Hospitals’ new message for patients: Stay home

Hospitals want you to visit them less often.

Empowered by Washington and armed with Covid-inspired health innovations, health executives are seeking to increasingly move care outside of the hospital — despite the seeming risk to their bottom line.

Hospital executives think they can more than make up the revenue by shifting their exam and recovery rooms to patients’ homes. And Congress is urging them on, with legislation in the works to help hospitals expand their at-home offerings and to allow Medicare to continue paying for telehealth after lawmakers first granted temporary permission after Covid struck.

The appeal to lawmakers is potential savings if remote care proves more efficient, but hospitals also see financial advantage.

“It's a real game changer for us” and “one of the silver linings to the pandemic,” John Couris, president and CEO of the Florida Health Sciences Center in Tampa, said of Congress’ support for remote care. "We're all trying to diversify our revenue streams.”

And it’s bipartisan. House legislation that would extend loosened pandemic rules for telehealth and hospital care at home won unanimous approval in the Ways and Means Committee on Wednesday. In the Senate, Marco Rubio (R-Fla.) and Tom Carper (D-Del.) have a bill that would extend the rules permitting government reimbursement of care at home. A Carper aide told POLITICO that the senator plans to soon introduce another measure that would make hospital-at-home offerings permanent.

Hospital leaders believe spinning up new lines of business and making health systems more efficient have the potential to buoy a sector that is still contending with the financial fallout from the pandemic — now without the federal emergency funding that blunted Covid’s impact. The American Hospital Association points to costs rising at the same time the sector operated in the red every month of 2022. Margins have improved since, but not enough for hospital leaders to take comfort in the status quo.

The leaders of the movement to remote care, as one would expect, are the hospitals with the financial wherewithal to pursue it.

That could forebode an even bigger split between the haves and have-nots.

The well-heeled systems are also thinking about how they can sell their innovations, such as proprietary artificial intelligence products, to other hospitals and health care providers.

It all adds up to what could be a major transformation in the way the hospital business works — with implications for patient comfort, quality of care and cost.

Washington is supporting the shift with its own goals in mind. Lawmakers and administration officials are quick to tout their policies to Americans who see remote care as a way to avoid the grueling inpatient experience.

Government leaders are also adding up the potential savings for health programs that have seen costs balloon over the last decade with no signs of stopping.

The hope is that recovering at home will be less expensive than inpatient care. The impact of telehealth on the cost of care is being closely studied by tech companies, providers and government analysts, as it has the potential to reduce expenses but also could lead to more visits, driving up costs.

"The question is, how now do we get some of those things that were tried and demonstrated to work [in the pandemic] extended?” Sen. John Thune (R-S.D.) asked members of the American Hospital Association earlier this year, noting he’s working with colleagues to both extend pandemic programs and make them financially sustainable.

Lawmakers hope remote care will help solve the existential health care problems facing the country: broadening access to treatment while also preserving the financial viability of providers and the government insurers, Medicare and Medicaid, they rely on.

"What we have to do is lift up those innovations and make sure that we have enough flexibility in the system,” Sen. Tina Smith (D-Minn.) said at an event on rural health care last month.

But it’s easy to envision how some providers get left behind in the transition. Small hospitals, often struggling to stay afloat, are shedding services that are deemed too expensive.

Remote care could offer them a lifeline if it makes it easier to reach far-flung patients — the dilemma facing rural hospitals.

Business analysts see the push as a positive development.

“Everybody knows the story here, right? The last couple of years for the sector have been very challenging,” Kevin Holloran, a senior director at Fitch Ratings, said on a call earlier this year about the financial state of nonprofit hospitals, which make up half of the total enrolled in Medicare. “For a lot of people — not everybody, but a lot of people — this is going to be another kind of make-or-break year.“

And for many hospitals, he suggested, the answer to that challenge is clear:

“Transformational change is needed.”

Remote care’s value

The pandemic forced hospitals to innovate, as they sought to keep their beds clear for Covid patients. Congress helped by flooding them with financial aid and by agreeing to pay doctors and hospitals for telehealth for Medicare patients. The Centers for Medicare and Medicaid Services issued rules to allow more care at home. That can run the gamut, from post-surgery observation to obstetrics checkups, behavioral therapy and even care for acute illness.

Adopting remote care early in the pandemic was, for many providers, the only way to continue their services and keep the doors open. For hospitals overrun with Covid patients, the tech offered a way to offload some of the demand — a feature that remains a major selling point to systems seeing demand for some services rebound.

Congress offered supplemental funding for providers amid the unusual revenue cycle. But as the aid dried up and costs continued to rise, systems increasingly saw expanding care away from the hospital as a way to improve their finances.

Projections for the telehealth market suggest continued growth over the coming decade, supported by research that found remote care utilization remained elevated well beyond the early days of the pandemic. And for a number of facilities, the overhead to offer remote care is below that of in-person care, another financial advantage luring providers.

While both the hospitals and Washington like the idea of care at home, they aren’t on the same page about how much the new services are worth.

Hospitals want to charge the high rates inpatients and their insurers pay, even if care has moved to the home or to an outside clinic where it’s less expensive to offer.

Lawmakers are considering imposing site-neutral policies, cutting down hospital rates — wherever services are performed — to lower reimbursements paid to doctors working out of their offices.

Legislation the House passed overwhelmingly in December by Cathy McMorris Rodgers (R-Wash.), chair of the Energy and Commerce Committee, would cut the hospital fees. Hospitals, thus far, have succeeded in lobbying against the measures in the Senate.

They say paltry government reimbursements through Medicare, the health care insurer for elderly people, who are growing as a share of total patients, and Medicaid, the state-federal program for people with low incomes, are a big reason they need to go remote.

“The reimbursement is getting tougher,” said Michael Dowling, president and CEO of Northwell Health, New York’s largest hospital system. “Everybody's trying to figure out how to improve operational efficiency.”

And in that regard, Congress is of one mind. The House Ways and Means Committee on May 8 approved legislation to extend for two more years the pandemic rules that have allowed all Medicare patients to access telehealth.

Two-thirds of senators have co-sponsored pending legislation by Hawaii Democrat Brian Schatz that would make the telehealth rules permanent.

“We do expect it to be done this year,” Rep. Brett Guthrie (R-Ky.), chair of the Energy and Commerce Health Subcommittee, said of extending telehealth access at a recent hospital conference. “The genie's out of the bottle.”

Many lawmakers hope to also include another provision in a year-end health care package: legislation to extend and expand the pandemic program allowing hospital care at home. The Ways and Means bill included a five-year extension and legislation is pending before the Senate Finance Committee. A new, more expansive version is expected in the Senate this month.

Couris touted home-based care as not only more efficient but also higher quality, saying a small study at his organization found similar patients had significantly lower readmission rates when they were getting care through the hospital-at-home program. His own daughter has gotten hospital care at home.

“The standards are just as high as they are in the hospital because they're registered as a hospital patient,” he said. “We have to follow a set of hospital rules.”

The high-tech future

Rapid developments in technology are driving hospitals’ transition.

During the pandemic, many health systems invested in the networks, sensors and infrastructure to support remote care, whether privacy law-compliant check-ins or new staffing models for patients getting hospital care at home.

Sensors that enable staff to monitor patients remotely are less intrusive than they once were, meaning more patients comply with wearing them. That enables care providers to watch over someone from afar, Jiang Li, CEO of remote care company Vivalink, said.

“Almost everybody's thinking about how to make adjustments to embrace new technology,” Li said. “This trend definitely will continue — it will continue on a global scale, not just the U.S.”

Most providers have increased their spending on technology in recent years, including an emphasis on telehealth and remote care, according to a 2023 report.

Health regulators are taking note — and engaging in the conversation.

Dr. Meena Seshamani, deputy administrator and director of the Centers for Medicare and Medicaid Services, said in a statement that the agency “continually assesses opportunities" to better the speed and reliability of care, including via technology. That assessment includes discussions “with the medical community and patient advocates on an ongoing basis.”

Some large hospitals are essentially opening tech consulting operations, selling the systems they’ve built in-house, or their staff’s expertise.

“You're finding more health systems say: ‘What else could we do that is not necessarily wildly profitable but that just covers its own costs plus a little bit so that we can turn around and do other things?’” said Niyum Gandhi, chief financial officer and treasurer at Mass General Brigham.

Mass General, a major Boston hospital system, has done just that. It created an artificial intelligence business, relying on tech industry players, from GE HealthCare to Nvidia, to validate its tools. The health system, like other large health providers, is building its own AI products too, with some seeing opportunities to license them to peers.

That’s not a business plan just anyone can pursue.

In underserved areas, care options are shrinking. Rural hospitals have cut services that they see as unsustainable, even if they’re important to patients in the area.

Congress, in an effort to preserve care in rural areas, created a new Medicare payment designation for rural hospitals that would allow facilities to eliminate inpatient services to keep emergency rooms open.

And some doctors, in both small and large systems, are skeptical that technology is a panacea. Even where state-of-the-art tech is available, they worry they won’t be able to examine patients as thoroughly — or at all — when care is remote. Investigations into the use of remote monitoring sometimes suggested it led to substandard care.

But for patients looking for the convenience of the remote care they got during the pandemic — or hospitals who see remote care as a path to financial stability and better care — the future is coming.

“Things are going in the right direction,” Couris said.