"We as a nation will potentially reassess the incredible number of regulations that stifle innovation and greatly impede our ability to respond to crises," says nationally recognized health economics expert and Professor of Economics Tony LoSasso.As the COVID-19 pandemic continues to upend the economy and drastically impact the lives of millions of Americans, the U.S. health care industry has been placed under a microscope. Whether it’s optimizing the supply of personal protective equipment (PPE) for health care workers or rethinking telemedicine, COVID-19 has had significant implications for the business of health care.
In this Q&A, nationally recognized health economics expert
Tony LoSasso explores how these issues will continue to play out. LoSasso joined the Driehaus College of Business in fall 2019 as a professor of economics and Driehaus Fellow. A Double Demon alumnus, LoSasso researches how health insurance benefit design affects healthcare use and, ultimately, health.
Professor of Economics and Driehaus Fellow Anthony LoSasso. | Photo by Kathy Hillegonds
“My research has important implications for how government regulations can degrade or improve the function of insurance markets,” he says. LoSasso is also working with the Kellstadt Graduate School of Business to soon launch a DePaul MBA concentration in Healthcare Analytics, which is making its way through the faculty approval processes. The four-course concentration will prepare business graduate students to work in the health insurance industry, consulting sector, and government.
In general, how do you think this pandemic is going to impact the health care industry?
In the short term, it has been enormously disruptive. There have been massive postponements of elective procedures, which has cost physicians and hospitals hundreds of millions of dollars. While many of these will simply be done in the future, others will never happen for a variety of reasons. Weaker institutions will be pushed to the brink and some will close.
At the same time, there are a few positives. Infectious disease preparedness will be the watchwords for years to come. Resiliency in supply chains will also be a first-order priority. We as a nation will potentially reassess the incredible number of regulations that stifle innovation and greatly impede our ability to respond to crises. To name a few: “certificate of need regulations” that give competitors a veto over building or expanding health care institutions. Policymakers would be smart to eliminate these laws nationwide. Scope of practice laws that limit the ability of non-physician providers to perform and bill for less urgent health care procedures has now been revealed to be entirely arbitrary and limiting our ability to respond when the healthcare system is stressed. Such restrictions should be carefully examined and lifted when the benefits are observed to outweigh the largely hypothetical harms.
The crushing needs for both therapeutic innovations to treat COVID-19 and vaccine development will require not just massive private and public investment, but will also require flexibility and speed from the Food and Drug Administration (FDA). The urgency implies that there needs to be zero tolerance for bureaucratic inefficiencies in both government and industry. And we know that private industry is generally much faster to adapt than government. Arguably the most difficult issue society will need to confront will be privacy restrictions. “Contact tracing” is the buzzword now, but what that actually means and how it will be operationalized remains to be seen. Health care providers will need to adapt to new demands for what has been known as protected health information (PHI). Dealing with privacy issues while still being responsive to the need to trace infection risk will be an enormous issue for health care providers going forward.
The outbreak of coronavirus has led to an increase in telemedicine use as never seen before. How do you think the industry will adopt telemedicine in the long-term?
Sometimes, acceptance of innovation needs a push. I think that’s the case with telemedicine. The technology and the idea are decades old, but it’s been extremely slow to take hold. I think that will change going forward. It’s obviously not right for many “hands-on” services, but for many routine provider check-ins and for patients for whom it is costly to get to a provider’s office, it’s ideal.
The biggest barrier to making telemedicine a common practice heretofore has been payment policy. I think there will be a huge push to rectify that going forward. There is an opportunity for the federal government to lead in this space by establishing payment policies for Medicare, the publicly funded insurance program for the elderly.
There is a lot of political tension related to the scarcity of personal protective equipment and medical equipment, and there has been a bidding war among states. Do you think this will financially impact hospitals in the long run at all?
Scarcity leads to price increases just as surely as water flows downhill. But economics teaches us that price increases serve as an important market signal to producers for where demand is high—this is a very useful function of markets. It’s a feature, not a bug!
Nothing will spur producers more than the prospect of profits. Neither government mandates nor altruism can match it. There will be costs to this in the short run. In the long run, all levels of governments and private providers will have strong incentives not to be caught with their proverbial pants down.