MedArrive CEO Dan Trigub

Digital Health

The Current State of Hospital Finances

Although we touch on Kaufman Hall’s National Hospital Flash Reports pretty regularly, the consulting firm recently published a more in-depth update on the current state of hospital finances and it looks like we could be in for a rocky 2023.

The main themes are all laid out below, but the full 13-slide deck is a quick skim if you want to take a closer look at any of the highlights.

One of the most noteworthy findings was that employed labor expenses are projected to increase more than all non-labor costs combined by the end of this year.

• Hospital labor expenses are expected to climb $86B from last year’s combined total, while non-labor expenses are looking at a $49B jump due primarily to inflation causing drug and supply costs to remain 20-25% above pre-pandemic levels.

• Contract labor expenses remain nearly 500% higher than in 2019 as the battle for nursing talent continues to pressure margins despite this year’s slowdown.

Kaufman Haul’s optimistic projections for the rest of the year now indicate that hospital margins will be down 37% from pre-pandemic levels, but their pessimistic models point toward a significantly sharper 133% decline.

• The most pessimistic scenarios include COVID-19 variant surges, sustained inflation and expense growth, sicker patients who have delayed care, aggressive payer negotiations, and increased mix of non-commercial payers.

• Half of hospitals reported a negative operating margin in H1 2022, and 53% are expected to be in the red by the end of the year – a pretty bleak picture considering only a third of hospitals saw negative margins prior to the pandemic.

The Takeaway

Hospitals have been feeling the pain of sluggish volumes and climbing expenses since the early days of the pandemic, but they’re now faced with a total lack of foreseeable federal support to help stabilize their deteriorating financials. Unless the situation starts showing signs of improvement, it’s likely that the service cuts and restructuring moves are just getting started.

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The Wire

• Hume AI Scores $3M: Hume AI raised $3M in funding from Northwell Holdings to develop its ML models that capture meaning from speech and nonverbal expression for use in clinical research, patient screening, and accessibility technology. Hume’s tools can detect subtle emotions such as sarcasm or surprise to help providers better understand potential mental health challenges. Northwell Holdings CEO Rich Mulry noted in the announcement that understanding “not just what people say, but how they say it” can have a profound impact on outcomes

• Detecting HF Events With Speech: The other big voice biomarker story of the week came when Cordio Medical presented data at HFS 2022 showing that its speech analysis smartphone app HearO could reliably detect impending heart failure more than three weeks before the event. Researchers had 253 HF patients complete five voice recordings per day for 2 years, allowing HearO to predict about 80% of HF events an average of 22.5 days prior to the events occurring, and significantly outperforming current standards like weight and oxygen saturation (35% & 25%).

• FDA Digital Health Policy Navigator: The FDA’s recently released regulatory guidance just became a lot more digestible after the agency debuted an extremely useful tool called the Digital Health Policy Navigator. The tool can help digital health startups determine whether their product falls under the FDA’s oversight through a relatively painless 7-step process.

• Synapse Study Kickoff: Synapse Medicine is kicking off an interesting implementation study at Brigham and Women’s and Vanderbilt to measure the effectiveness of its medication reconciliation software and clinical decision support solution. The Synapse platform combines real-time drug knowledge with patients’ clinical data to detect potential risks that can lead to adverse drug events. Participants will use the point-of-care tools to analyze drug-related risks and optimize medication appropriateness.

• Penn State Virtual ICU: Penn State Health is bringing its virtual intensive care unit in-house by utilizing CLEW Medical’s cloud-based tele-ICU platform to help its hospitals better manage capacity and provider shortages. The first of its kind to be granted 510(k) clearance, CLEW ICU identifies the patients most likely to deteriorate then streamlines workflows to provide them with timely care, and a new virtual unit of 20 physicians and 10 critical care nurses will provide the tele-ICU with around-the-clock support. 

• Mental Health Crisis Poll: A KFF/CNN Mental Health Survey found that an overwhelming majority of Americans (90%) think the US is experiencing a mental health crisis, especially among young adults. Among 2k respondents, 52% of adults under age 30 felt anxious “always” or “often” (vs. 28% age 30+), 34% rated their mental health as “fair” or “poor” (vs. 19%), and about half of that group said they haven’t been able to get the care they need due to stigma and cost.

• July Telehealth Use: Fair Health’s Monthly Telehealth Regional Tracker showed that national telehealth use rose by 1.9% in July, accounting for 5.3% of total visits (vs. 5.2% in June). The slight increase in July demonstrates relatively stable telehealth use as the pandemic continues to wane, while the top diagnoses, specialty, and procedure code remained the same from June (mental health conditions, social worker, CPT 90837: one-hour psychotherapy).

• Galileo Selects Elation EHR: Virtual primary care provider Galileo is partnering with Elation Health to launch its EHR platform across Galileo’s national network that provides care for thousands of complex and underserved patients. Elation’s API enables Galileo clinicians to build customized applications or automate alerts to help maximize its value-based contracts.

• AI Computing Breakthrough: One of the most exciting AI studies of the year was just published by Google’s DeepMind lab after its AlphaTensor reinforcement learning AI discovered a new matrix multiplication algorithm with the potential to speed up many common computing routines. Although the findings could impact everything from drug discovery to genomics, the authors were most enthusiastic about the fact that the algorithm itself reaches “beyond human intuition” and opens the door to improving other human-designed algorithms.

• CVS Offloads bswift: Francisco Partners is acquiring benefits technology and services company bswift from CVS Health, adding a new logo to its portfolio of over 400 tech investments (which includes Merative, formerly IBM’s Watson Health business). bswift will continue partnering with CVS Health and Aetna to provide health benefits to their employees and clients.

Hyperfine Brings MRI to the ICU

“It completely changes the way we think about MRI imaging.” Take a look at this video interview with Mass General’s Chief of Neurocritical Care to see how clinicians can use Hyperfine’s Swoop Portable MRI to eliminate care disruptions in the ICU by keeping critically ill patients in the unit throughout the neuroimaging process.

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