The pandemic pushed healthcare systems to their limits. Priorities changed. New trends emerged as the healthcare industry dynamics shift every day. Telehealth is flourishing, while elective procedures are being halted. What’s the hospitals’ response and the implications on the MedTech industry?
Elective Procedures
Put-on-hold elective procedures are a prime reason for hospitals’ major drops in patients and revenue during the outbreak. With the overwhelming number of COVID-19 patients on the one hand, and the lack of equipment and staff on the other, healthcare providers have freed up resources by halting elective procedures. [1] Physicians made it clear – non-emergency interventions, such as knee and transcatheter aortic valve replacements (TAVR), emergency visits and outpatient appointments should be postponed to sustain the safety of the patients. This resulted in an overall decline in such appointments and is still causing serious financial distress for a lot of healthcare providers. According to a recent report, operating EBITDA margins fell 174% compared to the same period last year and were down by 118% from March, as hospitals felt the first full month of COVID-19’s impacts. [2] The survey also indicates:
- Operating room minutes drop of 61% compared to April 2019
- Discharges fell 30% year-over-year
- Emergency Department visits dropped 43%
- Outpatient Revenues fell 50% year-over-year and 51% below budget
- Inpatient Revenues declined 25% year-over-year and fell 30% below budget [3]
174 provider executives were surveyed on the impact of the pandemic on the health systems. Half of them expressed concerns that it will take at least to the end of the year or even longer for their organisations’ elective procedure volumes to return to pre-COVID levels. Acknowledging the possibility of permanent changes in patients’ demands and expectations and in the way healthcare systems operate, only one-of-five executives expect their organisations to return to the primarily onsite work arrangements established before the pandemic.[4]
Teleservices
Meanwhile, a lot of providers have turned to telemedicine. Telehealth is most likely staying after the pandemic is over. What is still a hot topic: how healthcare systems and the legislature bodies are preparing to implement changes enabling telehealth constant for patients. Undoubtedly, virtual communication is now flourishing. A lot of patients have embraced the change. However, while
- 67% of the surveyed executives predict their organizations will use telehealth at least five times more than they did prior the pandemic
- only one-third believe they are fully prepared and have all the needed telehealth capabilities. [5]
Tele-ICUs & combined RPM solutions are considered a way to deal with the crisis
Yale New Haven Health is one of the healthcare systems embracing the changes brought by the pandemic. While typically monitoring five or six ventilated patients, the therapists each were asked to monitor a lot more ventilators than usual, often three times their normal loads. This raised a lot of challenges, such as alarm fatigue, staff burnout and delay in care. As a response the system deployed remote monitoring for ventilator patients – combining tele-ICU, EHR and remote patient-monitoring technologies. [6]
Supply Pact With MedTech
An ongoing issue since the pandemic started is hospital access to PPE: gowns, gloves and masks, and mechanical ventilators. The supply couldn’t satisfy the excess demand, forcing hospitals to rely on private company donations.
In addition, medtech players ramped-up their production of ventilators and came up with innovative ways to use non-invasive respiratory machines for COVID-19 patients. Alliances with other manufacturers were made, so they could speed up the production and make the design less costly. [7]
The American Hospital Association (AHA) shared its concerns that COVID-19 is placing strains on other parts of the medical supply chain. [9] AHA urges the Federal Emergency Management Agency (FEMA) which is currently negotiating an agreement with the private sector, to widen the discussion scope and include medical equipment other than PPE, such as – dialysis devices, cardiac monitors and IV pumps.
In contrast to prior infectious disease outbreaks, COVID-19 has placed a strain on an extraordinarily wide range of medical supplies, equipment and medications. For the health care system to sustain its response, it will need the private sector’s support in addressing the full range of these needs, and not just narrow segments like PPE. [10]
FEMA developed a voluntary agreement under Section 708 of the Defense Production Act, aiming at maximising the effectiveness of medical resource distribution as a response to the pandemic.[11] The proposed agreement has a 5-year duration, suggesting the US may be affected by the coronavirus for “an extended timeframe”. The outcomes are still not set in stone, but AHA is supportive of FEMA’s approach. [11]
ASC’s Key Role in the Return of Elective Care
Due to the significant decrease of elective procedures, the pandemic’s impact on some device makers such as Stryker, Edward’s Lifesciences and Zimmer Biomet, has been a hot topic in the past two months. Before the outbreak, the healthcare industry has been noticing a shift of knee replacements and other elective procedures and surgeries from acute care hospitals to ambulatory surgery centres.
Data shows that in 2018, 5,700 ASCs across the US performed 23 million procedures and generated $35 billion in revenue. [12] This was only to show that the ASCs business has grown at a very fast phase. As a result, in 2019 big waves of private equity investment firms were making buy-out deals with ASCs and orthopedic centres. [13] This trend is to be accelerated by the COVID-19 crisis, according to healthcare experts. There are a few reasons why:
- ASCs can offer surgical procedures at rates 35% to 50% lower than hospitals [14]
- They are able to work through elective procedures sooner and at a greater capacity than their hospital counterparts [15]
- Forecasts on the volume of procedures at ambulatory surgery centres predict growth of 6% to 7% a year through 2021 [16]
This shows that these centres might be vital to the financial recovery of many MedTechs. While this poses opportunities for the manufacturers, there are a few things they should take into consideration:
- MedTechs have been primarily focused on big hospital systems. Their current commercial offerings are not well suited for the ASCs operations and clients – either too pricy, or too complex. Note: these centres are far less complex than big acute hospitals, with fewer procedures and fewer needs.
- The decision-makers, unlike in big hospitals, tend to be the physicians. A recent study shows that physicians are more price sensitive, which means that they are more prone to switch to another device manufacturer if the prices offered are cheaper and if there are discounts available.
- Also, physicians working in ASCs value the services provided by the MedTech manufacturers differently that their hospital colleagues. For example, they rank technical support first, while hospitals say operating room coverage is most important. [17]
The Way Forward
The hospital systems have been facing serious issues as a result of the pandemic. That has changed not only their care model, but also the way they work both with their patients and the MedTechs.
The financial damages are a fact. Despite all efforts hospitals made to cope up the COVID-19 crisis. Healthcare long and short-term financial recovery plans should take into consideration the potential changes in the way care is to be delivered to the patients – the rising telehealth trend and the way infectious diseases and control will be handled from now on.
With patients‘ demands changing, the innovation in remote patient monitoring and triaging are likely to get providers ahead of the curve. Convincing patients that elective procedures are safe for execution is of vital importance, now that even US Google Searches on elective surgeries have declined with 32% compared to this time last year. [18]
The rise of the ASCs is also a huge change in the care model. Device manufacturers have to be careful when negotiating with the ASCs. The business model they have developed for big hospitals might not work for the smaller medical centres.
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