On March 1, the first case of COVID-19 was diagnosed in New York City at Mount Sinai. Over the next month, our health system would work at an unbelievable pace to double capacity to manage the dramatic spike in COVID-19-positive patients.
Engineers and facilities personnel transformed lobbies and conference rooms into hospital rooms, we canceled scheduled surgeries and admissions, and hospital leadership partnered with a disaster relief organization to open a field hospital in New York's Central Park.
The astonishing spread of the virus required the cessation of almost everything that isn't COVID-related, and although this rapid and intense work has been nothing short of remarkable, it also spotlights a clear challenge: it took about a month for America's financial model of healthcare to be broken.
The current crisis is both exposing and exacerbating long-standing shortcomings within the economics of medicine in the U.S.
Health systems facing a surge in COVID-19 patients are struggling financially in the current climate, and unless the trajectory changes dramatically, most will indeed need financial support to continue operating. As the nation charts a path forward for healthcare delivery, there is an opportunity to learn from this crisis to ensure that our nation's health system is better prepared for the next threat.
For almost a decade preceding my start at Mount Sinai, I served as an adviser on emergency care policy at HHS. During that time, healthcare was dramatically transformed. We decreased inpatient healthcare capacity and developed a more distributed delivery system in the interest of improving the quality of care, decreasing the cost of care, and making healthcare more patient-centered.
These priorities, the Triple Aim, have led to a focus on improving the value—or quality divided by cost—of care. Policy experts have worked hard to eliminate waste and inefficiency in the healthcare system by creating metrics and financial rewards for delivering high-value care through innovation or process improvement.
The unintended consequence of any efficient just-in-time system, however, is the ability to maintain a just-in-case contingency plan. Unused capacity, often framed as inefficiency or waste, also represents a buffer that allows healthcare systems to surge during times of high demand. Financial viability requires health systems to function at near capacity—which is a driver of emergency department crowding, delays in care, staff burnout and attrition, and limited response capacity. The Military Health System, given the potential need to respond without notice, added readiness to the Triple Aim. Their "quadruple aim" is intended to ensure balance between efficiency and capacity.
Operating near capacity at all times means the current healthcare model specifically does not prioritize readiness for moments like this pandemic. Instead, existing payment structures offer incentives for preventing costly hospital admissions, maximizing staff efficiency, and maximizing profitable scheduled surgical procedures. Medicare and Medicaid, aiming to reduce costs, pay just $0.85 and $0.65, respectively, for every dollar spent. World-class health systems, consequently, operate on 1% margins by ensuring that they outcompete each other for commercial insurers.
Form follows finance. The inability of the healthcare system to manage the surge in response to COVID-19 wasn't just predictable. It was all but planned by economic design.
The healthcare system needs a new approach. Many of the challenges the nation has faced over the last month—from personal protective equipment, to ventilator availability, to inpatient bed capacity—stem from these financial and regulatory models.
Many of the stopgaps we've heard about, which include federal stockpiles, grant programs and military field hospitals, are based in a public-sector approach to solving problems. However, healthcare in the U.S. is not a public-sector enterprise. It isn't run on grant funding, and the notion that the $3.5 trillion healthcare industry can be backstopped with existing federal grant programs allocated toward readiness is unrealistic. Instead, we need a functional approach that is developed within the constraints of our current model of reimbursement for services rendered.
America must make readiness an essential component of the business of healthcare.
Our focus should be on ensuring the healthcare system is capable of managing any and all threats to public health. Future threats will likely center around trauma, burns, or even chemical or radiologic, dirty bomb-triggered events. It is critical to adapt payment and regulatory structures to achieve health system readiness for those scenarios.
We will emerge from the current threat as we have from natural disasters, mass shootings, and terrorist attacks. The CARES Act and subsequent federal relief are important first steps to rebuilding, but it is essential that we use this opportunity to proactively prepare ourselves for the next threat while ensuring our recovery from the current.
Reprioritizing readiness within the U.S. healthcare system will require leveraging a deep understanding of the business of healthcare by engaging experts from the finance, insurance and healthcare sectors. This issue deserves attention in the policy debates to come, because as the delivery of healthcare in the U.S. evolves, so too should our strategic objectives and the financial incentive structures to achieve them.
To be prepared for worst-case healthcare scenarios tomorrow, readiness must be central to the business of healthcare delivery in the U.S. today.
