These 3 Healthcare Threats Will Do More Damage Than Covid-19

For two years, the Covid-19 pandemic rattled financial markets, dominated news coverage and disrupted daily life in ways most Americans would never have predicted.

But now, in year three, the coronavirus has been downgraded to a persistent yet manageable threat—on par with the flu. Thanks to some familiar medical solutions (vaccines, antiviral meds and public safety measures), three-quarters of Americans say the worst of Covid-19 is behind us.

Now, a new disaster looms. American healthcare stands in direct path of the perfect storm.

Forecasting disaster

Doomsday predictions often prove wrong or overinflated. But, in 2004, a team of hurricane experts at Louisiana State University predicted “a catastrophe [is] right on the horizon.” They were right. Less than a year later, New Orleans was eleven feet under water. Hurricane Katrina killed 1,833 people and left thousands more homeless.

How did the researchers know Katrina was coming? Using data-based computer simulations, they observed a confluence of potentially deadly forces—rising heat, weak levies, high wind speeds, transportation issues and more—that, when combined, would bring about certain destruction.

A similar situation is unfolding in American healthcare.

Decades of price escalation combined with eroding quality and misused technologies have made U.S. healthcare the “most expensive and least effective” system in the developed world. By themselves, these protracted healthcare issues are manageable and might have been tackled over time, using familiar fixes.

However, that was before a trio of “mega forces” arrived that now threaten to create healthcare’s version of the perfect storm. Without urgent and radical solutions, these forces will combine to produce a massive medical disaster—one that will prove far more destructive and costly than Covid-19.

Mega Force 1: Untamed Inflation

In my 2021 book Uncaring, I predicted federal Covid-19 relief efforts, totaling in the trillions, would cause inflation to rise rapidly. However, I failed to anticipate that a series of global events—the war in Ukraine, an international oil shortage and a persistent supply-chain squeeze—would enter the picture and, together, drive U.S. inflation to a 40-year high.

Without these added pressures, our country may have had five to 10 years to fix healthcare’s thorniest problems. Instead, the United States no longer has the luxury of tinkering with payment models or carrying out the long-term transformation of medical practice.

Most public health officials and patients don’t realize that healthcare prices are about to explode. They mistakenly compare today’s soaring consumer prices with the relatively tame rate of healthcare inflation.

But unlike gas, grocery and housing prices, healthcare prices don’t adjust in real time. Instead, the cost of everything from nursing salaries to bandages to Rx medications is set one to two years in advance and holds firm for 12 to 24 months.

A when these contracts come up for renewal this fall, the piper will have to be paid.

Labor in healthcare is essential and increasingly expensive. So are raw materials and supply-chain expenses. The same factors that have driven consumer prices up 8% to 9% are likely to drive up the price of healthcare to unaffordable levels for decades to come.

Starting next year, the majority of U.S. health insurers plan to increase employer premiums 10 to 15% with American families likely to pay an even higher percentage for their share of healthcare costs.

Mega Force 2: The Nursing Shortage

Last Friday, my friend—a surgeon—called at 4 p.m. to cancel dinner plans. He told me one of his patients scheduled for surgery that morning was still waiting for his procedure. Since the patient wasn’t allowed to eat or drink anything since the night before, the doctor didn’t want to cancel the procedure and have to reschedule it.

Surgical delays and cancellations are becoming increasingly common. A driving factor is a growing shortage of nurses.

According to multiple studies, one-third of RNs plan to leave their current roles while many intend to exit the workforce entirely. More than 1 in 4 baby boomer RNs intend to retire within the year.

This dwindling headcount poses a huge problem for patients. Hospitals literally can’t function without enough nurses. State regulators set minimal requirements for RN staffing on medical floors and in critical care units. The nursing shortage is especially pronounced in operating rooms, where experienced nursing is essential for optimal patient care. When hospitals can’t meet these numbers, care gets delayed and patients must be turned away.

You might assume an easily solution would be to expand nursing-school enrollments and increase class sizes. But training nurses is expensive and time-consuming—it takes at least five years to get nursing students ready to deliver bedside care and even longer to train them for the operating room. Further complicating the issue is that it takes a skilled RN to teach nursing students the hands-on techniques of bedside patient care.

And in the context of a nursing shortage, hospital administrations are loath to assign experienced RNs to educational roles rather than care delivery roles—even if the former is the best long-term choice.

With the dual threats of inflation and nursing shortages, hospital administrators feel trapped in lose-lose situations. They know that aggressively raising wages to recruit and retain nurses will drive costs through the roof whereas holding salaries down to address ever higher costs will lead to more nurses quitting.

Without immediate solutions, surgical backlogs will grow and even fully insured patients will find their surgeries delayed or postponed. The result will be progressively poorer outcomes, avoidable complications and even death.

When my friend called me the next day, he said his patient finally underwent surgery at 2 a.m. Fortunately, the case went well. When I asked how the family reacted, he replied, “They’re still irate.”

Mega Force #3: The Burnout Crisis

Even before the pandemic, doctors were reporting burnout rates of 44% or more. Now, after two years of intensifying workplace demands and an endless parade of patient deaths, the emotional trauma on healthcare professionals has reached a boiling point.

The shortage of nurses and support staff, combined with cost-cutting efforts from insurers and hospital administrators have only fueled the discontent.

Doctors, who increasingly reject the word “burnout,” label the problem “moral injury,” a pain that comes from being unable to provide excellent medical care. Physicians say hospital administrators and insurance company executives are more concerned with profits than patients. Furthermore, doctors feel they don’t get the respect and appreciation they deserve for all their hard work.

As a result, dissatisfied physicians are turning to private equity firms for better compensation and greater control over their day-to-day. Private equity leaders recognize this as a great financial opportunity.

The PE approach is to first sign up as many community specialists as possible (with a particular eye on the kinds of doctors that hospitals need to stay in business: anesthesiologists, ER physicians, orthopedists, urologists and cardiologists). Then, having gained market control through consolidation, the PE firms demand significantly higher physician reimbursements from insurers and hospitals (25% or more).

Between 2010 and 2019, private equity’s annual healthcare investments soared from $42 billion to $120 billion. Naturally, the last thing these companies want is to reduce reimbursement. And as burnout continues to intensify, more and more doctors will pursue this route, thus worsening healthcare’s cost crisis.

As happened with Katrina, this vicious combination of forces, all hitting medical practice at once, will inflict massive damage. Double-digit inflation, a major nursing shortage and monopolistic control of physician specialists through private equity—on top of the ongoing healthcare problems that predate Covid-19—will produce a mega disaster unless we take urgent and bold action.

The old solutions (i.e., financial incentives and assigning doctors and nurses ever-larger patient loads) simply won’t work. Try raising nursing salaries or acquiescing to private equity demands and we’ll exacerbate healthcare inflation. Try squeezing compensation or reducing headcount, and we’ll worsen nurse and doctor dissatisfaction and compromise access.

Addressing all three mega forces together will require a radically different approach than in the past. The details of that solution will be the focus of my next article. To receive that story in your inbox, click the “FOLLOW” button at the top of this article.