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Staying Prepared to Combat the Pandemic: Lessons for the US Healthcare Industry from Italy’s Response Flaws

The WHO (World Health Organization) ranks Italy among the top 10 countries with high quality of healthcare and related services in the world. Although the Italian healthcare system is far from perfect, this rating by the WHO is largely based on equality of healthcare access and other healthcare outcomes such as life expectancy and healthy life years of the population. Despite displaying qualities of a higher level of care and healthcare services, Italy is currently the new epicenter for COVID-19.  Despite now having some of the toughest measures in the world to contain the spread of the pandemic, Italian authorities were slow to react and fumbled many of those steps in the early stages of the contagion as they sought to preserve basic civil liberties as well as the economy, raising the fatality of the coronavirus outbreak in the country. The number of reported coronavirus positive cases in the US has skyrocketed over the past few weeks, and the death toll from COVID-19 in the US is not far behind from that of Italy. The rising number of cases has already overwhelmed the US healthcare industry. In this article, healthcare industry experts at Infiniti Research outline some key takeaways for the US healthcare industry from Italy’s flawed response to the outbreak and how healthcare companies in the US can prevent themselves from a similar fate.

US healthcare industry COVID-19

Ensuring protection of healthcare staff  

The US has surpassed the initial phase where the spread of the COVID-19 can be contained completely. As such, what companies in the US healthcare industry need now is to be equipped with the staff and resources to cater to the rising number of cases in the country. In Italy, over 2500 healthcare workers have become victims of the novel coronavirus outbreak. They account for approximately 20% of Italy’s healthcare staff who are out of action due to active infection and are subject to isolation or even death due to the virus.

The US healthcare industry cannot afford a similar situation at the current state, as such, they must ensure the safety of healthcare staff at all costs. Appropriate PPE should be provided to the staff based on the area in which they work Furthermore, supplies should be plentiful and necessary training must be imparted to the staff on guidelines to treat coronavirus patients. Apart from this, it is vital to offer timely and efficient testing of staff in order to ensure safety.

Rationing resources fairly

The surging COVID-19 cases can drive companies in the US healthcare industry into an agonizing emergency scenario and will require caregiver to take several crucial decisions. Rationing the available resources fairly to meet the demand of the rising number of cases would be one of the most crucial decisions to be made. The resources include ICU, ventilators, medicines, and staff to care for the patients.  One of the first steps in managing available resources is screening outpatients who are unlikely to need critical care and urging them to self-quarantine at home. Providers in the US healthcare industry must also strive to look at the cases and try to evaluate as quickly and efficiently as possible the likelihood that they can improve a patient’s condition faster.

Set patient treatment guidelines

Providers in the US healthcare industry Hospitals could adopt a lottery or first-come-first-served system for triaging patients. However, this could mean that someone less sick is treated before an infected patient who needs critical care, thereby potentially failing to achieve the goal of saving the most lives. Hospitals could choose to treat worse-off patients first, but if those people are unlikely to survive, doctors might be better off focusing on people who are less infected. However, the chances of survival of these guidelines in an extreme crisis situation remain to be seen. Professionals in the US healthcare industry are of the opinion that as the US currently lacks an exact historical comparison for how the coronavirus pandemic could play out, these guidelines offer general principles for steering hospital decision-making. Having predetermined guidelines prove helpful not just for determining which patients to treat but also on how long to treat them.

Undertake extensive testing

Timely and rapid testing for healthcare workers as well as the general public with symptoms, and those who are asymptomatic is the need of the hour to help the US healthcare industry to prepare better for what lies ahead. Apart from the clinical benefits to COVID-19 testing such as creating an action plan for treating low- and high-risk patients, the primary purpose of testing during a pandemic is advancing public health. Testing allows tracking who has COVID-19 and can help limit the community spread of the virus.

Want more insights on how our healthcare market intelligence solutions can help stakeholders in the US healthcare industry to better organize patient treatment plans, allocate medical resources, and be better equipped to fight the pandemic?

Impact of the Consolidation of the Healthcare Market

In today’s world, consolidation is key. In the past few years, financial institutions, airlines, and even retail department stores have all consolidated and transformed. Now the healthcare industry is going through its transformational phase for the purpose of consolidation.

Technological innovations and noteworthy regulatory changes backed by market dynamics are the key drivers of the rapid consolidation of health systems. Today, hospitals are acquiring not only other hospitals but also insurance business as well as physician practices. Healthcare service is no longer limited to the traditional volume driven, fee-for-service (FFS) system. Rather, the focus is on value-based care (VBC), which demands diversification and innovation on the part of healthcare providers. Most of the consolidation that has been happening in the healthcare market is horizontal in nature –i.e. hospitals acquiring other hospitals.

 

Ways in which consolidation is taking place

The U.S. health system consists of four verticals: large chains, mid-tier systems, Academic Medical Centers (AMCs) and small community health systems. It would be wrong to assume that consolidation of these verticals is a recent phenomenon. All of these groups have undergone consolidation with the aim of broadening their geographical reach, market share, and launching their new service lines.

That being said, the current trend of consolidation is no longer limited to traditional affiliations, collaborations, and joint ventures. As the focus has shifted to value-based care, healthcare systems require better technology and improved capabilities to deliver the best results. Situations like these have led to the consolidation of medical service providers with technical service providers in order to provide the right service at low costs. This is occurring most frequently in cases of large chains.

When it comes to mid-tier healthcare systems, the focus is on consolidation within the region as well as in neighboring market regions. The consolidation is done through the extensive integration of healthcare providers, from the primary level to post-acute care. This kind of consolidation serves two purposes:

  1. Value-based service provided to that particular population
  2. Acquisition of a better share in that particular regional market

Finally, there are AMCs, which tend to consolidate and emerge as specialist health systems dedicated to a specific type of illness.

 

Impact of consolidation

1.Higher prices for healthcare purchasers

Higher prices are perhaps one of the greatest impacts of health care market consolidation. Also, as regulators push for transparency regarding quality and pricing from various health systems, there are greater chances for the emergence of differential payment for higher quality services. At the same time, government payers who are looking for ways in which to decrease prices will pressurize health systems to reduce their costs and manage risks.

Overall, the market is sure to be quite volatile in the beginning. Those healthcare systems that can leverage the market and manage risks are sure to deal with the pressure in an effective manner.

2. Tough atmosphere for small hospitals and insurers

Due to the apparent rise in payment rates, small hospitals will be faced with some challenges, including having to transition to electronic medical records, which is capital intensive. In fact, this transition has resulted in the emergence of contracting models like Accountable Care Organizations (ACOs). Also, there is a trend among younger physicians of wanting to work with large organizations, rather than serve in small hospitals or partner in small practices. This makes it even more difficult for small hospitals to survive.

Small insurers will also find it difficult to continue in this challenging environment, as multi-state employers prefer insurers who can serve their employees throughout the country, rather than just locally.

3. Fostering of competition

The Affordable Care Act (ACA) sees to it that both public and private insurance exchanges create healthy competition so that there is less of a barrier to entry for insurers. This in turn will benefit potential customers.

Apart from the insurers, competition will also be fostered among healthcare systems, which will help purchasers get better value for services. Also, with the enforcement of the anti-trust policy, there is sure to be better pricing for services, as well increased chances of cross-market mergers and reduction in independent practice associations.

With all of this in mind, it is a bit too early to predict the exact outcome of the consolidation of healthcare systems. But with the system undergoing rapid consolidation, it has become even more important for industry stakeholders to consider regulatory scrutiny so that a strategy for the long-term viability of the healthcare system can evolve.

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