The 21st Century Renaissance: A New Healthcare in the United States (Part 8)

The 21st Century Renaissance: A New Healthcare in the United States (Part 8)

Can Physicians Recover Post-COVID 19?

Today, it seems that most of the headlines in healthcare are extremely bleak; overall, the financial health of most physicians show they are in bad shape and getting worse. In previous blogs, we noted the primary reason is the dependence on an outdated, 20th Century model, of both patient care (we will call it analog based) and payment built around a Fee-for-Service (FFS), or encounter-based, practice of medicine. In this model, the more often a doctor sees a patient effectively determines what can be billed; therefore, the revenue can be generated through the practice.

Let’s understand that “a practice” is also a business. The provider needs offices, staff and supplies to provide that care, and the physician also has their own financial needs from student loans to their own personal finances. As with any successful business, a physician practice or provider must have more revenue than their cost to operate in order to survive. A second area challenging providers is technology, both from a use standpoint, as well as a cost standpoint.  Technology can be costly! Without consistent and efficient use, patient care and billing will suffer.

Where is the good news?

As we write this blog, we are faced with three (3) very interesting headlines.

  1. Humana® posts $1.8B in Q2 profit as insurers continue to show strong financial performance amid COVID-19: 94.5% increase year-over-year, Humana said.


  1. CVS Health® raises full year guidance as Q2 profits soar amid COVID-19 response


  1. Telehealth leader Teladoc® to buy Livongo® in $18.5B deal

What is the correlation?

The first are the financial results from Humana (HUM); a company I am very familiar with and worked with for nearly two (2) decades. They reported an amazing financial quarter, for what many on Wall Street are labeling, the “The Covid Quarter.” Why would Humana see such amazing financial results? The heart of Humana is that they’re an insurance company, and its biggest “customers” (those that actually pay them) are Federal and State governments. Their premiums for coverage are paid, regardless of COVID or any pandemic or other disaster. The second reason is that with the lock-down, and hesitation by a material number of their members to stay at home, they have had dramatically lowered their “Medical Benefit” cost. Some expect a boomerang in 2021 however, we don’t believe it. A contributing factor to the second part is that Humana owns and operates hundreds of medical centers and employs many physicians – the move to Telecare has worked in their favor in a major way!

Today, CVS has continued to adapt with the evolution of Caremark, their core pharmacy benefit manager (PBM), Aetna and their core of physical facilities; collectively, these are the types of modern companies we will need in the 21st Century.

From the article listed above:

CVS Health’s CEO Merlo touts “acceleration” in company’s healthcare delivery model as profits soar.

The health giant that’s part drug store chain, part pharmacy benefit manager and health insurer has seen major jumps in virtual care and telemedicine offerings, as well as the addition of COVID-19 testing in the community and for businesses, even as it continues to ramp up its HealthHUBs across the country.

The third example is Teladoc and Livongo:

The deal would combine one of the leaders in the telehealth market with a growing digital health firm that targets chronic disease management. In a release, the companies said the combination represents a “transformational opportunity to improve the delivery, access and experience of healthcare for consumers around the world.”

The lines between in-office service and remote care have been blurred by the nation’s response to the pandemic, and the need for many people to have contact with their physician(s). We now believe that most healthcare, surely at the provider level and even at the hospital level, have become outdated legacy systems. Computers patching the hardware and software will not work, and this is why we remain confident that a new healthcare delivery model is emerging today.

Doctors will only survive if, and when, they realize that the outdated business model of the 20th century will not work.  We have ‘crossed the Rubicon’ and we cannot return to a pre-Covid healthcare system.

That new world we live in today is a mix of managed care, cutting edge technology and it is entirely a new physical experience that is only now emerging. As we have noted many times before, some companies such as Walmart (WMT) are seeing it however, most are not and will be extinct rather soon if they do not adapt.

-Noel J. Guillama, President