Health Systems Made A Big Difference In The COVID Fight: Time To Reconsider Their Social Impact

Though many parts of the US government and society have struggled to respond to COVID, large integrated multi-hospital health systems appear to have made a decisive difference in this pandemic.

The consolidation of hospitals and health systems into multi-billion enterprises has been increasingly controversial in academic and policy circles. Critics have argued that the growth of these large enterprises has driven up costs and been motivated mainly by anti-competitive leveraging of health insurers. However, health systems’ scale and geographic reach have proven a big advantage in battling the COVID pandemic. This post describes some of the ways in which health systems, particularly larger systems, have effectively addressed COVID’s challenges. We then suggest a reimagining of the role of health systems in our health care and public health infrastructure. We also propose vigorous policing of possible harms to competition that could result from increases in health system size.

Health Systems And The Pandemic Response

Scale gave health systems the flexibility to re-program their facilities to cope with COVID surges. Hackensack-Meridian (the largest private care system in New Jersey), New York Presbyterian and Northwell Health (the two largest private care systems in New York), and New York City’s Health and Hospitals Corporation were hit early and hard by the ravages of the pandemic. Their leaders have stressed that their ability to respond at scale as a system were essential to their effectiveness against the initial wave and their continuing response. Market clout also enabled these and other health systems to wring personal protective equipment (PPE) from a paralyzed supply chain to protect their front-line caregivers.

Just like the proverbial auto accident witness who rushes into the intersection and lifts the front end of a car off an injured child, health systems achieved things in the height of the pandemic that no one believed possible. During New York City’s COVID flood this spring, Columbia Presbyterian managed to more than double its ICU capacity from 422 to almost 1,000 beds in a scant five weeks, in part by converting unused operating suites. The explosive adoption of telehealth solutions within literally days is another great example. Bob Wachter, Chair of Medicine at University of California at San Francisco, told us, “We did 20 years of innovation in 20 days.”

Sophisticated health system information technology (IT) infrastructure and expertise made this rapid transition to telehealth possible. Larger organizations made a more sizable shift to telemedicine than their smaller counterparts in the midst of the spring COVID surge and had a much higher residual level of telehealth as a percentage of total visits, according to a Commonwealth Fund analysis.

More recently, community-wide reach has enabled health systems to move aggressively to vaccinate thousands of caregivers within days of vaccines becoming available. INOVA Health System in Fairfax County, Virginia vaccinated 12,000 of their frontline caregivers in just three weeks, and more than 55,000 community residents in just six weeks. In San Diego, a new “Vaccination Super Station” was established by San Diego County and UC San Diego near Petco Park (home of the San Diego Padres) aiming to administer COVID-19 vaccines to 5,000 health care workers per day after it opened on January 11, 2021. These efforts have been replicated in dozens of other communities. Large health systems are central players, in collaboration with major pharmacy chains and public health authorities, in the vaccination roll-out this winter and spring to the millions of Americans health systems touch and track through their ambulatory care infrastructure.

Scale Necessary But Not Sufficient

However, scale by itself was not sufficient. Health system leadership and “systemness” also played a decisive role. Recognizing that decisions needed to be made quickly, health system executives stood up command centers within days, first in New York, New Jersey, New Orleans and Detroit, but soon across the country as the pandemic rolled through. They instituted rapid-cycle decision-making processes that cut across layers of management to move resources and people around, often on a few hours’ notice, to meet surges in demand. The rapidity with which health systems made key decisions and mobilized resources surprised both of us and demonstrated that these sometimes-unwieldy large enterprises do not need to take forever to act.

Leaders at health systems—such as Henry Ford Health System in Detroit, Johns Hopkins in Baltimore, Ochsner Health System in New Orleans, Methodist Healthcare in Houston and Advent Health in central Florida—found ways to listen to, and communicate directly with, frontline care givers in emergency departments, intensive care units and clinics who were facing near-battlefield conditions at the heart of the crisis. They also collaborated in real time with other systems in their regions, on PPE, capacity management, community messaging, workplace safety, and co-ordination with public health agencies and governors.

Time To Reconsider The Role Of Health Systems

The authors of this posting have known each other for forty years and agree on a lot of things.
One area where we have differed has been hospital consolidation. Morrison has been a strenuous advocate of consolidation, particularly in local markets. Goldsmith was an early advocate of health system development but has been increasingly troubled by what he has seen as an increase in anti-competitive activity, as well as the absence of measurable economies from scale.

However, both of us have been convinced by the last twelve months that health systems’ scale was a major societal benefit in coping with COVID. Over this period, health systems have demonstrated that they are a vital part of our public health infrastructure. While the public benefits of health systems are difficult to quantify, they have performed far better than just about any other element of our society in responding to COVID.

It is time for the policy community to reconsider what has been, in the past two decades, an increasingly hostile posture toward these large complex enterprises and consider what steps can be taken to encourage them to take a broader public health role. We think collaboration with state and local public health entities should be formalized by contractual ties that facilitate infectious disease surveillance and immunization; data gathering and analysis from anonymized electronic health record data bases; and actions that address inequities and social determinants which lead to health problems.

Focus On Behavior, Not Merely On Scale, As Public Policy Concern

Large health systems are likely to grow further as a result of the financial stresses on smaller institutions and physician practices during COVID. Policymakers should focus on the behavior of health systems rather than merely on their size in considering their social and economic impact. This new wave of consolidation should be accompanied by vigilant federal antitrust enforcement to assure that costs are not unduly raised for businesses and consumers. We feel exactly the same way about health insurer consolidation, within markets or across payer segments: Medicare Advantage, Medicaid managed care, self-funded employers, etc.

Consolidations found to be abusive, that is, which inappropriately raise patient and employer costs, should be dealt with along the lines of the recent Sutter antitrust settlement engineered by Health and Human Services Secretary-designee Xavier Becerra when he was California’s Attorney General.  This $575 million settlement limited Sutter’s ability to contract with insurers on an “all hospitals or nothing” basis, forbade Sutter from interfering with insurers creating  tiered pricing or narrow networks for services, and limited out- of-network pricing; it also rebated to self-funded employers a substantial fraction of estimated overcharges for Sutter’s services over more than a decade. 

Formalized Linkage To Rural Hospitals Combined With Payment Reforms

However, more than a quarter of present hospitals are likely to remain orphans post-COVID as they are, for financial reasons, not likely to be “consolidated” into larger systems. Despite CARES Act and Federal Emergency Management Agency funding, many smaller hospitals may have sustained life-threatening damage from COVID. We think large urban and regional health systems ought to be encouraged by federal grant assistance to extend their specialty clinical services at affordable cost through telehealth linkages and rotating specialty clinics to the nation’s more than 1,300 critical access hospitals. We also think that emergency transport for acutely ill patients from these small hospitals to regional centers for specialty interventions should be tax- supported rather than left to the vagaries of private coverage (as these costs are often shifted to patients at unaffordable out-of-network rates).

We also support Harold Miller’s recent proposal to replace the current system of “Critical Access” funding for small rural institutions with a new, blended system of population-based “reserve capacity” funding from both public and private insurers, combined with adjusted “per incident” payments for services actually rendered. This would provide more stable coverage for the small hospitals’ fixed costs.

This new blended funding model should be accompanied by short-term grants to encourage reprogramming these seventy-year old Hill Burton-vintage acute care facilities to a 21^st century-appropriate mix of ambulatory and emergency services, mental health and substance abuse treatment, as well as the aforementioned robust subspecialty telehealth linkages to regional referral centers and transport services for those requiring specialized care. Simply continuing “life support” payments for an acute-care mission for our rural hospitals is postponing the inevitable.

COVID was a 9/11 moment for courageous frontline caregivers. They “ran toward the gunfire.” and saved tens of thousands of lives. Though the process was not always faultless, health systems acted decisively, as systems, to enable front line care givers to reach patients and help save lives through coordinated capacity management and care organization. Many health systems that recently formed or rebranded organizations actively supported their courageous caregivers and demonstrated their worth to their communities.

The public apparently agrees. According to Gallup, the number of Americans expressing confidence in the medical system rose a full 15 points, from 36 percent in 2019 to 51 percent, a near three-decade high, in 2020.

Large health systems made a decisive difference in our response to COVID and have demonstrated their potential for more significant contributions to the public’s health going forward. Those contributions should be both acknowledged and encouraged by changes in payment and regulatory policy.

Authors’ Note

Both authors occasionally lecture to and consult for health systems, health plans, supply and technology firms. as well as professional associations. Goldsmith is also an equity owner of a telehealth firm that remotely monitors ICU patients and owns publicly traded common stock in one large diversified health insurer and one investor owned hospital management company.