Senior Policy Fellow , Margolis Center for Health Policy
Vice President for National Program and Outreach, Council on Foreign Relations
Adjunct Senior Fellow, Council on Foreign Relations
Susan Dentzer, health-care analyst, commentator, journalist, and senior policy fellow at the Duke-Margolis Center for Health Policy, discusses local health systems, including how they are coping with the COVID-19 pandemic and best practices for reporting on the subject. Carla Anne Robbins, CFR adjunct senior fellow and former deputy editorial page editor at the New York Times, hosts the webinar.
FASKIANOS: Good afternoon. Welcome to today's Council on Foreign Relations Local Journalists Webinar. We'll be discussing local health systems and best practices reporting on them during COVID-19 pandemic with Susan Dentzer and Carla Anna Robbins. I'm Irina Faskianos, Vice President for the National Program and Outreach here at CFR.
As you know, CFR is an independent, nonpartisan organization, and think tank focusing on U.S. foreign policy. This webinar is part of CFR's Local Journalists Initiative created to help you connect the local issues you cover in your communities to global dynamics. Our programming will put you in touch with CFR resources and expertise on international issues and provides a forum for sharing best practices. So thank you all for being with us. Today's webinar is on the record, and the video and transcript will be posted on our website after the fact at CFR.org/localjournalists.
We shared bios with you, but let me just give you a few highlights. Susan Dentzer is a leading expert on American healthcare and policy and a frequent commentator on news outlets including PBS and NPR. She is currently a senior policy fellow at the Duke Margolis Center for Health Policy in Washington, DC. She's held roles as the on air health correspondent for the PBS NewsHour and editor in chief of the policy journal Health Affairs, and she's a member the Council on Foreign Relations.
Carla Anna Robbins is an adjunct senior fellow at CFR. She's aculty director of the master of international affairs program and clinical professor of national security studies at Baruch College’s Marxe School of Public and International Affairs. Previously she was deputy editorial page editor at the New York Times, and chief diplomatic correspondent at the Wall Street Journal. So Susan and Carla, thank you very much for taking the time to be with us today. I'm going to turn it over you, Carla, to get us started.
ROBBINS: Irina, thank you, as always, and thank you to everybody at CFR. So Susan, thank you for doing this. You bring multiple skill sets to this conversation. Today I'm reporting on local health systems and the pandemic. You've worked in television and magazines. You’ve edited, what was when you were doing it, the leading public health journal, and you started in the business with local newspapers. So you've done it all. You also have deep expertise not only in public health, but also in economics, and this is in many ways an economic story. So in full disclosure for everyone here, you're also one of my best friends, you're probably my best friend. So we’ve got to be clear on this for full disclosure.
So as ever, we're going to start out with a few questions from me and then throw it open to everyone here and I really want to thank all the journalists here because the work you guys do is so incredibly important right now. We know how tough the news businesses is, it isn't? I can't even imagine what it's like to report on a daily basis in the current environment, so thank you for being here. So when we talked about you joining us today, I divided my questions into two areas: getting through the pandemic and digging out afterwards.
So, what questions and what stories should we be asking in this stage of the pandemic about our local health systems capacity, even though the infection rates and mortality numbers are rising? We're not hearing about crises so much in capacity or shortages of PPV or ventilators. Is that about to come again? Did we learn some key lessons from the first wave in New York and Washington state or from Europe, that local hospitals in Texas, Florida, Arizona, and Nevada are now following? Is it going to get better, or are we about to get hit by another wave in a really bad way?
DENTZER: Well, thank you Carla. First of all, thank you for that gracious introduction and secondly, great to be with all of you to talk about this very important topic. I want to echo what Carla said about the importance of you continuing to do your very important work. So, that was a lot of questions. Let me start to unpack some of them. I divide my thinking up into the viability of the health system to cope with a pandemic into its clinical issues. What is it actually able to do clinically now to care for people with COVID-19? And then what are the financial and operational repercussions on the system and its capacity to deal with this? As Carla said, there's what we care about now and then what is going to happen in the future. So thinking in those different dimensions, clinical versus financial, operational, now versus future, that's kind of how I organize my own thinking.
If we just take the clinical perspective right now and ask, you know, how our health systems doing in various areas around the country? The first thing, of course, that I learned long ago as a journalist is that almost anything you say about the US healthcare system will be true somewhere. Because there is so much variation around the country and around the system and among hospitals, and across even within the same metropolitan area. There will be big differences among hospitals, depending on the structure of the hospital. Is it nonprofit? Is it for profit? Who does it serve? Who's its population base? Is it primarily Medicaid patients or public publicly insured patients, or is it a more privately oriented system? All of those variables come into play when we ask any question about what's going on in the healthcare system.
But if we basically ask, how is the health system prepared today? We think about sort of three S's: space, stuff, and staff. Okay, so the space is, how much space do they have to accommodate patients right now? That space issue, as we have learned across the country, has really been able to fluctuate, because if you take, for example, New York, the governor of New York told every hospital in the state to double ICU capacity within the hospital. So they had to put hospital beds, including ICU beds, and what were formerly conference rooms and what were formerly closets, etc.
So for space, has the current system, does it have the current space? And what space has it created in terms of new beds, swing beds, etc, etc. So that's one really important factor, how much space do they have. And that will not necessarily be a fixed number because hospitals have a licensed number of beds that frankly is kind of a fiction, it's not even clear. They're always operating and staffing their fully licensed number of beds. So you always have to be aware of that. It's a dynamic number that that you have to get your arms around. So that’s space.
The next thing is stuff, and of course, the most important stuff in the current environment. People have tended to focus on personal protective equipment, or PPE, and that's extremely important. But it's also all kinds of other stuff. We focused a lot early on in the pandemic on ventilators. As we now know, we probably overused ventilators. It now looks as if we put too many people on ventilators, and frankly kind of killed them faster by virtue of doing that. So ventilators are important but you also want to know, are there also BiPAP machines, CPAP machines, other ways of providing oxygen support for people as well. Then there's just the basic drugs, you know, are there enough medications? There's been a lot of attention obviously on remdesivir capacity, but we care about everything else too. And now increasingly, we care about other medications: dexamethasone, other forms of corticosteroids, etc. So whether institutions have all of that becomes really important.
And then finally staff. And of course, staff was a paramount issue in the Northeast, in particular, in the pandemic. It's still an issue. If you read now, the stories coming out of some places, I read a piece today about Oklahoma. Now, Oklahoma in a different environment, say if there had been a tornado they could have that had devastated a vast area and hospitalized a lot of people, they could have called up staff from Texas. They can't do that now, right? And it's also going to be really hard to get the flow back across the country that occurred when COVID was really hitting the Northeast. Since a number of providers did come in, for example, from California.
California is not going to be in the business of exploiting healthcare providers anytime soon, right? So how systems are able to put together that constellation of stuff, space, and staff is really, really critical and is going to be highly variable, even within particular locations or localities. So that's number one. Then there is the operational aspect of it. As we know, in the first phase of the pandemic in the Northeast, lots of institutions cancelled elective surgeries. That same dynamic is now going on, of course, across much of the rest of the country. You have to do that for various reasons. You can't take up beds with elective surgical patients. You can't take up staff with that, you can't take up PPE with that. This is a hugely devastating financial impact on hospitals, as many of you will know. Elective surgery accounts for about 50% of overall hospital revenues, and the lion's share of the margin, because very frequently, elective surgeries are compensated relatively well by, especially by private payers relative to public payers like Medicare.
So what's going on is the institution pulls back from doing a lot of elective surgery. And frankly, sometimes we call elective surgery, it's not clear it's so elective. Sometimes it's urgent surgery that in a perfect world we'd be doing anyway, for example, for people with cancer. So understanding and getting your arms around all of that, in the here and now is really important. And as we know, going forward, this is having an enormous impact on the financial viability of many institutions. Not all, some of them have plenty of cash in the bank. But others don't and they're going to be very seriously stretched. That's why some of you are probably watching very closely, as am I, the efforts now to pull together the next fiscal relief package. This next package is probably going to have to have some additional assistance to hospitals and other healthcare providers, because of the devastating financial impact that many of them have suffered today. So let me stop there, Carla,that was a stab at taking on some of those really important questions you posed.
ROBBINS: So, in my town, I've got a public hospital, I’ve got a private hospital. How public? How much information is there out there about either of those hospitals? How hard is it going to be to get the information that you're talking about as a reporter?
DENTZER: It will depend, right, because some hospitals are being very public about what is going on. They have to report a lot of information to public authorities. And now we know that information now has to go up the food chain to the new protect site for HHS. Most of that information is still being reported on that site in the aggregate, but it does dial back down to individual hospital numbers. So with some digging in, and you can certainly go to the hospital and say, what numbers are you reporting yet, right? About your occupancy, for example. So you you can get it, it's just it will require some digging. And that's true for all hospitals, they all have to report that at this point.
ROBBINS: And so of the numbers that are being reported, what are the most important ones? We hear so much back and forth on the other numbers, you know, mortality rates, pseudo percentage infection, you see all the numbers on the front of the Times every day. But if I want to look at the health and the capacity of a hospital itself, and you went through those very good things, which particular numbers are the ones that I should be paying the most attention to?
DENTZER: Well, I think overall, you really you do want to understand. And it's important to say in most parts of the country, not all, in most parts of the country, what is developing is some way for hospitals to get together and share resources, and if not share resources just work together to address this pandemic. So you will frequently read about patients being transferred from one facility to another. So it's important to understand what's going on in the individual hospital, but it's also important to understand what's going on collectively in the state or the region. Because there's going to be a lot of this going on, there's will be movement of people being transferred when certain institutions get to be overcapacity, or they're experienced shortages of ICU beds or what have you.
So understanding what that looks like in the region and what is the capacity overall of the system regionally to respond is probably the most important thing of all. Because it's highly unlikely that every institution is always going to be able to respond to every element of COVID business that comes to that door at a particular time. It's going to need the ability to transfer patients to other institutions. So understanding what regional capacity there is to do that is important, but also who's overseeing that process, right? Who in the state health department is keeping tabs on this? And have they figured out a way to triage amongst systems that way?
ROBBINS: So you talked to a lot of hospital administrators and people from different parts of the country and you also are watching the wave right now. Are there particular parts of the country that you're most worried about in terms of capacity and ability to deal with this? Because it means the lagging indicators are here and things are just really ginned up in the last few weeks again.
DENTZER: Yeah. Well, you can first of all look on some of the big sites that are tracking all of this on multiple levels. COVID tracking project, for example, to some degree COVID exit strategy is tracking that, the new protect Health and Human Services (HHS) site, etc. And you can put together a picture, but it's very clear that the worst off areas of the country now are, not necessarily in this order, but it's California, Texas, and Arizona.
ROBBINS: But is that also true about their capacity? I mean, that's certainly true about their infection rate, but isn't that also true about their capacity?
DENTZER: Yeah, if you look at the numbers, they are bumping way, way up against capacity. Now, it's going to be different within different areas of the state. Because the urban centers obviously are much more stressed, relative to most of the rural centers, but some of the rural centers are very highly stressed. And already in California, for at least a month there have been big transfers of patients several hundred miles from various parts of the state into, for example, Los Angeles. So, this is where I was getting at this notion of understanding the overall numbers and also what is what are the patterns of transfer and movement of patients around and who's essentially guiding that process, as various areas become way over capacity.
ROBBINS: So, why did they change this thing with the CDC and the reporting responsibilities transferring it to the HHS? I mean, a lot of people are looking at that very suspiciously, but it's a way, one more attempt to Jedi mind game us on something.
DENTZER: Well, I think there was probably less nefarious stuff going on there then then some have reported. It is true that the CDC had some existing lines of reporting that for various reasons already were confusing for a lot of hospitals. Essentially what is happening now is it's all being inputted into this protect site at HHS, I think that probably was an appropriate thing to do. Could we rule out that people aren't going to try to play games with the data? No. But, in whose interest is it right now to do that? Maybe there's one person whose interest there is to do that, but almost no one else. So I think it's probably not an issue we need to spend a lot of time on. The really important thing, obviously, is getting the data as quickly as possible. And to the degree, I know, there's a lot of confusion right now among hospitals as the shift has taken place, but that should sort itself out. And now there will be this one entry point for the data and that should help the process.
ROBBINS: So I want to throw it open, but some of the things that I'm thinking about. And just one that I want to throw in very quickly right now a big question, which of course, it's ridiculous to throw in at this moment is there are rescue packages, potentially things that people are going to know. I don't know what the reporting requirements of financial reporting requirements are for hospitals, I assume that public and private have different responsibilities. But if I wanted to take a look at the financial health of my local hospital, how would I do that? How often do they have to report it? And how could I figure out right now how close to the edge they are?
DENTZER: Well, there are a couple of ways you can do that. For the larger systems, almost every hospital finances itself by issuing bonds and all those bonds are rated by the major rating agency, Standard and Poor's, Moody's and Fitch. So the first thing to do is if you're talking about a reasonably good size system, call up the rating agencies and ask them are they rating? Not every rating agency rates every system, so they're going to be taking different pieces of the pie. But find out what what's happened to the credit rating. And there have been a lot of credit rating reductions, especially in recent weeks for a number of these facilities. So that's number one.
For smaller hospitals, and particularly for safety net hospitals, municipal authorities can often issue bonds on their behalf municipal bonds, and those are those are reported into SEC. So you can go on the SEC website and see what's going on with that level of institution. The other really critical thing is just to call them up and ask, right? Because if you can get the CFO on the phone, you know, hospitals don't have an interest right now in downplaying the degree of their financial duress. They just don't, if anything quite the opposite. And as we know, in the first wave of provider relief that came through to the tune of 175 billion, not all of which has been dispensed, by the way at this point. Because of the formulas that were adopted, both for that part of the program and also for what essentially amounted to loans, some of you who follow this will know that CMS in particular, gave, essentially lent hospitals their future Medicare payment, to help them address any liquidity concerns, and those were structured as loans that are going to have to be paid back eventually.
There's a lot of discussion now about the timing of those paybacks, how much of that will actually be required, how much loan forgiveness should there be, and if there's not loan forgiveness, what is the interest rate that hospitals will have to pay if they don't pay that money back on a timely basis? If you put all that together, hospitals right now have an interest in disclosing what their actual financial situation is because this will not only sort out what to do with the first wave of the hospital systems, but also what to do with the next wave of hospital systems, right? And there will be another way. The House passed, its so called Heroes Act back in May that had a big element of financial relief. Now we're going to see what the Senate puts forward, if anything, and then of course, the negotiating will begin. But hospitals really do have an interest right now in being public about what their degree of difficulty is, and so I would start by asking them and get as far down the road as you can with them that way and then you have these backup options as well.
ROBBINS: That's great. Thank you so much for that. So Irina questions from?
FASKIANOS: Yes. So thank you both. Let's go now to all of you For your questions and answers, please click on the raise hand icon on your screen to indicate you would like to ask a question and please accept the unmute prompt and tell us who you are and what news outlet you work with, to give us context. So let's see we already have two hands up. So we'll go first to Tiffany Stecker.
Q: Can you hear me?
Q: Okay, great. Well, thanks so much. This is really interesting. So I'm with Bloomberg Law. I'm based in California and was on a call with the State Hospital Association yesterday. And they mentioned that one issue is that patients that are usually discharged from a hospital and go into a skilled nursing facility for rehab for a couple weeks, and that option isn't available anymore because of the problem that cities have had with containing COVID. So, Susan, I just wanted to see if that's something you've seen in other states or nationwide where there's a backlog of patients that can't go home yet, but can't really go to an acute care facility because of COVID.
DENTZER: Yes, indeed, that's been a problem almost every place. And I'll just point you all to a webinar series that I hosted for the patient center at Outcomes Research Institute. Back in the spring, if you go to pcori.org, go down to the bottom of the site, you'll see, you can click on and get all of those webinars and almost everything. What's interesting is that almost everything that is being experienced in the health system now was exact same stuff that was being experienced two months ago and three months ago in the Northeast in particular, but also Louisiana and some of the other epicenter areas early on. But this issue of patient flow at large has been a real issue.
So if you think of it, you had patients getting sick in the community, some of whom were getting sick initially in nursing homes. And so they were having to be admitted from nursing homes into hospitals. So there was one element of flow that had to be taken into account. Then once patients were treated, if they were recovered and had to be discharged, you had to get them out of the hospital. Well, in the Northeast, New York in particular, where did they go? Some of them could be discharged to home unless people at home were sick and couldn't take care of them. So that couldn't happen. Nursing homes initially in New York were refusing to take patients back because of the uncertainty about how long, even after they had recovered, whether in fact they would remain infectious, right? So there was concern about taking them back.
And a lot of hospitals in New York and elsewhere, were requiring two negative SARS-CoV-2 tests before they would take a patient back. Well, that could take two weeks to get the results back. So patients were stacking up in hospitals, not able to go back into nursing homes. So that was an issue. And then as I say, they couldn't necessarily go home. And guess what, there wasn't necessarily enough homecare staff because at one point, the visiting nurse service of New York, more than a third of the staff was out sick, right? And then for patients who couldn't have a place to go home, shelters weren't taking them back, so the city essentially had to turn around and read a lot of hotel rooms to house patients. So various versions of this have played out across the rest of the country. And it's been a real real issue and it's only compounded by the disaster of the testing situation in most places, the availability of tests, the time lag for getting tests back, etc.
FASKIANOS: Okay, thank you. Let's go to Ann Thompson.
Q: Yes. Thank you. Thank you for doing this. I was wondering about contact tracing. Have we just given up on that? Are there areas of the country that are doing it well?
DENTZER: Yeah, there are some. It's becoming less and less of an urgent issue in the high surge areas, frankly, because as you all know, despite the large number of positive tests, we think it's a major understatement, right? I mean, I think CDC director Redfield has said it's probably 10 times the reported rate at this point. Well, if that's the case, you take some of the areas that have had really major surges in infection in recent weeks, the states I mentioned earlier and also Florida. If the actual positivity rate is 10 times what we're showing now, contact tracing does isn't going to really help that much, right? Because almost everybody will have already come into contact with people who are positive. So you know, it doesn't mean that contact tracing is useless. It still should happen for scientific reasons.
I mean, we still need to further our understanding of how people become infected. We pretty much know the basic parameters, you know, that you have to be in a more confined area for a certain amount of time and be exposed to either aerosolized virus or droplets. But we could probably refine our understanding further if we have more contact tracing going on for scientific purposes. For the purposes of having people essentially stopping community spread, it gets harder as I say when the prevalence is higher number one. The other thing is with the testing delays. It is probably the case that let's say you got alerted that somebody you had been in contact with somebody who had tested positive. You go out today to get a test, you could wait a week before you get your test results back. So in a perfect world, what would you do, you would quarantine for that week. How many people are actually doing that? Probably not very many while they await their results. And in the meantime, as we continue to refine our understanding, we think people are at their most infectious before they're symptomatic, right? So it means they don't know. They don't want to believe that they're sick. They don't have symptoms, they're probably moving around a lot, even if they've been notified that they've come into contact with somebody who tested positive. So that makes the contact tracing piece a real struggle.
FASKIANOS: Thank you, Missy Miller.
Q: Hey there, thanks so much for taking my question. I was wondering, do we know what is a normal hospital capacity pre-pandemic? Because Florida now has a dashboard that it shows patient beds and ICU beds per hospital. And at the beginning some of these ICU’s were showing at zero percent. So the hospitals changed how they report it, so now they're reporting all their beds, not only their staffed beds, so it's very hard to judge what the number that we see on this dashboard is, whether they're doing well or reach 90 or 100%, if they’re full. Do you have any benchmarks to compare this with or what questions we should ask?
DENTZER: It's a complicated question, as you suggest, and back to what I said earlier, first of all hospitals do have some surge capacity, right? So they can probably add more beds. As I say, in New York, they were required to do so they haven't been required to in other states, but they, a lot of them do have capacity. So there's a little bit of surge capacity, probably still in a fair number of hospitals. So that would be one question to ask. Okay, so how many beds are you saying you have now and how much of that has been surge capacity that you've added? What additional surge capacity do you have to add? How are you thinking that you would segment that as between ICU beds and step town beds and general floor beds, etc. So that's one piece of it.
Historically, particularly in recent years, it has been the tendency of hospitals to try to operate as close to capacity as they possibly can. And going into the pandemic, if you looked at major urban centers, hospital occupancy rates were way, way up in the 80s, or even the low 90s in most places in good times. Okay. Now, admittedly a lot of that is pointed be things like elective surgery patients. So these are people are not there for a long time, but they're there for several days. And the cycle because hospitals were churning through so much like elective surgery, they were trying to keep those beds relatively full because they were trying to do a lot of elective surgeries.
So essentially, what we're having to do is compare life before COVID, which was operating under a completely different set of dynamics to life during COVID, which is totally different dynamics with no elective surgeries and lots of COVID patients. And as we know, in some areas of the country, you know, 40% of the patients who are in hospitals or more are COVID patients, they pushed out a lot of the other, in effect pushed out a lot of the other patients. So I wouldn't spend a ton of time asking what the normal world is because it doesn't matter right now what normal was, what matters is what is what's going on now.
FASKIANOS:Thank you, let's go to Anastassia Gliadkovskaya.
Q: Hi, thanks so much. I'm a data fellow at The City, we’re a digital newsroom that cover the five boroughs in New York. I had a question about finances specifically. You know, hospital systems are all of different sizes and their finances vary widely. Are there certain red flags that we can say definitively across the board, you know, are concerning for all hospitals? So for example, you know, some hospitals may say they lost half a billion dollars, you know, lost revenue on elective surgeries that were postponed. But another hospital may have lost less or more.Does it make sense at all to compare those losses, given how, you know how different they are in size? And I guess the follow up is, apart from the ratings that you mentioned, are there other indicators of health or sort of red flags? Like, for instance, heavy borrowing is that you know, would heavy borrowing indicate health or on the other hand, sort of concerning red flag?
DENTZER: The number one question you want to ask the CFO is how many days cash do you have on hand, right? Because days cash on hand means, can you afford to pay your staff or are you gonna have to lay people off? Can you afford to buy PPE or are you going to have to go without it, right? So days cash on hand, how many days cash do you have on hand? So after that, hospitals are borrowing all the time. But they shouldn't be necessarily borrowing for operational purposes, they should be borrowing to expand capacity and things like that. So, but if you can get it, if they don't have much cash on hand, then they are going to have to work out short term financial arrangements. That's why they need it, these advanced payments from Medicare so badly and from private payers as well. So I would ask them, you know, once you find out what days cash on hand owes, and if it's below 30, they're in big trouble, right? Ask them, what emergency sources of financial support are you lining up? Are you going to have to furlough staff? You know, all of the consequences that would normally follow from a hospital essentially running out of cash. So I would start there and then of course, you could look at their overall credit rating and what happens in that vein. And then, you know, ask them to tell you how many people they've laid off right recently, because they will if they have been really stressed, they will have had to already start taking measures like that to start to conserve cash.
FASKIANOS: Thank you. Let's go to Mary Katherine Wildman.
Q: I am a reporter with the Post and Courier newspaper in Charleston, South Carolina. Thank you. The question I have, hospitals are dealing with all kinds of financial stressors right now. But one thing that I'm just a little unclear on is that many hospitals in our state have kind of stepped in to offer or at least facilitate a lot of our state's testing. Is that a financial positive or negative for most hospitals, and if it's possible to say how much does that cost them to provide?
DENTZER: It depends, right? Well, as with most things, a lot of hospitals in larger health systems are able to develop their own in house tests. These are known as laboratory tests. For those of you who have covered this in an earlier era, those are what we would think of as tests that are governed under the regulations known as CLIA, right? And hospitals have always had the ability to develop those tests. And many of them have in this environment in particular, they are able to bill insurers for those tests, as we know they cannot build individuals for those tests. That was part of the some of the earlier relief packages that were enacted. So there's no cost sharing now for individuals for COVID related tests that have to do with establishing whether you've got the virus or not.
There's a little bit more ambiguity around tests that are done to figure out how to treat you. That's going to be sorted out in the next packages of legislation. But at least if you're in the hospital and you get a hospital device test, you're not going to pay anything and the hospital is essentially going to have to negotiate with insurance companies as to what that test is going to be. And like most things, hospitals will tend to pick a number that they want to bill the insurer for. And then there's an effect of negotiation about what the insurer will actually pay. Okay, so that's that situation.
There are other situations where hospitals might be doing either on campus or off campus tests, where they've linked with some other provider of some sort, who is handling the test. It's either a public health authority that is doing it, in which case the public health authority is picking up the tab for that, or it could be partnering, say with a CVS or one of the other major commercial testing labs. And in that case, it's going to be a function of what arrangements were set about who's going to bear the cost of it. Typically, if it's done by a commercial lab that has set up, let's say you've got like a CVS or you've got a lab, Lab Core or Quest Diagnostics, orchestrating the testing facility, the hospital itself isn't going to be on the hook for that or necessarily getting the revenue from that. That's going to be a transaction that's negotiated between the commercial lab company and the health insurer.
FASKIANOS: It looks like we have no questions. Oh, we do have another question, Mary Zatina,
Q: I’m with WDET public radio in Detroit, and my question pertains to nonprofit hospitals and their requirement for funding.
What do you see happening with nonprofit hospitals reporting their losses from the coronavirus and what they would benefit? And also, what implication might that have overall on community benefit from nonprofit health systems and hospitals?
DENTZER: Well in the short run, if I were running a nonprofit hospital and by the way, when we say nonprofit, of course, what we really mean is tax exempt, right? Because they essentially do not have to pay many forms of taxes at the federal or state level. They may have to make payments in lieu of taxes that have been structured in various areas. But you know, every hospital has to have a margin of some sort to stay in business. And whether you want to call that a surplus or a profit, whatever, they've got to have some margin to stay to stay in business and to continue to reinvest. And historically, nonprofit hospital margins have been all over the lot. It really depends on, you know, what is the size of your institution, what is the mix of pairs that you have, etc, etc. So when we say nonprofit, we mean everything from a Cedars Sinai or Northwell Health. I mean, Northwell Health is the biggest employer in New York State, right? And it's a nonprofit system. So we mean everything from that all the way down to a very, very small, much smaller community hospital, for example, or even a rural hospital. So there's huge, huge range there.
On community benefit, if I were running a hospital, you bet your life I would declare to at least to some degree, what I'm doing now, as community benefit if it's legitimate to do that. Right now we have a lot of forms of assistance coming in to cover the costs of caring for patients with COVID-19. And there probably will be another wave of that. If we look at the Heroes Act, if that becomes anything close to law, that if any of those provisions are taken up in an overall bill that passes both the Senate and the House and is enacted into law, there's a lot of Medicaid changes in particular there. There are numbers of provisions for Cobra extension, etc, etc. So, a lot of care isn't going to be free care. It's going to be picked up by somebody in particular by Medicaid.
To the degree that there are unreimbursed expenses out there, it really does behoove hospitals to capture that and legitimately claim that as community benefit. I think it's going to be difficult to do that because of all of these payment changes that are going on. I think more broadly, you know, when this is over, there will probably be a look back at how hospitals have handled this to understand the situation. And I guess I would not go out on a limb at this point and say that I know what we're going to find. But you know, it this is a complicated exercise and could you imagine that a lot of hospitals are going to try to report things as community benefits that in retrospect, they probably shouldn't have. Yeah, I can imagine that would happen. I can also imagine that hospitals will throw up their hands and say, it's just too complicated. Let's get on with this. And then we'll see what happens with community benefit provisions if they are altered going forward. I don't even begin to pretend I can see that far into the future.
FASKIANOS: Thank you, let's go back to Naseem Miller and she's with the Orlando Sentinel.
Q: Thanks again, I am curious, how you would view a midsize nonprofit health system that, you know it started laying people off in April/May but at the same time since then they have acquired another small hospital. And the two sort of don't jive with each other, but maybe it works for high level finance, but I don't quite know what to make of it. And of course, the employees are pretty outraged about it. So I don't know what do you think?
DENTZER: Well, there has been a trend of hospital consolidation on for quite some time, for the fundamental reason that to some degree, depending on the part of the country before the pandemic, you could reasonably argue that there were too many hospitals, too many hospital beds. That's not an argument many people make today. But before the pandemic, that was true in certain areas of the country. And if you think about it, if you have two hospitals, you've got two CEOs, two boards, two sets of overhead, etc. If you combine them, you streamline all of that. And so your fixed costs relative to your volume fall. So economically, that is a rational move and it is a particularly rational move now, because I can bet you I don't know that situation that you're describing. But I bet you the hospital that acquired probably had 10 days of cash left on hand, right? They probably didn't have a choice. And you should ask what the purchase price was. Because I know for example, up here in Washington, DC several years ago, Johns Hopkins, but it what had been a prestigious hospital in northwest Washington called Sibley for $1. Because it essentially in buying the hospital saved a lot of its debt. Okay. So find out what the purchase price was. If I were the employees, I'd say, you know what, if I want to keep working here, or even possibly be called back to work someday, it's probably better off at these hospitals merged. I know the optics of it look really bad but from a reasonable financial standpoint, I would bet you it was a smart decision.
FASKIANOS: Thank you. We don't have any questions right now. But in the chat, can you reiterate, and we will send it around but the website that you mentioned at the outset, Susan, so people can look it up after this call?
DENTZER: Sure. It's the website of the Patient Center Outcomes Research Institute, which goes by the acronym PCORI, pcori.org. PCORI is not a government entity, it was created under the Affordable Care Act. So it's considered a quasi governmental agency, which is why it has that org as opposed to Gov. But go to that page. And if you look down at the bottom of that page, you'll see on the left a tile that essentially directs you to a webinar series. And that's the webinar series that we did back in late March, April, and into May. We did a segment on this whole question of flow within hospitals that I mentioned, including the nursing home piece. We did a segment on how hospitals should set up incident command structures, which is another thing that you might want to look into, particularly for purposes of maybe developing an interesting feature story. We did a segment on telehealth and the very broad use of telehealth that occurred in the early stages of the pandemic in particular. And we did another segment on the emergency room and what was going on in emergency departments. Because of course, those were primarily the receiving areas for the first waves of patients. And in the early, early days of the pandemic, that's where a lot of the really difficult stories were occurring as patients were showing up breathing fine one minute and dead within several hours as their breathing capacity rapidly deteriorated. So there's some fairly gripping stories there.
FASKIANOS: Thank you. And we'll circulate that again after this discussion, but I wanted to give it make sure everybody had it right now. So Carla, over to you for more probing questions. I always have questions.
ROBBINS: I always have questions. So Susan, you know a lot about the way Washington works. Let's pitch forward a little bit. Vaccine has developed one hopes sooner rather than later. How much preparation is being made on distribution and on rational distribution? And who's going to make that decision?
DENTZER: Well, really important questions. As we know, what is happening now is the government is signing contracts, there was just one announced yesterday with Pfizer, to commit to buying a large numbers of vaccines, even before we have a proven vaccine, and it is doing that with more than one company. So companies can already start producing the vaccine even before it is approved and makes it all the way through phase three clinical trials. It's because we don't have time, right? I mean, it's better at this point to create the capacity, just building the capacity to produce the vaccines is important. Getting the glass vials, we don't have enough glass vials in the world right now to produce the adequate numbers of vaccines. So, gearing up all of that production capacity becomes really, really important.
Then we have results out of some of the phase three trials, which are already underway. If we have those by early fall, it is theoretically possible that you could get some initial so called emergency authorizations out of the FDA that would essentially say we're tentatively approving these vaccines, and then you will already have a lot of them produced and then able to be distributed. On the question of distribution, there's been a newly appointed panel under the National Academy of Sciences to look at this issue. CDC basically came to the national academies and said, tell us how to figure this out, right? Because it's an extremely important set of issues to figure out, you know, because we're not going to get all the vaccine doses that we need available right away, it's going to just be a drop in the bucket at the outset relative to the need.
So figuring out how to roll the vaccines out who gets them first, is it high risk elderly people in nursing homes? Are we going to prioritize those people over, for example, schoolchildren, right, so that we can reopen schools again or universities so we can get universities open again or restaurants so they can open up again? I mean some really, really difficult issues. They will be made less difficult if we have huge volumes of vaccines, or if we have more than one vaccine. And it's theoretically possible that we'll have a couple or a few vaccines, but then even figuring that out on the basis of clinical trials, which, in the in the best of all worlds, we will have tested these vaccines on maybe 30,000 individuals, maybe 50, maybe 60. Deciding on that basis, what vaccines we think are going to work for which parts of the population is also going to be very complicated. So all of this has to be somehow figured out over the next say six months, so that we can come up with some kind of a rational plan. And it will be one of the hardest things I think from a public health standpoint that this country has ever had to do.
ROBBINS: But it's not just a public health issue. It's also a political issue. And it's also a question of who's in charge. When you look at sort of the political struggle that's gone on, you know, even who gets to brief at the White House and we trust the CDC. Ultimately, who owns the vaccine and who gets to decide who benefits here?
DENTZER: Well, for these agreements that have been struck by the federal government, in essence, the federal government owns that vaccine, right? And some of the manufacturers have said, when that price when that transaction takes place, they're not expecting a red cent more. Some have said no, we're going to take a lot of the government money to develop this we're going to see some advanced purchase commitments and we're going to strike those regions, but we're going to reserve the right to continue to sell the vaccine on the outside. So we'll see some variation I'm pretty sure in those arrangements as well.
For the as best as I can tell, from reading the detail that Pfizer and MIH have put out and HHS to put out, the government is going to own every dose of the Pfizer vaccine that has it has committed to produce in this certain timeframe. So that means if there is a government decision about how to allocate that, that will be followed. But that's a big if, right? If there's going to be a plan. Now, as we have seen, there hasn't been a top down government plan on anything in this whole arrangement. So what emerges as a top down government plan? I honestly don't know. It could be that what will happen is the government will just say, we're just going to divide this on a population basis. We're going to ship it out to the states, certain doses, for whatever your population is. We're going to send you enough to vaccinate 3% of your population and you figure it out, states.
I think if I had to bet, I'd say that is probably, you know, it depends on who of course, is making that decision. What administration and what is the timeline, but if it were today, I would say, I would bet that's how they will do it. They'll just allocate them to the states on a percentage population basis and let the states figure it out. But who knows, this is truly uncharted territory.
ROBBINS: This is the Council on Foreign Relations. Does anybody have a better idea internationally about how to distribute this vaccine?
DENTZER: No. It's a huge issue because obviously the rich countries are the countries that are in a position to put up the money for these kinds of arrangements, these major advance purchasing commitments. There is a movement now to try to structure that on behalf of poor countries. But it's not particularly far along. And it's not clear what how big the pool is ultimately going to be that is set aside to buy these vaccines on behalf of poorer countries. That's another for people who are interested in the global health aspects of that, that is a huge issue that we're just all gonna have to keep watching.
ROBBINS: I see we have one final question, Irina, from Frank Zufall. Less dependency on ventilators, what have hospitals, medical personnel learned about addressing COVID-19 over the last 13 months, have we become more effective in treating patients?
DENTZER: Yes is the word. And that's, you know, if you want to look at any silver linings in this, there is just incredibly rapid learning that went on at the clinical level and very rapid dissemination of the learning that went on at the clinical level. So, again, back to ventilators. As many of you will know, what was clearly showing up in a lot of patients is that their lung function deteriorated very, very, very rapidly. And there's a measure known as oxygen saturation and people would come in with a slightly below normal level of oxygen saturation in the blood and it would deteriorate by 50%, within an hour, just extremely suddenly. And early on people said, holy god, what do we do about this? And so the impulse was get somebody on a ventilator as quickly as possible.
In retrospect, it looks like, as people understood that this deterioration that could occur, patients were first of all watched a little bit even more closely, you didn't just assume that if somebody was doing well in one hour that you'd come back an hour later, and they still be in that same situation. And then they were also put on alternative forms of oxygen support, CPAP machines, another kind of machine known as a BiPAP machine. Even things like proning, which is basically, you take a patient and you turn the patient over on his or her stomach, because that just enabled better oxygen exchange in the lungs. And even just doing that it was learned would support the breathing capabilities of a lot of patients.
So for those of you who know much about this, what we know is if you put patients on ventilators very frequently they don't come off them, right? They die, right? Because it's a pretty extreme measure to undertake. So if you can basically keep from doing that and do other things to support the breathing of patients in the interim, that really helps. And then of course, we've been able to add things like remdesivir, dexamethasone, etc, other treatments that have helped. So there's been a lot of progress. And in the end, it happened very quickly. It could have happened even faster and we would have saved more lives but thank god at least it finally occurred and it's not over. We're just continuing to learn more and more and use more and more tools to help preserve people's lives.
ROBBINS: Well, a little bit of good news there. We've so appreciate your doing this was really fabulous. Lots of really good stories. Irina, I will turn it back to you. Thank you so much.
FASKIANOS: Fantastic. Thank you both Carla and Susan Dentzer, and that you can follow Carla on Twitter @Robbinscarla and Susan at @Susandentzer. And again, we will circulate these resources along with the video and transcript of this webinar. So again, please come to us CFR.org., ThinkGlobalHealth.org, and ForeignAffairs.com, for the latest developments and analysis on the COVID-19 pandemic, and share your suggestions and feedback for future CFR Local Journalist webinars by sending us an email to [email protected]. And I hope you all stay safe and well. So thank you again.
STAFF: This concludes