The Health Group’s Ryan Lindsay: Amazon Will Change How Hospices Do Business

The health care industry at large is rapidly changing, and this is having a ripple effect on hospice providers. Among the factors driving are massive companies not traditionally associated with health care entering the space, such as Amazon (NASDAQ: AMZN) and Walmart (NYSE: WMT). 

Amazon, for example, recently indicated that it was pursuing nationwide expansion of its on-demand health care service that the company tested in Washington state markets. While this venture does not provide hospice care, providers remain likely to see some lasting effects.

Ryan Lindsay, director in the health care consulting firms The Health Group and Gray, Griffith and Mays, recently presented at the National Hospice & Palliative Care Organization’s virtual Leadership and Advocacy Conference on disruption in the larger system that could impact hospice and palliative care providers.

Hospice News caught up with Lindsay to discuss the major factors causing disruption in the industry, including Amazon’s role, mergers and acquisitions, cybersecurity and staffing shortages.

Is disruption always a bad thing?

Absolutely not. Disruption often moves an institution or an industry forward by bringing innovation, technology changes, changes in consumer expectations, and often advances the services that are provided or products being developed.

You’ve cited mergers and acquisitions as a potential disruptor, and hospices have been one of the most active sectors in that regard. How and why does M&A represent a disruption?

A disruption is something that would really change the direction of an organization. A lot of times operation policies and procedures are changed and things of that nature. We see a lot of nonprofits merge with for-profits or convert to for-profits. That is a disruption to that organization. From a parent [company’s] standpoint, it may not be a complete disruption, but the disruption to the smaller entity often is substantial.

There’s no longer a local board of directors that is running that organization. Many times the direction of that organization, the community involvement of that organization, is changing at a local level. From an operational standpoint, you’re still serving the same patients. In many cases, you’re providing the same services. From a mission standpoint, and maybe from a operational standpoint — how you’re going to treat uncompensated patients or charity care, or the way you approach an inpatient unit, for example — would be different than then maybe it was 20 or 30 years ago when many of the hospices were nonprofits, often freestanding and run by a local board of directors.

Ongoing staffing shortages are of course top of mind for many providers. Can you say what you see happening in the next few years if things continue on their current trajectory?

We’re hearing that some of the nursing staffing issues that we’ve seen in the past few years and are still projected, they’re catching up. There’s still going to be some pretty significant physician shortages based on the care model that exists today. Innovation might change that with different players in the industry and with the rise of telehealth.

The telehealth companies and with the entrance of Amazon into that world, it’s possible that we may not need the projected number of nurses and physicians in the future that we currently do. That’s where disruption could be helpful. Innovation and change can help relieve some of the stress of these staffing models that exist right now.

It is a challenge for hospices. They are often at a disadvantage when they’re competing for new nurses or new physicians that are coming out of school that might be interested in joining a facility. They simply in many cases can’t afford to provide the bonuses and some of the benefits that a larger health system can. They’re in a competitive environment, and they may be at a little bit of a disadvantage from a financial perspective.

Hospice and home health are both going to have to adjust to that and possibly do more with less, like many industries have had to do. Using technology and approaching problems with an outside-the-box solution should help some of those organizations get through these tough times and maybe even thrive in a new environment.

Even though these massive companies like Amazon and Walmart that are moving into the health care space don’t necessarily provide hospice, is there a ripple effect on those providers?

I think it’s important to consider all health care industries when you’re looking at the future of hospice or home health. You are part of a large industry, and you need to see where we fit in the long term future. When I think about those companies coming in, it’s probably going to affect consumer expectations.

Consumers are now changing rapidly the way they receive goods and services than they have in the past. Many are using Amazon or ordering goods online, which has had a negative effect on the retail industry. Likewise, you’re starting to see that with grocery stores as well whether groceries are being delivered, or maybe you are picking up your order instead of going into the store. We as a society due to COVID made rapid changes to the way we consume those products and purchase those products. You’re going to see that with health care as well.

Many Americans that used to go to their doctor or clinic on a routine basis have had to change their behavior in the past year due to COVID. Whether it’s government lockdowns or just the fear of going into a health care facility, many of them have chosen to use telehealth or other alternative methods, and of course hospices and home health have been affected by this. They have adapted well to the changes that occurred in the last year. They have proven that they are two players that could really change the way Americans see health care solutions where they used to go to a physician office or a hospital, especially when paired with telehealth.

Patients may be able to see some other alternatives where they can stay at their house, have pharmaceuticals delivered directly to their door, and simply choose the convenience of those services over the traditional methods of health care.

You said in your NHPCO presentation that companies like Amazon are going to change the way hospices do business. Can you add more color on what might change and how hospices will need to adapt?

If you take a look at hospice referrals, this is where you’re going to see a big change in the future. Many hospice referrals come from within a hospital or potentially a skilled nursing facility. That may change in the future. You may see more referrals from a telehealth doctor. You may see patients with chronic conditions that aren’t admitted to a skilled nursing facility or that are being treated by home health as opposed to going to a hospital. Hospices may need to cast a wider net on their referral sources, and they’re going to need to use technology to make sure the patients and their families are able to stay in constant contact with each other and with the physicians and nurses that are treating them.

One thing that many people expected to be a major disrupter this year is the Medicare Advantage carve-in. We are a few months into the program. Do you see it so far as disruptive?

I think the jury’s still out on that one. I think our providers have adapted well and probably have been given enough lead [time] to prepare, but it’s hard to budget the effect of that. That’s something that we’re gonna have to keep in mind in the future. It certainly could lead to additional disruptions as far as the reimbursement models of hospice and home health.

Certainly as we expanded Medicare and Medicaid you’re going to continue to see changes in the reimbursement models, due to the amount of expenses for those two sources. Medicare Advantage might be today’s latest change and disruption in reimbursement, but you’re gonna see that expand. That may just be one of many changes that we’ll see in reimbursement in the future.

How prevalent are cybersecurity threats and how have these attacks and the necessary investments to prevent them impacted providers?

Many providers are not spending enough time discussing the cybersecurity threats that are out there today. I’ve had clients that have been completely shut down for periods of time by hackers asking for ransom for their data. A company will come in and they’ll take over their billing and general ledger programs and basically lock down a lot of their patient data.

It is really important for organizations to first of all acknowledge those threats. What I do as an auditor is a lot of times we do a risk assessment of our clients, and that’s one of the first steps. You want to see how they are addressing these risks and often organizations aren’t doing enough to address those. Some of the larger hospital systems are certainly addressing them, and some of the larger hospice and home health companies are doing a better job than others. But it’s not a cheap solution, and that’s a preventative thing until you need it.

It’s kind of like insurance. You’re spending the money and in hopes that you never need to use it, but it’s a really important part of the operational risk that exists in our entities today. It’s only going to increase if you take a look at those cybersecurity companies that are rapidly growing.

Certainly in health care with the amount of revenue and reimbursement that is exchanged, we have significant risks there that need to be addressed.

What advice would you give to an organization that’s trying to ready itself for change and roll with some of these punches?

I keep going back to the team in an organization. It’s really important for an organization to constantly look within and make sure they have the right people on the team. You see that in sports all the time, teams are always looking to move players to benefit the team. It’s important for organizations to do the same. It’s difficult to make some decisions, but it’s incredibly important to position yourself with the right mix of decision makers and influencers within your organization that can pivot and bring innovative ideas.

I go back to diversity within your management and within your boards and governance. You want people to come from different perspectives and be able to provide solutions to unknown disruptions that could be coming in the future.