Lessons from Executive War College 2022

May 3, 2022

By: Mick Raich, President, RCM Consulting, Vachette and Lighthouse Lab Services

Every year the sky is falling, at least that’s how it seems. I have been attending Executive War College since the 90s and thank God we’ve been able to change and adapt with the dramas of running a healthcare business. These are things I learned from presentations by Robert Michel, editor-in-chief of the Dark Report, and others: 

  • Primary care will be delivered via retail spaces in the future. Walmart, Walgreens, Rite-Aid, Target, Kroger, Albertsons, Safe-way and others are all looking to go into this space. They will offer primary care and ancillary services, such as lab and radiology. These sites have over 33,000 brick and mortar stores already. Walmart will have 4,000 wellness clinics by 2029. CVS has 1,000 sites planned. This will make a difference going forward. What about the recent trend for health systems buying primary care providers?  Will we have health systems competing with retail for primary care?  Who does the billing for these services?  Who will provide the infrastructure for these service providers? 
  • Millennials will make up 45% of the work force by 2025. They are going to change how health care is delivered. This demographic wants the healthcare delivered digitally. They will have a telehealth visit and then get their blood work via something like the Labfly App that allows them to receive their results digitally. Their scripts will be delivered versus them going to get them. Driven by COVID visits, telehealth usage went up from 8% of visits in December 2019 to 32% of visits in June of 2020.  Both Aetna and Humana have distinct telehealth coverage in some of the plans they offer.
  • Large firms will build strong self-insured plans. Both Amazon and Walmart have plans to build specific healthcare platforms for their employees. Amazon has experience in this after they built their own COVID lab. 
  • Digital pathology is here to stay. Many firms are spending big money to get this into process.  Sonic has noted they want to be fully digital by the end of 2023. CMS memorandum (QSO-20-21-CLIA) notes that CMS will exercise “enforcement discretion to ensure pathologists can review pathology slide remotely.” Will this continue to be relaxed after the end of the public health emergency (PHE)?
  • The pathology shortage is happening. Pathology match has dropped by 19% since 2017. Tie this to an aging population and the great retirement, and we have the perfect storm. Will pathology be able to use this shortage to reverse negative payment trends with managed care and hospitals? How will pathology salaries raise as they become scarcer?
  • New COVID labs are scrambling. With 25,000 new labs last year and many more in 2020, there is a plethora of labs all vying for the same specimen pool. All the labs are trying to shift testing and perform tests on a limited number of specimens available in a given demographic. Which labs will survive and what will be the determining characteristics of the survivors? 
  • Reimbursements are not going up. The next round Protecting Access to Medicare Act (PAMA) data reporting is predicted to result in a 15% pay cut for many CLFS tests in both 2023 and 2024. This could thin the herd even more. (What this means is labs which have lower costs, aka better buying power, may survive. Think really big labs.)
  • Inflation is really tough on healthcare providers. Why? They have a fixed payment amount.    Employee costs, equipment costs, rent, electric all are going up, but unlike other industries, healthcare providers have a set payment rate. They cannot raise their rates to keep their margin strong. Imagine all your costs go up 15% due to inflation, and yet you’re looking at a 15% cut from PAMA? Pathology is not immune to this either. They are looking at a 9% pay cut next year and the cost for hiring a new pathologist is 20% higher than it was three years ago. 
  • The Eliminating Kickbacks in Recovery Act (EKRA) is still clear as mud. I sat in on several EKRA presentations and the bottom line is do not pay your salespeople based on volume, profit, case volume … maybe. There seem to be two court cases pertaining to this issue that conflict with each other. The letter of the law is even unclear. Simple takeaway: don’t pay your reps for patients, specimens, etc. Prediction? There will be a precedent setting case in the next 12 months based on greedy, non-compliant and unscrupulous COVID billing. 
  • Change is the only constant. It is always amazing to think about the changes I have seen over the years. The number of companies that have gone silent is in the hundreds. There are also a solid group of great companies I have seen for years. Good businesspeople find a way to handle change. The cream rises to the top. I see the same thing with the EWC attendees. There are a core group of attendees who I have regularly seen over the past 20 years. Many have changed jobs, but they keep providing value no matter where they go.

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