July 8, 2020

5 Pandemic Takeaways: Large Employers See COVID-19 as Catalyst for Systemic Health Care Change

COVID-19’s long-term impact on U.S. health care remains unclear, but amid the ongoing turmoil and uncertainty, large employers see opportunities for much-needed reforms.

Elizabeth Mitchell, president and CEO of Pacific Business Group on Health (PBGH) and Lisa Woods, PBGH chair and senior director, U.S. Healthcare for Walmart, recently outlined five key takeaways from the pandemic during an online summit on the future of health care in a post-COVID world.

PBGH works with some of the nation’s largest employers in addressing health care purchasing challenges. Member organizations include 40 public and private entities that collectively spend $100 billion annually purchasing health care services on behalf of more than 15 million Americans.

Among the repercussions of COVID-19 from an employer perspective, according to PBGH’s Mitchell and Woods:

1. Telehealth is the future. Telehealth will continue to gain traction as a means of delivering appropriate care from a distance. Close to half of physicians are using telehealth in the wake of the pandemic, up from less than 20% two years ago. Analysts expect virtual physician visits will rise by 64% in 2020.

“We’re looking at ways to ensure that our associates can get the care they need in their home communities if they don’t feel comfortable traveling,” Woods said.

“We have been very focused on telehealth [at Walmart] and feel like it is the future,” Woods said.

2. Primary care needs more investment. With many primary care physician groups struggling due to fewer office visits triggered by concerns about COVID-19 exposure, fears are rising that provider consolidation will continue to accelerate, leading to ever-higher health care costs.

PBGH recently joined 35 other employer-focused organizations in urging Congress to impose a 12-month ban on mergers and acquisitions for health care organizations that received federal bailout relief. PBGH also is calling for immediate federal assistance for vulnerable primary care practices and the elimination of all or part of cost-sharing requirements for primary care visits.

Employers additionally want to see a greater emphasis placed on mental health and public health within the context of primary care and are looking for ways to positively impact social determinants of health (education, finances, food and housing insecurity, transportation).

“We haven’t been paying for the right things,” Mitchell said. “We’ve been focused on expensive tertiary care and elective procedures, and we need to focus on primary care. That’s how we keep people healthy and out of hospitals.”

3. Employers are hyper-focused on quality. “We know there are huge opportunities to identify how to get better outcomes, and we think purchasers are going to lead that charge,” Mitchell said.

Woods pointed to PBGH’s Employers Centers for Excellence as an example of the kinds of solutions employers will increasingly turn to in the pandemic’s wake. Through a rigorous evaluation and qualification process, PBGH has identified regional care centers that deliver high-quality elective surgical care for PBGH member-employees.

The centers were pioneered by Walmart and have been instrumental in helping PBGH members improve quality and reduce costs.

4. Employers want more control over contracting. Employers continue to be deeply concerned about health care costs that have been rising irrationally for years and worry the pandemic will fuel even higher prices.

Mitchell said financial pressure from COVID-19 has only exacerbated those concerns and will likely accelerate employer efforts to gain greater control of the health care purchasing process through direct contracting and other quality improvement and cost reduction efforts.

Direct contracting between employers and providers represents a promising solution, she said, because it creates an opportunity to “cut out the noise in the middle” to produce better and more cost-effective outcomes through collaboration between employers and providers.

5. The pandemic is forcing innovation. “[Employers] are going to be forced to innovate much more rapidly than they might have anticipated, because you can’t sustain a bloated, inefficient [health care] system in this environment,” Mitchell said. “The health care system didn’t fix itself, so employers are going to step in and fill that gap.”

In addition to boosting quality, Woods said eliminating unnecessary care—estimated to account for about one-third of all care provided—represents a key objective for employers. She noted that as providers ramp up from the pandemic-driven shutdown of recent months, it will be important to find ways to prevent unnecessary care from creeping back into the system.

The June 22-25 virtual summit during which Mitchell and Woods spoke was produced by Global Health Care, LLC, and included a wide range of presenters, from health plan and hospital executives to clinicians, educators and former policymakers. Their discussion can be viewed online here.