Ben Umansky shares his industry State of the Union at this year’s virtual event, lending insights and answers to key strategic questions facing healthcare and HRE leaders in the peri-COVID-19 era.
With vaccination rates rising in many areas, and organizations dropping mask mandates and other restrictions in recent months, it’s tempting to believe that we have put the COVID-19 pandemic largely behind us.
But we’re not out of the woods just yet, and the pandemic is still having – and will continue to have – a dramatic impact on healthcare and healthcare real estate (HRE).
That’s according to Ben Umansky, an Expert Partner, who delivered The Advisory Board’s “State of the Union” presentation during a Sept. 23 webinar hosted by Colliers Healthcare. Umansky was introduced by Shawn Janus, National Director of Colliers Healthcare Services.
In fact, rather than a “post-COVID-19 era,” Umansky refers to the current time period as the “peri-COVID-19 era,” applying the prefix “peri,” which essentially means we’re still in the thick of it.
And during this peri-COVID era, healthcare providers and HRE professionals must still factor in the effects of the pandemic. A lot of fateful decisions made today will undoubtedly shape the future of healthcare and yes, HRE, for years to come in the long-anticipated post-COVID-19 era. Exactly what those decisions are, who they will affect most, and who gets to make them is still unfurling today, even though we are still wafting about in that amorphous peri period.
“We believe… that there are decisions about to be made in the industry that we’re going to live with, for better or worse, for the rest of our careers – if not the rest of our lives as patients,” Umansky said. “And I think that gets lost a little bit in the pandemic mindset, in the idea that we are in the middle of a crisis, as we very much still are.
“We look ahead, and there are things that preexisted the pandemic: site of care shift, the movement to value-based care, the role of consumers, the role of integrated insurer becoming providers and then vice versa. All of that still moves on. And so, I want to give a little bit of a perspective for how we see that.”
Looking back to move forward
To illustrate the importance of this peri-COVID era, Umansky opened his presentation with a history lesson.
He referencd an iconic photo of British Prime Minister Winston Churchill, U.S. President Franklin D. Roosevelt and the Soviet Premier Joseph Stalin at the Yalta Conference, which was held in February 1945. Although World War II was still underway, the Allies were confident enough about their eventual victory that they met to determine and define what a post-war Germany and the rest of Europe would look like – what would come next.
Similarly, Umansky noted, “The pandemic is not over by any means, but we had better be thinking about what comes next.”
At the Yalta conference, he added, it is illuminating to note who was at the table – and who wasn’t. The leaders of France and Poland, for example, were not at Yalta, so they didn’t have much of a say about how things played out in the post-war world.
Likewise, in a post-pandemic era, the implications of being present at the table or not will also have far-reaching effects for all stakeholders in the healthcare and HRE equation.
As Umansky reminded, “Some organizations find themselves in positions of particular influence. They’re doing better financially, they have a strategic position that’s better. Maybe they’re just not dealing with as much COVID as the next guy. , They’re thinking about what comes next. While others are in crisis mode, they’ve been kicked in the teeth for the last year and a half, they’re still trying to keep their heads above water. Not everybody is at the meeting.”
Recent developments show we’re still in a very real situation
Umansky then shed more light on our peri state with a look at recent events and the very real situation we face here at home. Despite the Delta variant slowing down somewhat, it is very much alive and causing disruption and inequity throughout the healthcare world.
“In some senses, things may have turned a corner again where we maybe have crested that most recent peak, but that’s an aggregate,” he said. “There are markets that look worse than they’ve ever looked. There are hospitals that are overwhelmed. Idaho’s an example where they are now: officially allowed to ration care… to say to you, ‘We don’t have enough beds, nurses, equipment, and so we’re not going to treat you.’ It is almost like a battlefield triage situation. So it’s a very real situation, still.”
Add to the mix the state of flux of vaccine status.
“We have obviously, our great hope of vaccines, and now boosters,” Umansky noted. “It’s a continued struggle to get an uptake on that, but the battle goes on. I don’t want to give any impression today as we talk about the future that this particular set of issues has been licked.”
How does this affect Healthcare Real Estate ?
“COVID didn’t decide the future for us, but it forces us to decide,” Umansky noted. “It forces to the top of the agenda decisions about what comes next, and it gives certain stakeholders disproportionate influence.”
“So, what are the things where someone in the industry can put their thumb on the scale and move the world in a certain direction? We are predisposed to think about things that matter to everyone, maybe not always in the same way. But issues where no matter if you’re a provider or a payer or a senator or a patient or a head of HR or a real estate company,” he posed.
And carrying it out a bit, he asked, “Where do we predict things are going to go? Where might we like them to go? Where might our clients like them to go? How can we help them with that?”
When it comes to hospital recovery, bigger is better
In the hospital world, when it comes to who is recovering the fastest, and therefore widening the influence gap, Umansky noted that large, integrated delivery networks “that had a payer hedge” have fared better than independent community hospitals and small systems.
“Those who were able to get back to something that felt normal to them, started planning meetings, started discussing mergers and acquisitions, started doing strategy retreats,” he noted. “The folks who were still scrambling to make payroll, the folks who were still dealing with COVID surges, didn’t have that luxury, and still today, there are hospitals where their leadership is distracted.
“Distracted – that suggests it’s a minor thing, that is preoccupied, that is diverted by COVID, and so they’re not able to think about the future in the same way. So, you can see that it’s not just that the margins widen, but the influence gap widens.”
Hospital M&A will rebound as the dust settles
Although hospital and health system M&A activity took a hiatus during the height of the pandemic, that is likely to change, Umansky said.
“There was a big hiccup last year,” he noted. “People didn’t get deals done for probably fairly obvious reasons. That’s picking up now, and we do expect to see more consolidation in the hospital and health system space.”
Some of that consolidation will be strategic, he said, but some of it will be involuntary – the difference between want to deals and have to deals.
In the case of the former, he said, “Partnerships both sides say, ‘ I’m in a good spot, and this seems like a good idea, and we can do some exciting things together. Let’s do it.’”
But in the case of the latter, the have-to deals, he said the thinking will be more along the lines of, “I’m in trouble. I’m going to default on my bonds. I can’t invest in the capital, I need to keep up a clinical standard. I guess I have to seek a partner.”
“We expect to see more of both,” he said.
The outpatient migration will continue
Amid all the uncertainty, one thing is for sure: site of care shifts will continue. Although these shifts have been underway for years, COVID lit the match to the flame.
Umansky noted that the healthcare industry has been talking for years about the shifting of sites of care. But, he noted, “Not only does that go on, but it goes on with more wind in the sails.
“And when we say, site of care shift, we’re not just talking about inpatient to outpatient. We’re talking about hospital-based to ambulatory. So, actually, a physically different site of care. We’re talking about physical to virtual. We’re talking about medical settings of any sort to a home-based setting.
“All of those threads are in this idea. And for reasons, including those stated at the right, we think COVID did put wind in the sails here.”
Umansky then shared some five-year projections on inpatient hospitalizations, outpatient cases and ambulatory surgical center (ASC) volumes.
According to projections by The Advisory Board, inpatient volumes are expected to decline 2.9 percent during the next five years.
“In terms of just headcount and bed count, it’s pretty flat in aggregate, he said. But he noted that the numbers are worse than they look because declining inpatient volumes are “being backfilled by an aging population with a lot of chronic diseases,” but the more lucrative kinds of care are what are migrating out of hospitals.
“Those are not the same cases. They do not have the same financial profile for hospitals,” he noted . “That’s a big problem for them.”
But, he continued, “Obviously, much more growth expected on the outpatient side and in the ASC space.” The Advisory Board projects an 8.2 percent increase in hospital outpatient department (HOPD) volumes and an 11.1 percent growth rate for ASCs.
He noted that ASCs “look very different in terms of ownership structure and business model. It’s not a one-size-fits-all thing. Some of them are physician-owned, and they are very much a competitive alternative ” to a hospital or health system. ASCs can benefit from a better payer mix, a lower-cost setting and a more convenient location.
“Regardless of COVID, I do think that this ASC shift continues to gather momentum. More new ASCs are being built than hospitals. This is where the world is going.”
Be aware that COVID affected services lines differently
Another area to watch is the differing impact the pandemic has had – and will have – on various service lines.
For example, we all know that there was a lot of deferred care during the height of COVID. As we also know, in the case of elective surgeries, volume has recovered. However, important healthcare screenings were also deferred, and the consequences of that are not as easily predicted or reversed.
“For example,” Umansky noted, “folks didn’t get cancer screenings. Then they show up as Stage 3 and Stage 4 cases, instead of Stage 1. That’s a whole different story.” He said many kidney patients and others with chronic conditions also deferred care.
“That’s going to come back and bite us,” he said, “because that’s going to mean folks with more hypertension, with more cardiac issues, with diabetic issues. In some places there are big spikes or big drops that we expect on account of COVID.”
Umansky continued, “We say things such as, ‘Care is shifting to the outpatient setting’ as if care were a sentient creature, as if care got up and decided it’s going to walk out of the hospital. And that’s not what happens. The reason that the care moves is because someone moves it.”
One of the keys to this, he pointed out, is how employers handle healthcare benefits.
“Where do employers want people to end up? Lower-cost sites? ASCs? Urgent cares instead of Eds? Virtual care instead of in-first care? It is driven by purchaser action,” he said.
Expect for a physical-virtual hybrid care model
Umansky noted that, as we know, telehealth use soared during the height of the pandemic. Telehealth as a percentage of total visits went from essentially zero to approximately 50 percent by April 2020. Overall, telehealth visits have subsequently fallen back down to around 20 percent, he said, although they have remained high for certain specialties, most notably psychiatry.
“Most of the virtual care is being delivered by patients’ preexisting providers. It’s the same appointment that you were going to have in person, it just happens to be on Zoom this year. But you’re not seeing somebody different, you didn’t move the market. It’s an operational change.”
However, Umansky said that a number of disruptors are “in the wings, if not actively, stepping onto the stage.” They are not simply shifting physical care to a virtual platform; they are developing purpose-built virtual models.
“Providers are saying, ‘I don’t just want a share of primary care visits. I want the whole relationship,’” he said. The Advisory Board anticipates the growth of a “physical-virtual hybrid model.”
“I think it’s very obvious at this point that telehealth is going to be a noticeable part of healthcare delivery for the rest of our lives,” he added. “And it will probably grow, never as much as that big spike, but it will grow. This is a new skill set that everyone will be taught in medical school It’s a new investment that every practice has to make, every patient is going to do a little bit of this when it’s appropriate. It’s an operational challenge for the industry.” All sides are racing to integrate virtual and physical services.”
Umansky also noted, “There’s a lot of interest in home-based care right now” on the part of providers, policymakers, insurers, technology firms and others. “Everybody is excited about this space,” he said.