Reflections on Health Care in the Time of COVID-19

Ken Sharigian

Since graduating from the GSB I have spent my professional life working in the business of medicine; that is, in senior executive positions applying many of the disciplines we learned to enhance the market position, brand equity, operational efficiency, and economic viability of large health care providers such as Kaiser Permanente, Stanford Health Services and the University of Chicago Medical Center. Although the central mission of these organizations is patient care and community service, the amount of resources, time, and talent devoted to leveraging market position and extracting economic value from private and public payers is considerable and burdens the overall cost of care. Besides the diversion of significant resources from patient care, which is a source of ongoing criticism from physicians, nurses, and other on the ground providers, one can wonder about the cogency of these efforts.

In recent years certain underlying dynamics have emerged in the health care space. Most emanate from national concern about health care’s burden on the economy that could exceed 20% of GDP in the near future. This is coupled with skepticism that the return in health status does not justify the level of investment. Chief among these dynamics is a shift from concern with acute conditions to chronic conditions such as hypertension and diabetes which are disproportionally instrumental in societal and economic cost. As a result we see a health care system in transition, though not at equilibrium, focused on four areas of transformation. First is a change in focus from the business of treating sick patients to the business of creating healthy populations. Second is a shift in emphasis from the volume of care to the value of care expressed through heightened attention to safety, duplication of effort, overproduction, and waste. Next is the movement of care delivery from high cost locations like hospitals to lower cost places such as outpatient centers and the home. Finally, there is the change in reimbursement from fee for service (essentially piece work: patient visits, procedures, hospital admissions) to prepaid per capita reimbursement which is thought to be a lever to reach a more desirable future state. Many of the tools applied to affect this transition as well as the definition of the future state can be found in our GSB curriculum.

The foregoing environmental assessment informs the work I am now doing at the American Medical Association as its chief strategy officer. I write this as I shelter in place in my Chicago home during the COVID-19 pandemic that both reinforces and challenges this assessment and the tact taken by American health care and medicine. Certainly the COVID-19 virus’s harshest impact has been on those with underlying conditions such as heart disease and diabetes, but as we learned in our operations class like “just in time” manufacturing the virus has lowered the water level to expose the rocks. Cost efficiency and what seemed to be reasonable outsourcing of key supply chain elements eliminated slack resources such as intensive care beds and ventilators not needed in our to be expected world, but critically important in the low probability (or so we thought) COVID-19 world. Maintaining a reserve of these expensive resources would add to an already too expensive health care system, but makes us better positioned to respond to any future outbreaks. It also exacerbated our understanding of the inequity in our health and social services with gut wrenching data about the over-representation of the poorest, Black and, Brown of us in hospital admissions and death statistics.

I have no doubt that if you are well to do and sick the United States is the place to be; especially if you are discerning and have access to high end academic medical centers. Our system of reimbursement and investment has pushed the high end to the highest level at the expense of the middle and lower rungs of the service continuum. Competition for well insured patients to secure a healthy bottom line and sufficient capital to replenish and differentiate programs and facilities has produced pockets of world class health centers but an overall health system that cannot provide adequate care for all. The preferred panacea of universal health coverage will not resolve this dilemma unless sufficient economic value is offered at the lower end. Adding to this dilemma is the fact that we currently don’t have the system and resource redundancies to cope with unexpected events like the COVID-19 pandemic. It is hard to see how we recalibrate this distribution of resources and services without changing the rules by which the health care game is played.

Do we degrade our outstanding institutions to shore up the struggling ones? How would these powerful entities and their supporters and beneficiaries react to such a redirection of resources? Some argue that such radical approaches are unnecessary and believe the solution is simply the elimination of waste thought to equal as much as 30% of the total health care spend in this country. Maybe, but this case has been made for years with no discernable reduction in costs. Perhaps, some solutions will emerge from Silicon Valley-type innovation. It is a huge market attracting a myriad of confident entrepreneurs, but I fear the returns are at the high end rather than the low end of the market.

The COVID-19 crisis has not only exposed more starkly the inadequacies of our health care system, but has set up another challenge going forward. In my current world of organized medicine, we will come out of the pandemic with a smaller physician work force which even pre-crisis was evaluated as inadequately diverse and distributed. Some have themselves fallen to the virus, and there is an emerging trend of practice failures due to the economic fallout of the pandemic and increasing numbers of physicians leaving the field. While the pipeline replenishes we must make do with a smaller physician base to care for our patients. Ironically, there may be upside to this as it will accelerate transformation, but either to exacerbate prior inequities and problems or remediate them is unknown.

We all learned a basic planning tool: think forward to the desired state and work backward. Recognizing that what we want from our health system reflects what we want from our society as a whole adjusting our hearts and minds to this problem is a good beginning. I expect my industry will be a petri dish in more ways than one in the coming years.