THE OUTLOOK FOR HEALTH CARE IN 2023:

What you need to know about the forces reshaping our industry.

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Our Take

How Covid-19 will impact perceptions of health care

15 Minute Read

A chaotic period shifts perspectives

Covid-19 has brought the U.S.'s health care system squarely into the judgmental eye of the American public. Heroic but fallible, the vast tapestry that is our country’s largest industry is more than ever the subject of serious debate from the quarantined dinner table to the White House situation room. With every news story or personal experience, public attitudes ebb and flow.

Amid all of this change, we may ask who is making better impressions, who worse, and what lasting impact might these changes truly have. To understand these shifts in public perception, Advisory Board has analyzed public polling and media coverage, spoken with experts and stakeholders across the industry, and considered a range of possible developments across the coming months.

 

The pre-Covid-19 reality

The U.S. health care system has long earned a subpar public reputation. Gallup researchers each year ask a representative sample of Americans how favorably they view different industries. Health care consistently ranks near the bottom. In 2019, it was viewed 23rd most favorably among 25 industries—above only the pharmaceutical industry and the federal government.

Another Gallup poll found in 2019 that 63% of Americans believe the health care industry is “in a state of crisis” or has “major problems” (compared to just 37% who believe it has “minor” or “no problems”). With the exception of a dramatic (and dramatically brief) surge of goodwill right after the terrorist attacks of 9/11, the “state of crisis” or “major problems” camp has been consistently between 60% and 70% ever since at least 1995.

The picture is not entirely bleak, particularly in the specifics. Clinicians— physicians, nurses, and other practitioners who deliver care on the front lines— are clear leaders in public perception. According to the Pew Research Center, 74% of Americans hold a “mostly positive” view of medical doctors, and respondents have rated nurses as “the most trusted profession” for an impressive streak of 18 years.

The pre-Covid reality for the health care industry is that it was pilloried in the aggregate but respected and appreciated in individual interactions. During the present crisis, we should examine not only overall industry perceptions, but the nuances of credit, blame, appreciation, and disillusionment that may attach to specific stakeholders.

 

Our take

Covid-19 has disrupted the life of nearly every American. Surveys indicate 84% of Americans say their lives have been at least somewhat impacted by Covid-19. There’s little doubt that, as millions worry about their health and scrutinize the state of the U.S. health care system, many are reforming their opinions about it.

Likely net changes in public perception due to Covid-19, by industry

Health systems
Neutral impact

Hospitals have been recognized as vital community assets and received public accolades for preparing for a surge of Covid-19 cases. According to Gallup, 92% of people approve of how hospitals have handled the crisis, and 65% of people have a more positive view of them because of their response. However, staff furloughs, stories of clinicians fighting for personal protective equipment (PPE), and concerns about hospital safety moving forward all threaten to temper that enthusiasm. Hospitals’ ability to weather subsequent waves of Covid-19 while establishing and maintaining a safe environment for normal procedures and other care will prove critical. Especially important will be hospitals’ skill in communicating their success in these matters—bad news tends to get the headlines.

Clinicians
Positive impact

Clinicians have experienced the most significant boost in public perception of any industry segment thus far: 68% of those polled say they have a more positive view of individual providers because of how they’ve reacted to Covid-19. But nothing is clear-cut. Some patients blame physicians for delays in testing, strict end-of-life visitation policies, or uncomfortably early discharge home. Still, in aggregate, Advisory Board expects that clinicians will emerge from the pandemic with a significant amount of goodwill.

Health insurers
Neutral to positive impact

Nearly half of Americans say that Covid-19 has changed their perception of health insurers—and usually for the better. Decisions to waive deductibles and other cost-sharing for Covid-19 treatment and testing have earned some degree of praise. Whether this early uptick in perception of a deeply unpopular industry persists will depend on what comes next. If patients face high bills for out-of-network treatment, unexpected costs for telemedicine visits, or limited coverage timelines, familiar frustrations are likely to reemerge. On the other hand, rebate checks paid to beneficiaries by insurers not meeting medical loss ratio requirements will be welcome relief for economically struggling families. The wild card will be coverage decisions made by beleaguered employers. Who will get the blame when an employer decides that health benefits are too expensive to maintain?

Pharmaceutical companies
Positive impact

Barring serious missteps, Advisory Board expects a slightly positive change in the reputation of the pharmaceutical industry. As more laypeople begin to recognize the amount of literal trial and error that goes into the development of a vaccine or drug, pharma’s long-standing argument that drug prices are driven by heavy R&D costs may gain sway. The drug companies that first develop an effective vaccine or an effective treatment for Covid-19 will enjoy a much-deserved day in the sun. But as with insurers, the follow-up matters most. As long as those companies continues to publicize efforts to ramp up manufacturing, ensure fair pricing, and forgo patent exclusivity, they will get credit for accelerating our return to normalcy. If, on the other hand, a drug is introduced without proper testing and proves to be ineffective or even dangerous—or if manufacturing delays, distribution mix-ups, or unaffordable pricing constrain broad access—pharmaceutical companies may well become the villains.

Post-acute care providers
Negative impact

Despite being chronically underfunded and under-resourced, post-acute care providers are likely to attract more blame and reputational damage than other industry segments, given how many outbreaks have occurred in nursing homes and other such settings. Should this crisis saddle nursing homes with a reputation as unsafe places for loved ones, it could accelerate the shift of consumer and investor interest toward home health options. On the other hand, if traditional post-acute facilities can make the case that underfunding, not mismanagement, was the true root cause, incumbents could find success in lobbying for more favorable reimbursements.

 

Laboratory services
Negative impact

Other than the occasional bill for a blood test, few Americans had exposure to the lab industry before this crisis. But as Covid-19 testing has assumed such a central role in both the public health response and the popular debate, the value of labs has become more broadly clear—as have various failings in the system. While the testing chain is more than just lab services, insufficient testing capacity and slow turnaround times have been major impediments, and have shone a spotlight on a little-known segment of the health care industry.

 

Device manufacturers and other suppliers
Negative to neutral impact

The public has grown even more attuned to the indispensable value of medical devices such as ventilators and supplies such as N95 masks and other PPE. Shortages have laid bare the fragility of just-in-time inventory management systems and the near-total dependence on foreign suppliers for some products. To the expert eye, it is clear that the blame for depleted stockpiles and supply chain bottlenecks is shared by many. But a nation compelled to sew masks at home is not one likely to view incumbent suppliers through rose-colored glasses. Incumbents run a risk that even successful efforts to expand production will garner less public praise than feel-good stories of a distillery making a few bottles of hand sanitizer or a grandmother sewing a mask for her grandson on the front lines.

 

 

Factors that could change public perception

1: Hospitals and health systems

Factors that could help perception

  • Narrative of hospitals stepping up to provide beds and PPE in the face of inadequate government action
  • Suspending billings/collections related to Covid-19
  • Investing in financial navigation for Covid-19 patients
  • Executives taking pay cuts
  • Resuming scheduled procedures in a way that emphasizes patient safety and medical need
  • Quickly ramping up capacity in the face of continued outbreaks or a second wave of infections

Factors that could hurt perception

  • Layoffs/furloughs (particularly by systems who are perceived as well-resourced and rural hospitals where the virus is less visible)
  • Repurposing staff in a way that can upset clinicians or hamper patient experience
  • Penalizing staff for wearing non-standard PPE or not ensuring safety
  • Suboptimal financial experience/surprise billing for Covid-19 patients
  • Continuing aggressive debt collection
  • Perception that the hospital is unsafe
  • Perception that procedure delays hurt long-term care
  • Preventing staff from speaking to media outlets

2: Clinicians

Factors that could help perception

  • Medical volunteers continuing to step up in hard-hit areas
  • Media highlighting the plight of clinicians
  • Hero narrative for doctors, nurses and health workers
  • National and international appreciation events
  • Public events raising money for physician and nursing groups
  • Public understanding of the infection risk for clinicians
  • Large portions of the workforce being infected

Factors that could hurt perception

  • Patients blaming clinicians for inability to get tested or treated
  • Possible decline in patient relationship over telehealth
  • Clinicians being blamed for Covid-19 deaths
  • PCPs closing down due to financial problems and leaving patients without a primary provider
  • Efforts to get hazard pay at cashstrapped hospitals
  • Patients unable to follow treatment plans due to Covid-19 infection risk

3: Health insurers

Factors that could help perception

  • Encouraging employers (or state governments) to standardize approaches to waiving cost-sharing
  • Removing prior authorizations for Covid-19 patients
  • Notifying members when testing is available and where; providing free masks, gloves, or hand sanitizer
  • Extending premium deadlines or providing premium reductions
  • Making telehealth visits seamless
  • Advancing payments to providers
  • Promoting Medicaid coverage, perhaps with competitors
  • Covering services like antibody tests
  • Helping contact tracing efforts
  • Paying out 2020 rebates promptly

Factors that could hurt perception

  • Seeking government funds despite reporting strong financial performance
  • Layoffs of large amounts of staff
  • Huge bills for out-of-network Covid-19 treatment
  • Slow approval for delayed elective procedures, particularly for those with acute medical need
  • Future premium increases
  • Reinsurance gouging—off-loading costs onto employers
  • Benefit restrictions/pushing cost sharing in future plan designs
  • Being slow to pay out rebates

4: Pharma

Factors that could help perception

  • Developing a safe vaccine and forgoing patent exclusivity
  • Quick rollout of a reasonably priced Covid-19 treatment, especially equitably across the country
  • Increasing access and lowering costs for drugs not related to Covid-19 (e.g., insulin)
  • Information-sharing/collaborating across organizations and academia to advance research
  • Deploying clinically trained staff to help with frontline response

Factors that could hurt perception

  • Fumbling vaccine trials, development or rollout
  • Bad side effects of vaccine or treatment due to rushed approval
  • Price gouging on a vaccine or treatments
  • Efficacy of a treatment is limited or lower than public expectation
  • Shortages of existing drugs being used for Covid-19 symptom management (e.g., asthma drugs, painkillers)
  • Delays in new advancements due to postponement of clinical trials
  • Leaders overpromising the vaccine development timeline

5: Post-acute care providers

Factors that could help perception

  • Stepping up safety measures
  • Accurately reporting infection events
  • Becoming a trusted site to free up acute care beds
  • Following mandated infection control procedures and doing them well
  • Getting staff the PPE that they need

Factors that could hurt perception

  • Failing to control infections
  • Not adopting virtual ways for residents to see loved ones
  • Failing to communicate openly with family members
  • High levels of staff infection
  • Admitting (or not admitting) Covid-19 patients

6: Labs

Factors that could help perception

  • Private labs stepping up after early CDC delays
  • Ramping up testing capacity nationwide
  • Accurately communicating results quickly and cutting down on backlogs
  • Creativity in increasing throughput
  • Forming partnerships with other labs to even out demand and supply
  • Advancing accurate at-home tests
  • Serving an essential role in identifying local outbreaks and informing the government

Factors that could hurt perception

  • High false negative/positive rates
  • Ramping up tests too quickly before accuracy is established
  • High costs for non-Covid-19 testing for potential Covid-19 patients
  • Long turnaround times, especially among large labs and without clear communication to clients
  • Large labs accepting more specimens despite being full and not shifting demand to smaller labs
  • Use of inaccurate antibody tests

7: Device and suppliers

Factors that could help perception

  • Expanded manufacturing of vital devices like ventilators
  • Help given to providers about creative ways to sterilize products for re-use
  • Transparency about potential upcoming shortages
  • Sharing intellectual property for the creation of devices both inside and outside industry
  • Being creative and flexible about sourcing (e.g., 3D printing parts)

Factors that could hurt perception

  • Not having diversified sourcing and relying on international vendors
  • Re-use or flexible sourcing backfiring due to safety concerns
  • Pricing equipment/ devices too highly for cash-strapped hospitals
  • Selling devices to countries other than the U.S.
  • Holding firm on volume guarantees/ existing relationships after crisis
 

Four key implications

Considering the factors that could help or hurt public perception, and thinking about changes to public perception writ large, we see four key implications for stakeholders across the industry.

  • Implication

    Necessary actions will sometimes lead to negative perception

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  • Implication

    Not all credit or blame will accrue fairly

    Read More Collapse
  • Implication

    Goodwill will prove fleeting without action to preserve it

    Read More Collapse
  • Implication

    The values of incumbency and disruption will both be tested

    Read More Collapse
 

Parting thoughts

The jury is still out on both how public perception of key players in the industry may change, as well as what the consequences may be for those players. Consider the following questions, and what you can do at your organization.

  1. What are the things that your organization can control that would improve or undermine public perception of your organization amid Covid-19?
  2. How much does public perception matter in terms of your business and regulatory strategy?
  3. What are your biggest public perception risks? What are your biggest public perception opportunities?
  4. For things that you are not in control of, how can your organization minimize the fallout of a potential downturn in public perception?
  5. How can you track changes to public perception? 

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