As we start to think about re-opening the economy and trying to get back to “normal” it’s logical to start to think about what “normal” will look like in the future. While no one knows for sure what the new normal will be there are some things we do know or can logically conclude.
We can be fairly certain that the new normal we be different than our reality was just a couple of months ago. The impacts of this pandemic will be felt for several years and in some ways may change our reality for ever.
The economic effects of this crisis will most definitely be felt for many months if not years. By the end of this year the federal government will have added several trillion dollars to the national debt. A national debt that was already at a ratio compared to GDP that has not been seen since World War II. In addition to that tax revenues will be down and expenditures at the federal level for safety net programs and social services will be up. This will most likely produce record deficits for 2020, 2021 and possibly beyond. Most economist believe that on election day in November the country will still be experiencing double digit unemployment. It is safe to say that whomever occupies the White House next year will be governing over a seriously damaged economy. If this pandemic and the global economic damage it inflicts causes interest rates to go up on the US debt and borrowing it could become a perfect storm and a recipe for disaster. Even small increases in interest rates would put significant pressure on our federal budgets due to our enormous national debt.
In addition to the pressure being put on the government there will be significant pressure on businesses that try to recover from a terrible year in 2020. With double digit unemployment there will be a surplus of labor and a shortage of demand for that labor. That means that employers will have an easier time filling jobs and won’t need to be as generous with salaries and specifically benefits.
Both State and Federal governments as well as employers will start focusing hard on expense reductions to help them recover from the effects of Covid-19. For both of these entities’ health care is one of their largest expense line items and as such will be under enormous pressure. There will be renewed push for some form of health care reform. The form it takes will be largely dependent upon who wins the election this year. No matter who wins there will be a need to reduce costs and federal expenditures for health care in this country. Employers as well will need to reduce health care costs and we are likely to see a whole new approach to how health care benefits are delivered and financed. Increased patient responsibility, increased consumerism, defined benefit plans, telehealth and other new approaches to health care will become the norm as employers struggle to return to the profitability levels they enjoyed in 2019.
It’s going to be a brave new world out there and that brings both opportunity and risk. With any dramatic change there is opportunity for those who can see far enough ahead and then adjust to meet the needs of the new climate. There is also risk for those practices and hospitals that want to stick their heads in the sand and try to do the same thing they have done for the last several years. Those practices are not likely to survive the tectonic shifts we are likely to see in the coming years.
So, what is the new normal going to look like? Well we don’t have perfect clarity on that, but we do have some general ideas.
The new normal in health care is going to include a significant increase in consumer involvement. Consumers are going to be much more involved in the delivery of their care and specifically the cost of their care. This is going to necessitate new tools and approaches to how care is delivered.
The pressure on costs will mean that physicians will need to focus on efficiencies, cost reductions and showing value. The value play will be to consumers and to payers and each may have a different definition of “value”.
Employers are going to be able to push new forms of coverage. Things like defined benefit plans and benefit levels tied to tiered networks like our current pharmacy benefit structures are going to be developed and may become the norm. Practices are going to have to learn how to compete in this new world.
Information and information transparency are going to explode in this new world as consumers, employers and payers are not going to put up with the “black box” health care approach of the past. This transparency will extend far past rates and financial information. The new health care environment will have transparency around clinical indicators as well as quality information. I envision a time where doctors malpractice history will be public information. You will be able to see your surgeon’s rate of post-op infection as well as their complication rate. Clinical indicators that have long been used inside the industry will become readily available for all to see.
The technology that allowed us to quickly shift to tele-health is also going to explode. It’s not too hard to imagine a patient doing a tele-health visit with their doctor and a home blood pressure cuff, scale and other simple diagnostic tools all connected to thier computer and doctor’s portal so real time results are fed into the doctors EMR. It’s also not too hard to imagine the lab company sending someone to your home or office to draw labs prior to your visit so that your doctor has the results available.
These and many other changes are going to impact our nation’s largest economic segment in ways that we can’t even imagine right now.
If you think this can’t happen or is too far-fetched, I would ask you to consider the following. This morning I watched the news which included an announcement that Neiman Marcus was going to file for bankruptcy, Disney corporation was going to lay-off 100,000 employees and US Oil futures had opened at a negative $37 per barrel. That’s right, if you wanted to buy 1 million barrels of US crude in a futures contract the seller would have to pay you $37 million dollars to take it off his hands. So, I ask you, given that, is anything I am predicting really that far-fetched?
Recently I had a good friend ask me what it’s going to be like when all of this is over. My response is that it’s going to be a bit like giving guns to children. “I’m not sure what’s going to happen, but it is going to be exciting.”
Check out our podcast that coincides with this blog post!