More than two years after the pandemic started to impact U.S. healthcare, we seem to be past the worst parts of it. However, while the battle of the ICU bed, availability of PPE, and closing of profitable elective procedures may be problems of the past, deeper issues have emerged that represent long-term challenges for U.S. health systems.
Although the beginning of the end of the pandemic is prompting us to take a sigh of relief, the worst may still be ahead of us. 2022 will be a determining year for U.S. health systems as they grapple with how to address structural and systemic change. To ignore the deeper issues as we leave the pandemic behind us would perpetuate a vulnerable healthcare landscape and leave hospital systems unprepared for financial and patient care performance in the years ahead.
It is useful to look at the pandemic challenges not as root problems, but as symptoms of the fragile nature of the U.S. health system: The shortage in masks may be solved, but the vulnerability of the supply chain still exists. Nurses may become less overworked, but a long-term staffing shortage is still an issue.
The fact that the symptoms are disappearing doesn’t mean the underlying problems have gone away. The deeper issues hospital systems must address head on in 2022 and beyond pertain to both procurement, operations, labor, consumption and patient population confidence. Let’s take a deeper dive into each.
We will continue to see major supply change challenges for a few years. At first, we experienced this with masks and gloves, but the longer-term issues will manifest around items like semiconductor chips, devices with certain kinds of plastics and unreliable availability of many medical devices originating from overseas.
Some medical suppliers have already announced shortages in equipment and devices that are necessary for undisrupted patient care. The supply chain challenges have cost consequences as well: Medical device makers have reported their costs will go up and that these price increases will be passed on to hospitals and providers. Regardless, post-pandemic times are unlikely to come with increased reimbursement or additional government rescue packages to offset these cost challenges.
The problem, of course, is partly that we rely so heavily on supplies from abroad, and we’ve only recently come to recognize medical supply sourcing as the national security issue that it is. Another part of the problem is that procurement policies at the health system level are too laissez faire and tend to be focused on price, not supply chain resiliency. U.S. health systems are great at signing contracts for reduced prices, but the focus on short-term cost savings can be costly in the long run: Single-supplier contracts are very common in health systems, but they also are a structural weakness when it comes to remediating supply chain shortages.
To address healthcare procurement challenges, health systems should revisit their procurement policies and supplier relationships, focusing on “splitting the market share” rather than developing dependency on a single supplier. The resiliency of supply streams should be considered and, in some cases, domestic suppliers should be preferred to (cheaper) foreign suppliers.
During the pandemic, some hospitals saw positive financial results due to government rescue packages. However, when elective procedures were shut down, many hospitals lost the single most profitable service lines that under normal circumstances made it possible to run less profitable service lines. As a result, costs went up, and income went down—an unfortunate combination that left many health systems with negative operating margins for months.
The lesson learned for health systems is that overreliance on certain profit centers works very well with predictable, stable demand, but large demand fluctuations (such as no demand for elective procedures and high demand for ICU capacity) can throw this off entirely.
Health systems need to develop a different operational setup that can flex with demand fluctuations and, for example, allow the simultaneous presence of pandemic-related ICU occupancy on the one hand and a constant service of heart disease and orthopedic patients on the other. It can’t be one or the other—from both a financial and a patient care perspective.
During the pandemic, staffing became a big problem. Even before the pandemic, health systems had leaned out their staff to reduce costs to the point where nurses and technicians were overworked. The pandemic exacerbated this both due to the sheer number of patients in the ICU and due to the number of healthcare staff that got infected themselves and had to stay out of the hospitals for weeks or months. The symptom has now largely disappeared with the lower hospitalization rates and ICU capacity pressure, but the underlying problem still exists.
Hospital staffing shortages already represent a huge challenge that we will live with for years to come. Health systems short on nurses experience reduced procedure volume and resulting reduced hospital profitability—and reduced supplier profits. As if this isn’t bad enough, short-staffed hospitals rely on traveling nurses to fill the void—and traveling nurses are much more expensive than employed nurses, sometimes making up to $85 an hour.
The healthcare staffing problem needs to be addressed nationally. But individual health systems can also “stop the bleed” by ensuring equitable compensation and focusing on job satisfaction rather than on how many hours can be squeezed out of an employee.
Healthcare’s single-use mindset continues to be a problem: We just run out of things too fast when we keep throwing them away. In healthcare, we traditionally believe that throwing things away after one use increases patient safety. But there are forms of reuse—including single-use device reprocessing and instrument repairs—that are perfectly safe. Yet manufacturers continue to turn reusable devices into single-use devices and claim monopoly on instrument repairs. This comes at a massive cost to the hospital.
Further, healthcare device and instrument consumption procurement are still driven to a large extent by clinicians’ preference for expensive new and advanced equipment and devices. The pandemic taught us that when there is no ventilator available within a radius of 300 miles, healthcare excellence is less important than healthcare sufficiency. Health systems must address this and better balance clinical considerations with financial considerations and the sustainability of healthcare services.
Clinician-driven procurement needs to give way to more balanced procurement decisions that can ensure more financially sustainable operations and more adaptable patient care capabilities. Health systems should look at device and equipment reuse as a means of enhancing supply chain resiliency and reducing costs.
With enough pressure from U.S. health systems, manufacturers would be willing to help hospitals secure supplies by developing reuse solutions. Reuse technology is very advanced in the U.S., so the problem is more about willingness than about practicality.
Patient population confidence
During the pandemic, profitable procedures didn’t just drop because hospitals stopped offering elective surgeries. In fact, during most of the pandemic, procedures dropped because patients didn’t want to go to the hospital. This has resulted in pent-up demand—and it has meant that many patients have gotten sicker. The healthcare system will be strained to provide proper care for patients who have gotten worse because they delayed treatment.
There is a fundamental challenge here that we do not address enough: The pandemic severely reduced people’s trust in the healthcare system and its ability to provide care for them. This decline in trust is a product of the health systems’ obvious failure to keep up with the pandemic, but also with the general sentiment of suspicion and lack of belief in scientifically founded treatment that has ended up characterizing the post-pandemic patient mindset. This is a serious challenge when studied at a patient population scale—a challenge that can lead to higher healthcare costs and lower life expectancy.
Health systems must work with patients and care delivery networks from primary care doctors to healthcare staff in nursing homes to rebuild confidence in the hospital environment. It will become important to study the service line patient experience to help educate and adjust expectations. Patients do not go to the hospital simply because they are sick; they go there because they trust the hospital to have the competency and compassion to provide the best care possible.
These are massive challenges, and to be clear, health systems cannot meet them without changes to how payers allot insurance dollars and how lawmakers regulate healthcare. However, health systems do not have the luxury of waiting for the government or waiting until the pandemic is completely past us: The longer they wait, the deeper the hole. Health systems need to “fly the plane while they build it” and start addressing these challenges now.
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