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The scene is an emergency department (ED) at a large hospital in the Northeast.  Providers and staff are going full out as patients flood the department. Over the loudspeaker, EMTs in transit with a patient announce the age, gender and condition.  Another in-transit first responder team waits on hold in a queue that seems endless, one after another announcing a COVID-19 patient on the way.  

“Seventy-one-year-old female; oxygen saturation at 45 percent on room air, 72 with a non-rebreather [mask].”  The attending ED doc looks at his colleagues, wondering if the adrenaline already in his system can actually increase without some kind of physiological breakdown.

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It’s a typical scene in a market that is hitting its peak of cases, or at least one hopes it is hitting its peak.

Upon reflection, many staff members from EDs across the country are asking a similar question:  “Where are all the other types of cases we used to see here?” They are referring to injuries, chest pain, gun shots and automobile accidents, all of which seem to have disappeared in recent weeks.

At the same time, hospital multispecialty centers are for the most part quiet, if not closed completely.  Some are closed to preserve personal protective equipment; others are closed because nobody wants to go there and risk exposure.

And throughout this metro area, hospital urgent care centers are experiencing extremely low volumes for the middle of March.  The patients that do come are seeking help to determine whether their respiratory symptoms warrant going to the hospital. Everyone else is staying away.

These changes in typical patient volume and conditions aren’t just happening in the hospital world: they are happening perhaps even more dramatically at private urgent care centers throughout the country.  Urgent care volumes are down, anecdotally, between 50 and 80 percent. Many centers are closed temporarily, and perhaps eventually they will be closed permanently.

Underneath all of the stress, suffering, emotion and day-to-day maneuvering, we are starting to ask ourselves: What will this look like when things settle down?  What will hospital outpatient care look like? What will the urgent care industry look like? Will urgent care even survive this?

There are no clear-cut answers.  At the very least, though, I’d like to try to point out some things that have become obvious and project along those vectors where we might end up.

DRIVING FORCES

It sounds counter-intuitive that patient volume is down during a pandemic.  But the basic issue is that patient volume is down for some of the most profitable service lines.  At the highest level of the healthcare industry, there is no question that hospitals are going to be hit hard by this.  Bond ratings agencies have already started taking down the ratings of many health systems. No doubt these health systems will need to take on debt to survive; lower bond ratings will make that debt more expensive.  For some it will be unaffordable, creating the environment for another round of hospital consolidation.

You know it’s bad when health insurance companies are accelerating payments to healthcare providers.  Some, like UnitedHealth Group, are even providing small-business loans to clinical groups.  

Watching the dialogue on the Urgent Care Association’s COVID-19 listserv, the angst is palpable as urgent care operators struggle through the day-to-day decisions.  For most, these decisions will ultimately determine their survival.

At the same time, telemedicine visits are up dramatically, if for nothing else but high-level triage.  Prior to COVID-19, there was still a fair amount of pushback on telemedicine, largely driven by a mediocre “acceptance factor” by both patients and providers.  But the forces around COVID-19 have changed that. Other big questions include how much this change in the telemedicine acceptance factor is permanent; how that will affect visits to brick and mortar clinics; and how urgent care operators will adapt. 

There are a host of other temporary modifications in the on-demand world that have led to new discoveries.  Hospital-owned urgent care centers have taken on new roles, including designating some centers as respiratory clinics only. Some hospitals have started to push all radiology to urgent care centers to decant their multispecialty centers. Because of the volume drop, many multi-site urgent care operators have consolidated activities to a fraction of their total footprint, while raising productivity. 

Another way to frame the question of what the future looks like is in terms of how these driving forces and temporary changes might become permanent.

SURE BETS

Let’s start with urgent care, and I hope I can lift the spirits of everyone in the urgent care community by saying this: People will still get sick or injured and want care on demand. So if you can find a way to keep the doors open over the next six to 12 months, you will probably survive.  

On the down side, there will be a lot of operators who do not survive, either because they were just barely getting by before this happened, or, unfortunately, they timed their expansion just before the COVID-19 crisis began. Expansion usually involves debt. With interest rates so low and the economy so good, it only makes sense that many otherwise successful business people jumped “all in” to the urgent care market but now face a very long runway to break even.

Similar to 9/11, the pandemic is one of those things that seemed to come out of nowhere. But 9/11 was a time-limited incident and the recovery was relatively quick. With COVID-19, although we might be seeing signs of the incidence of disease peaking, the crisis has the potential to re-emerge and carry on until we have a vaccine or herd immunity has solved the problem. If this does drag on, it will cause investors to stay cautious for a potentially longer period of time.  Private equity in particular can be quick with the trigger when cash flow goes negative. And many of the multi-unit operators out there, along with companies in the supply chain, are backed by private equity funds.

So the bad news is that we can expect contraction and consolidation not just from hospitals and health systems, but all the way down to the smallest urgent care operator.  All of the businesses and institutions that support these provider organizations will also be impacted, including health insurance companies, suppliers and even trade associations.  

POSSIBLE SURPRISES

There will be a lot of pain associated with this consolidation.  But when the dust settles, there may be some opportunities that emerge.  At a high level, we are seeing many healthcare workers furloughed. Prior to COVID-19, labor costs were out of control while payer fee schedules were tightening.  The situation was becoming unsustainable. We will no doubt see a change in the supply/demand curve for healthcare workers. This will involve both providers and support staff.  

Urgent care center closures will leave payers exposed in many settings, where patients will have fewer urgent care options, leading to more emergency department visits for non-emergent cases.  Could we see the trend toward lower fee schedules reversed as a result?

Another unsustainable trend prior to COVID-19 was urgent care saturation.  Private equity investors had pushed many markets to the point of far too many clinics chasing a finite number of urgent care visits. Our pre-pandemic available-market data was showing an unsustainable ratio of on-demand clinics per 100,000 people. Assuming private equity players sour on urgent care, as they are likely to do given their lack of patience, that saturation density is likely to ease significantly.

One final prediction, which admittedly is going out on a limb, is that we may see the return of more single-site operators driving the urgent care business.  Why? The urgent care industry was born from former ED physicians opening centers, often with spouses, partners, or other family members in clinical and practice management roles. With one or two other employees, they made it work.

In the current crisis, guess which urgent care operators have the greatest chance of survival?  It would be those with the lowest fixed costs, including labor. Private, single-site operators with low fixed costs take what’s left over when the bills get paid.  With a small bump in fee schedules, a little less saturation, cheap real estate and a lot of burned out ED docs needing a break from the hell they just experienced, this might not be so unthinkable.

ONE FINAL THOUGHT

I try not to editorialize in these articles, but this last thought is going to break that rule.  The extent of the pandemic in the United States didn’t have to be this bad. We were slow to respond as a country.  The death rate from COVID-19 in the United States is more than 6.6 per 100,000 inhabitants. In South Korea it is 0.4; in Singapore it is 0.1.  It’s not the 36.3 or 32.9 rates we see in Spain and Italy respectively, but why are we not among the leaders?

Our rate of deaths is high because federal policy was driven by a “hunch,” not science.  The healthcare industry, from decisions around research and testing new drugs to patient diagnosis, must be driven by science, the basis of which is logic and reason.  Yes, there will always be an art to medicine, but the art is more how we weave facts, logic and reason into the practice of medicine.

Whether you are of the liberal or conservative persuasion, all of us in the healthcare industry are guilty for letting this happen through our own silence.  We live in a complex world, one that requires the difficult task of weighing a lot of data before we move ahead with important decisions. You know it’s bad when more science goes into professional sports than went into Federal policy around COVID-19.  This pandemic was a disaster waiting to happen.  

At our annual symposium, which took place just as the pandemic was starting to materialize in the United States, one of our panelists alluded to the danger of antibiotic resistance on the one hand, and the lowered status of science and facts on the other.  Though not a direct prediction, it was close enough that we should have been paying attention to how vulnerable we were. But there are signs that this emergency has woken politicians up to the fact that maybe a gut feeling isn’t the best guiding force for creating healthcare policy.  In fact, what policy we do have is the result of national experts and governors coming together to form a default national approach.  

We in the on-demand industry have shown that we can influence healthcare policy.  The entire healthcare industry is far more consumer-centric because of the work we did at the low-acuity end of the spectrum. A whole industry of measuring patient experience was born out of that work.

As a result of this crisis, we are going to lose a lot of courageous healthcare workers across the spectrum, not to mention the pain caused by clinics closing their doors.  Our voices need to be heard again, especially at the local level, about the lessons learned from this crisis. Let’s make sure healthcare policy is driven by our God-given ability to use logic, reason and facts when making decisions that impact millions of lives.

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