Listener Mailbag: Your COVID-19 Questions Answered
Season 1: Episode 57
July 21, 2020
Will this be the end of fee-for-service? How should we price a COVID vaccine? Bapu Jena and Sayeh Nikpay answer audience questions about the pandemic.
Listen to the full episode below or scroll down for the transcript and more information.
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Dan Gorenstein: I can hear you, can you hear me?
Bapu Jena: Can you hear me?
DG: Today on the podcast, we’re bringing you excerpts of a live zoomcast we did in mid-July. The audio does sound a little different, and a couple of times, we had some serious technical difficulties.
Overall, it was a great conversation though, as it always is with our two resident Pod-fessors, Vanderbilt professor Sayeh Nikpay and Harvard professor Bapu Jena. They answered audience questions about the future of health care post COVID, and talked about what their kids are watching on Netflix.
From the Annenberg Studio at the University of Pennsylvania, I’m Dan Gorenstein, and this is Tradeoffs.
DG: Welcome to tonight’s event, this is a community affair tonight everybody, kind of like community theater, but Zoom-cast style. Jeff, has a question, Sayeh. And he’s curious if you think that the pandemic is going to lead to more alternative payment models away from fee-for-service. And just in case, that’s too jargony for people most providers get paid every time a person walks in the door for a service that’s provided. An alternative payment model is often giving somebody a lump sum payment for a period of time, and then it’s really up to the provider and the patient to kind of work together to live within that budget. Do you think we’re going to see a rise of alternative payment models?
Sayeh Nikpay: So I think a lot of people are questioning the wisdom of a fee-for-service system, because when you stop doing stuff to people, the revenue stops flowing in. It’s been very difficult to move the needle on payment reform in the US. This may be such a catastrophic event that we actually propose something and do something different, whether that’s global budgets or, you know, other mechanisms that basically prop up these hospitals and clinics. So they’re not so directly dependent on every CT they run and MRI they run and, you know, surgery they do.
DG: Talking about the business of healthcare, and now we see lots of hospitals and clinics sort of begging for bailouts. How do you think we will see this, these providers respond in this crisis?
SN: So hospitals are a pretty heterogeneous group. We’ve got some that are really financially strong, they have access to credit, they’re members of a system. But then there’s also some hospitals that are smaller, rural, and they tend to operate on slim margins. So in Tennessee, where I just came from, some hospitals, when those elective procedures started to get turned off, were saying they had two weeks cash to operate their hospital. One thing that may happen is that we may see those hospitals that are in a better financial position acquire some of the struggling hospitals. And the situation is actually even worse when you think about clinics like primary care, which operates on pretty slim margins. We’re going to see a lot of clinics being acquired by hospitals as well.
DG: We’ve got a question from Julie Stone, based on the high likelihood of accelerated mergers and acquisitions within the health system space, how do we establish conditions to optimize value, quality, cost efficiency, balanced with the need for financial stability within the systems themselves? Very fair question Julie, very on point for a show called tradeoffs, thank you for that question. Bapu, can you start?
BJ: I would say that one thing that the FTC could do is, and it’s been discussed before, is set up conditions essentially tying the proposed merger to some measurable quality improvement, that that would be a condition for the merger. Otherwise, they would have to be a divestiture or a penalty or some form of penalty payments, something like that. But if ultimately, patients get better care I think we would want to reward that. And if they don’t, the prices just go up, that’s something that we want to discourage.
SN: I totally agree with that. That’s been an empty promise. This idea that you’re going to deliver better, more integrated care just by merging. I think that alternative payment models could potentially help with this as well, right? Because if hospitals operate under a budget, then there’s a disincentive to do more charge more because you have to efficiently use the resources that you have.
DG: We’ve got a couple of questions in a tab that I did not notice, I apologize for that.
DG: Right around here we lost Bapu to some technical difficulties.
BJ: Well, I can, I can barely hear you.
DG: But we got him back just in time to answer a question on vaccine pricing.
BJ: But if you ask a question, I can try to talk for like ten seconds, and if it sounds horrible, just wave your hand and I’ll stop.
DG: You sound great. So the question, Bapu, I’m going to put the question in. How do you think about pricing a COVID vaccine so it’s both affordable and has incentives for private industry.
BJ: Let’s suppose that we have a manufacturer develop a vaccine, we know it’s incredibly valuable, but we say to the manufacturer, ‘look, we know your vaccine is valuable, but we’re not going to allow you to charge the value of it. You have to charge five hundred dollars or four hundred dollars for the vaccine.’ That might work initially, and the government could do that, but what happens if that vaccine isn’t actually perfect? What incentives and what signals does that send to the subsequent vaccine manufacturers who are thinking about ways to make the vaccine better. Now, if the vaccine is perfect at the outset, the government could do really whatever it wanted to do and the price could be a lot lower than it otherwise would need to be to sustain that future innovation.
DG: I wanna go back to this one question, I’m gonna type it in. What can be done to increase COVID vaccine uptake when a vaccine arrives?
BJ: People focus on the price of the vaccine. I mean, that’s important, obviously, right? But I think what’s actually more important isn’t the price of the vaccine, but it’s the, what you might consider the non-financial costs of getting vaccinated. To put it differently, if we made the vaccine free I think that there’d still be a lot of people who don’t get vaccinated. And it could be because they’re afraid of getting vaccinated. It could be that they think that there’s a small chance of side effects and they want to wait until the next vaccine comes out. I’ve actually heard that from some very educated people. So there’s a lot of just nonfinancial barriers to getting vaccinated. And I think we need to think creatively about what solutions there would look like. It doesn’t have to be the case that you have to go to your doctor to get this vaccine. It shouldn’t be that way. And there’s other things that you could do as well. But the big idea here is thinking creatively about reducing nonfinancial barriers to getting vaccinated.
DG: This is the recording from our July conversation with our favorite pod-fessors, Sayeh Nikpay of Vanderbilt and Harvard’s Bapu Jena, answering more audience questions starting with a medicaid question from John.
DG: The pandemic means lost revenue for states, which means many states are looking to cut Medicaid spending, which leads to people losing coverage and the same loss of revenue for providers you’ve already talked about, it seems like a no brainer to bump up the federal share of Medicaid payments in times like this. Politically, though, this seems like a hot button or controversial issue at the least. Question; is this kind of measure controversial among economists or just politicians?
SN: No, I don’t think that that’s controversial, and in fact, I think that it’s good value because Medicaid tends to have very low spending per beneficiary, low spending growth and we know that states have to balance their budget every single year. And so if the federal government, which can run a deficit, doesn’t do things to assist the states, then those states are going to have to potentially cut benefits, pay providers less, or if they want to maintain things where they are, they’re going to be able to spend less on things like education and other types of state programs that benefit those populations. And we did this policy during the Great Recession as well.
DG: The pandemic has been brutal. Lots of people are hurting. As we talked about before and I think the question really is, In all these stormy skies, I’d like from each of you to share one bright spot that you’ve seen in the data or the evidence coming out of this epidemic. Sayeh, Let’s start with you.
SN: Sure. I think that what we learned from the last recession was that failing to act quickly has really, or did, a lot of damage to the economy and also to vulnerable families, households that don’t make a lot of money. And I think that the response, the policy response has really been informed by the past. Policymakers really learned you have to act now. You have to do it fast. And what people are finding, what researchers are finding, is that that’s tracing through to fewer families falling into poverty because of COVID-19. There’s a question whether these economic policies will be continued throughout the duration of the pandemic. But I think people really learn the lesson from the last recession or the lesson from the last recession that you have to get relief to people quickly.
DG: How about you, Bapu? What’s a bright spot?
BJ: Yeah, I mean, I certainly think we’d all agree that the bright spot is Zoom, Zoom meetings. No, I would say this, there’s a few things so one is, hospitals and provider practices were afraid of transmission so we started moving towards telemedicine. I think a lot of these things are going to persist well after the pandemic is addressed, because we’re going to learn what needs to be done in person and what doesn’t need to be done in person. Hopefully a silver lining in all of this.
DG: I guess I’d really like to hear from both of you, one moment that is COVID related, related to this pandemic, that you think you’ll hold on to for years and years. Bapu, can you start?
BJ: I’ll say that our daughter lost her top two teeth during COVID 19. She has a beautiful smile and she runs around calling herself Toothless, which apparently is a character
BJ: on some dragon show on Netflix. I would say, you know, family. It’s a gift and a curse. You spend a lot of time together. You know, obviously, that could be difficult. But I think, you know, the relationship between my daughter and son has changed a lot in this time, and I’m grateful for that.
DG: How about you, Sayeh?
SN:Oh, I love my husband. I knew that before, and I know it even more now. I have a feminist husband who does, you know, half of everything, sometimes more than half, and gender equity in our household has been just a saving grace through this crazy time.
DG: That’s fantastic.
DG: Thanks so much to Sayeh Nikpay and Bapu Jena for giving us their time and expertise, and to the folks at Lyceum for hosting. I can say that for me, Tradeoffs has been one of my big pandemic bright spots, getting to tell stories, and to connect with all of you.
The audience questions really made this event and we’d like to do it more. So please let us know, what would you like to know about COVID-19, health care disparities or any other policy-related topics? Send them to us on Twitter, we’re @tradeoffspod or you can email us at firstname.lastname@example.org
I’m Dan Gorenstein, this is Tradeoffs.
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Select News, Analyses, Resources:
If we want to beat covid-19, we need to get a lot better at vaccinating people (Bapu Jena; The Washington Post; 07/09/2020)
Who Gets a Vaccine First? U.S. Considers Race in Coronavuris Plans (Megan Twohey; New York Times; 07/9/2020)
Primary Care Practice Finances In The United States Amid The COVID-19 Pandemic (Sanjay Basu, Russell Phillips, Robert Phillips, Lars Peterson, Bruce Landon; Health Affairs; 06/25/2020)
Fee for service is a terrible way to pay for health care. Try a subscription model instead. (Vivian Lee; STAT; 06/12/2020)
Quality competition and hospital mergers – An experiment. (Johann Han, Nadja Kairies-Schwarz, Markus Vomhof; Health Economics; 12/26/2017)
Sayeh Nikpay, PhD, MPH, Assistant Professor, Health Policy, Vanderbilt University
Bapu Jena, MD, PhD, Ruth L. Newhouse Associate Professor of Health Care Policy, Harvard Medical School; Associate Professor of Medicine, Massachusetts General Hospital
The Tradeoffs theme song was composed by Ty Citerman.
Additional thanks to:
Zachary Davis and Lyceum for hosting our live event…
…and our stellar staff!