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Resilience in Health Care Financing

  • 1Geisinger, Danville, Pennsylvania
  • 2Bloomberg School of Public Health, Johns Hopkins University, Baltimore, Maryland

The last several weeks have seen a radical transformation in the delivery of health care in the United States. Physicians have moved millions of in-person office visits to video or telephone. Clinical teams have managed patients with serious illnesses without hospitalization whenever possible. Hospitals have shifted infusion therapy and other services to the home setting.

This abrupt shift, driven by the coronavirus disease 2019 (COVID-19) pandemic, has led to a tremendous loss of revenue. In the US, the predominant mechanism for paying clinicians, hospitals, and other facilities for health care is the fee-for-service model. It is estimated that physicians have lost about 55% of revenue and hospitals are experiencing negative operating margins, significantly affecting cash flow and leading to layoffs and the threat of closure.

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    1 Comment for this article
    Resiliance after the Covid-19 Pandemic
    John Hirshleifer, MD, MPH | None
    This article raises an important issue that preexists the current crisis and will persist well after. The current system of health care financing is rife with market failures which result in widespread corruption and waste. Health care in general, and hospitals in particular, need to be thought of as having the same set of responsibilities as electric utilities. In particular, society requires that, like electrical power, health care must be of uniformly high quality; be available 24/7; and be able to respond to surges and lulls in demand as part of the public health response to a crisis.
    /> Hospitals should not have to rely on "profitable service lines" to subsidize unprofitable but necessary operations. The global budgeting approach used in some ACOs and by the state of Maryland are good steps forward. However, to scale these approaches up will most likely require a national system of health care financing.