Many adaptations to the coronavirus pandemic will remain standard features of health care long after the pandemic wanes, according to Brian Chapman, managing partner at ZS Associates, an Evanston, Ill.-based pharmaceutical and medical technology consultancy. In the long term, telehealth will be a clear winner as payers look to lower ongoing costs, more procedures and care will move out of hospitals, rapid diagnostics will gain importance, and government and payer coverage of infectious disease testing of all kinds will expand, he predicted.
The short term effects of COVID-19 have become clearer in the last month. “Not all of the delayed procedures are truly elective,” Chapman told BioWorld. ‘Postponable’ procedures – those that can be put off but still need to be done – have most impacted orthopedics and cardiac care.
“In the short term these [procedures] can be put on ice, but I hope we don’t lose progress that we’ve made in recent years in determining when it is appropriate to have an intervention. We may need a way of measuring just how critical different procedures are to get done no matter what,” he noted. For instance, “cardiac care won’t be delayed for a year,” while a knee replacement could be.
The good news is most patients whose procedures are delayed for a few weeks are not going without treatment entirely. “Oftentimes, intervention with medical technology is something used as an alternative to managing with pharmaceuticals” with a goal of improved outcomes, Chapman said. “Patients can be on drugs for arrythmia or get a pacemaker or radiofrequency ablation; they can take pain medications for osteoarthritis or have a joint replacement; inject insulin or get a pump.”
Since February, telehealth has emerged as a key modality for care delivery for nearly everything except COVID-19, a change Chapman expects to transform healthcare in the future.
While many states and regulatory agencies declared exceptions made for telehealth during the pandemic to be temporary, “people will see that we could take measurements from home and don’t need patients to trek into the office. I don’t see that going backwards as people realize this is a more efficient way to do things.”
As a few examples of the wide-spread embrace of telemedicine around the country in the last few weeks, CMS enabled Medicare to pay for “office, hospital, and other visits furnished via telehealth across the country and including in patient’s places of residence starting March 6, 2020” and included a wide range of providers in the expansion of telehealth under the 1135 waiver. The U.S. Drug Enforcement Agency issued long-awaited guidelines enabling telemedicine providers to prescribe controlled substances and 25 states issued emergency orders waiving in-state licensure requirements for telehealth.
The bill for [coronavirus-related] care will be tremendous, not just for government, but for payers, which will likely accelerate the trend to moving many procedures to ambulatory centers. “If the cost is 40% less outside the hospital, I don’t see what can put that genie back in the bottle,” Chapman said.
Beyond the changes to health care delivery, the pandemic may significantly change the focus of research and some payment practices.
Given the international challenges with testing for COVID-19, “I think that we are waking up to the value of diagnostics,” Chapman noted. “The very rapid response of the industry to the [testing] gap could translate into a long-term rise in the importance of diagnostics, especially in infectious disease.”
“Money has been aimed to address rare diseases with a focus on sequencing and figuring out how to get IT around it, but we weren’t seeing a ton of innovation,” he said. “Rare disease work will not go away, but the idea of innovation in mass market tests as opposed to very esoteric interests” will come more to the fore.
And, with the experience of coronavirus and awareness of asymptomatic spreaders, payment expectations for testing will also likely change. “As a country, we will no longer find it acceptable that people without insurance cannot get screening for infectious diseases. I can’t imagine we will say it’s up to you to pay for testing,” Chapman asserted.
Preparing for the recovery
Medical technology companies can take several steps to prepare for the return to a more normal environment even during the pandemic, he advised.
Different hospitals and different parts of the country responded in different ways and in different times. Companies will need to “get a perspective on how this inconsistent recovery will impact their business. Some are sitting on a ton of product; some have supply chains interrupted. They need to know who will be turning the lights on when” to know where to position their supplies and sales forces.
With capital expenditures down, companies will need to develop creative approaches as they did during the 2008 recession, he said. “A lot of companies found a way to rent their equipment or make alternatives available to customers. We will see that again.”
For those companies depending on capital infusions, this is a tough environment. “The cost of capital has suddenly gone up and companies have furloughed staff,” Chapman said, but if they have a great idea and can hold on, they may “get to a spot where that will have a lot of value” on the backside of the pandemic.
“Many large cap med techs with a lot of cash have been doing a tuck-in strategy that has been really well-rewarded and we expect to see more move in the same direction. We had a lot of companies with high valuation and not a lot of great targets,” he said. If companies that have been trying to build scale “can avoid irreparable harm, can batten down the hatches and survive, I’m optimistic that we won’t lose these therapies that were in the pipeline.”