COVID-19’s impact on the United States and its healthcare system is unprecedented. In this piece, I make four predictions for what the next phase will bring. Each has important strategic implications for healthcare companies and investors.
Here’s what I expect:
- Treatment, not testing will be key to reopening the economy
- Hybridization (virtual/in-person mix) will be the new reality
- Public health post-COVID-19 will be like security post-9/11
- The federal government will grow even more powerful relative to everything else
Treatment, not testing will be key to reopening the economy
It is accepted wisdom among public health experts and many others that the widespread availability of COVID-19 testing is a necessary condition to reopen the economy. It says so on the roadmaps of California, Massachusetts, the federal government, and many companies and institutions. It makes great sense: once we can see the problem clearly we can prevent infections from spreading. Other countries that are reopening –like Germany and Singapore—make extensive use of testing and contact tracing. This, we’re told, is the way things will be until a vaccine is introduced in a year or so.
Here’s the problem: progress on ramping up testing has been slow, even in Massachusetts where I assumed it would go fast. Despite lots of announcements of new capacity coming online I haven’t seen anything that makes me think there will be a breakthrough. Consider, also that effective testing for COVID-19 can’t be a one-time phenomenon. People will need to be tested over and over.
Meanwhile, with the worldwide deluge of patients, doctors are figuring out how to treat them. We might not have a vaccine in a year –or ever (unfortunately), but treatments are improving now, through experimentation, physician insight, and good luck. There is early promise from Gilead’s remdesivir; other drugs will be useful, too. But it’s not just drugs, it’s also non-drug adjustments such as how to optimize use of mechanical ventilation for these patients and even when to turn them onto their stomachs. As another example, I received firsthand reports from frontline Italian physicians who hypothesize that the coronavirus attacks the cardiovascular system first, and that is where to focus to address the root cause in a straightforward way. These are just things I’ve been privy to; certainly there are thousands of other investigations going on around the world. Some will work, and soon. These innovations can be additive or multiplicative, even if they’re not a miracle cure.
Bottom line, I think it’s likely that COVID-19 will become a manageable disease within a few months or even a few weeks, and that’s what will enable us to start to go back to work and school and to start flying again with an acceptable level of risk. For better or worse, it’s also more consistent with how the American healthcare system works: treat the sick.
It would be so much better to have ample testing in place before trying to reopen. Until we get there the US will suffer from higher disease burden, greater cost, higher inequities, and more skittishness about public gatherings compared to other countries. Yet as a whole we will figure out how to make do without the testing capacity that everyone wants.
Hybridization (virtual/in-person mix) will be the new reality
When COVID-19 hit, telemedicine made more progress in one week than it had in the past 10 years. Suddenly patients were scared to come to the office or hospital (and doctors/nurses/staff were afraid of the patients), reimbursement with in-person visits was equalized, and cross-state licensing restrictions were eased. People are getting accustomed to online meetings, online socializing, online schooling, and online shopping. Some of it –like convenience, immediacy—they like. Other parts –such as the difficulty building new, trusting relationships and absence of physical contact, and difficulty interacting with groups or teams—they don’t.
The pandemic will be with us for a while, which means people will have plenty of time to get used to being remote, understand better how to make it work, and won’t always default to the old ways. This is true even for some older Americans who thought they’d be able to ride out their careers or lives without jumping into the digital waters.
There has been a gradual shift to online over the past couple of decades, but the pandemic changes things. Now, we realize that we may have to suddenly revert to a remote world at any time, so we had better be ready for it. Social distancing is likely to be required to some degree over the next couple years, which means offices, factories, schools and entertainment venues won’t be able to return to their previous density. We can expect to see a rotation of remote and in-person staff and students –instead of total shutdowns. And kids may not like it, but there will be no excuse for another snow day!
Health status and age will play important roles in how hybridization is realized. Older people and those with conditions making them vulnerable may find that they have to spend more time in the digital world than their younger and healthier peers, because it’s not safe for them to show up in person. Ageism and discrimination against people with disabilities is already a major problem. It will become much more so in a COVID-19 influenced economy, especially during a recession where the job market favors employers.
For healthcare delivery and clinical trials, it is likely that more routine interactions will be conducted online rather than the office, and that the home will become even more attractive for recovery, aging and research. Providers will make greater use of nurse practitioners and physician assistants as front-line representatives, for triage, follow up and care coordination. It’s more straightforward to standardize protocols and supervise staff in the digital realm, plus it’s cheaper. We will also see a rise in asynchronous interactions, which are often more effective and efficient than as live video call. With the right leadership, these changes can also facilitate an increase in value based and evidence based cared.
The current situation has very negative consequences for the health of people with chronic and even acute conditions, who are avoiding the doctor and hospital at all costs. Meanwhile, providers face financial ruin as patients stay away. It has to be addressed, and hybridization is the way to do it.
Public health post-COVID-19 will be like security post-9/11
After 9/11, security came to the fore. Suddenly there was visible security at airports, in office buildings, and throughout public spaces. New physical and digital surveillance technologies and practices were introduced and there was massive hiring of security guards, analysts, etc.
Now that COVID-19 has struck, we can expect public health to be similarly elevated. It will become a pervasive part of our economy and society. Expect temperature –and maybe face mask and hand washing– checks at the office, school, and any public venue. Contact tracers may call or visit our homes or scrutinize our cellphone records. Event managers and employers will need to hire a health team and devise a health/safety plan to prevent outbreaks and provide confidence.
New products and tools will be needed to sanitize surfaces, detect pathogens in the environment, and monitor outbreaks. Sick leave policies will need to be revised and enforced. New cultural norms will be established –for example on the wearing of masks, shaking hands, what personal space means. Mental health needs must also be recognized and addressed in the adult and pediatric populations.
It won’t be enough to pursue these approaches privately. Local, state, and federal agencies will have to invest in order to deploy a comprehensive strategy to protect and reassure the public.
The new public health approach will dovetail with existing post 9/11 security measures and infrastructure. For example, the Red/Orange/Yellow/Blue/Green threat level developed for terrorism is actually more suitable to viral dangers. There will also be opportunities to redefine and expand the corporate wellness industry, which at last will be able to demonstrate a robust return on investment.
Federal government will grow even more powerful relative to everything else
The federal response to the pandemic has been problematic. The US had time to prepare after observing China and Europe, but largely failed to do so. States complain that there’s been little federal response or coordination and that they have been left to fend for themselves. The underlying reasons and political elements can be debated elsewhere.
Somewhat paradoxically, the pandemic has strengthened the federal hand relative to others. Consider:
- With interest rates near zero, the federal government is easily able to borrow $2+ Trillion for the CARES Act
- The Federal Reserve has propped up the stock and bond market with its promise to buy essentially anything, including non-investment grade securities
- States are facing huge drops in revenues thanks to the shutdown of the economy. They need to balance their budgets and don’t have the borrowing powers of the feds. They also have to beg the federal government for assistance with the current crisis
- The completely unprecedented surge in unemployment is leading to dependency on programs such as SNAP and Medicaid that are primarily funded at the federal level
- Many industries –think travel, tourism, restaurants—are essentially shut down and need a bailout to restart
- Colleges and universities, are hamstrung by having to close their campuses -possibly through the fall semester as well—and the question of whether domestic and especially international students will return
- The healthcare delivery system is suffering from a huge disruption as essentially all resources are diverted to COVID-19 or idled
The broad implications of this sudden swing will play out over time and will be affected by the November elections (assuming they occur on schedule). The pandemic really does place the country at a crossroads. The conditions are ripe for further dividing the nation along various fault lines (rural/urban, nationalist/globalist, etc.) or for bringing us together. We may also see blocs of states ally more formally to coordinate with one another and attempt to shift the balance of power. Meanwhile, it is notable that this federal power expansion, involvement in the economy and massive increase of borrowing are occurring under ostensibly conservative leadership.
One near-term result is that the country has jumped much closer to the left-wing policies of Bernie Sanders and Andrew Yang than would have seemed imaginable in February. Everyone will be covered for COVID-19, whether directly through their insurance plans or through federal subsidies to providers, and the $1200 stimulus checks with the president’s signature are like Yang’s Universal Basic Income.
Massive unemployment will shift millions of people to Medicaid, so we may have Medicaid for All rather than Medicare for All. (This is actually a better idea, in my view.) I think we’ll see the holdout states finally accept the Affordable Care Act’s Medicaid expansion now that their backs are to the wall. And I also expect the COVID-19 experience means the Supreme Court will decline to strike down the Affordable Care Act, even though that won’t be the explicit rationale.
The situation is fluid and each of these predictions is subject to change. But I wanted to get some thoughts down while they were fresh, with the goal of spurring conversation and debate. In addition, I hope that clients will find this thinking useful as they determine what to do next and make longer term strategic and investment plans.
—April 20, 2020