things is likely very much on HCA management's mind.
Layoffs and buybacks. Still not a good look.
Managing Director – Health Policy