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Two years into the global COVID-19 phenomenon, it’s become very clear that patient care organizations in the United States have taken a big financial hit from the pandemic. Not only has caring for COVID-19 patients turned out to be extremely expensive, the pandemic has also scrambled hospital operations in particular, as numerous nurses, physicians, and other clinicians have become infected the by virus, and others, burned out by the many months of stressful, often overtime, labor, have left the field altogether or, in the case of many nurses, quit their existing jobs in order to cash in as traveling nurses, at a time when those nurses are in extreme demand.
As a result, the leaders of some of the patient care organizations that had either not moved very far along on their paths into value-based contracting and care delivery, or not begun the journey at all, have remained semi-frozen, tremulous over the financial risks involved in moving forward into risk-based contracting at a time when their organizational finances were already teetering.
At the same time, the leaders of patient care organizations that had already assumed a great deal of financial risk prior to the spring of 2020 found that their capitated contracts helped save their organizations financially during those difficult months during the first half of 2020, when the federal Centers for Medicare and Medicaid Services (CMS) effectively banned nearly all elective surgical and medical procedures, sending fee-for-service revenues plummeting at hospitals, medical groups, and health systems nationwide. As Stacey Hrountas, CEO of the San Diego-based Sharp Rees-Stealy Medical Group, said in a Nov. 17, 2020 panel discussion during the first day of the APG Colloquium 2020, sponsored by the Los Angeles-based America’s Physician Groups (APG), and held virtually, “Seventy percent of our revenue is prepaid, and, hallelujah, because it saved us during COVID!” Indeed, even as many multispecialty group practices nationwide were crashing financially during the first half of 2020, Sharp Rees-Stealy did just fine, because its capitated contracts prevented its revenues from bottoming out during an exceptionally difficult time for medical groups.
So, what impact has the pandemic had on the forward evolution of value-based contracting, as it’s stretched on now into its third year? Well, the answer is complicated, say all those interviewed for this article, both on the health plan and provider sides. But things are moving forward when it comes to alternative payment models (APMs), accountable care organizations (ACOs), and other types of payment vehicles.