The logjam of patients who cannot be seen expeditiously at hospitals is becoming an entrenched problem with no imminent solutions, a CMS leader said this week.
“The data tells us healthcare services, particularly for the Medicare population, have not come back to pre-pandemic levels,” said Jonathan Blum, principal deputy administrator and COO with CMS. “We’re not sure why.”
But the agency’s leaders have a theory, and it ties into the capacity and workforce issues that have affected the industry over the last couple of years, Blum added during a featured panel session at the HIMSS Global Health Conference and Exhibition in Chicago.
“When we go to healthcare facilities for firsthand visits, what we see is ER rooms that are backed up,” he said. “We hear stories that care providers can’t find space, particularly for children or those who have more severe conditions. And what they say is they just don’t have the beds open. They can’t find workers.”
The challenge affects nonelective services as well as elective procedures, Blum said, and it spans all types of geographic areas.
“This workforce shortage will take us many years to fully come back from,” he said.
A murky crystal ball
A perplexing aspect of the continuing lag in volumes is the lack of an evident pattern in case-mix changes. There isn’t an apparent increase in the complexity of care, Blum said, nor have quality metrics been noticeably impacted.
“The picture of how service use will change in the next six months, 12 months, 24 months, that’s a picture that we can’t see very well,” he said.
What’s clear is that providers “have seen a really structural, significant change in their operations and their financing,” said Dawn Samaris, managing director for strategic and financial planning at Kaufman Hall. Expenses have gone up “by 20, 25%” amid workforce shortages, while revenues have been stymied by the shuttering of services “as well as, quite frankly, new entrants into the healthcare space.”
Borrowing by not-for-profit healthcare providers this year is about 20% of normal, she noted, leading to questions such as, “Are they making the investments in the infrastructure and what their communities need to be able to deliver the types of care they want to [deliver] long-term?”
As with operations, the prospect of a quick financial turnaround is dicey.
“I think it’s going to be a tough road for hospitals for some time to come,” Samaris said. “We are having more difficult conversations today than I think we’ve ever had of really people looking at their income statement, their balance sheet, saying, ‘What is the path forward?’”
“Healthcare is typically thought to be a little bit recession-proof,” said Paula Chatterjee, assistant professor of medicine at the University of Pennsylvania. “The fact that we’re seeing different patterns now begs a couple of questions. One is: Are hospitals and health systems now capitalizing on revenue streams that are recession-sensitive? And what does that mean?”
Adapting to a new reality
As the U.S. population ages, Blum said, providers should prepare for a payment environment in which their average all-payer rate increasingly resembles the Medicare rate. Such a trend would constitute a significant reduction in revenue, with a January 2022 report by the Congressional Budget Office finding that commercial payers reimbursed hospitals at 182% of the Medicare rate for inpatient services and 240% for outpatient services.
“Systems need to think through how they design care” for such a scenario, he said. “That’s going to require a different workforce, that’s going to require different workflows, that’s going to require a fundamental design change from how we deliver care today. That should be a very strong price signal that system design, care design, value-based care [modeling] needs to really plan for that future.”
Given the present and future fiscal realities, Samaris said, not-for-profit hospitals may have to come to terms with being unable to cover the full gamut of a community’s care needs.
“I think that’s no longer financially sustainable,” she said. Organizations should be “really looking hard at: What can we maintain within our portfolio? What do we truly differentiate ourselves at? And where can either my competitors or partners in the community do it better and for a lower cost than I can, and I can deploy my own resources elsewhere?”