Federal officials reject LSU hospital deals: How will this effect university health operations?
Last Friday, federal health officials refused to pass Louisiana Gov. Bobby Jindal’s healthcare administration which consists of privatizing six state-run hospitals; unfortunately for the Governor and Louisiana, this unapproved contract already resulted in the turnover of several hospital management teams, with the bottom line being that the state is operating off of an unapproved fiscal budget.
The unapproved mandate concerned formerly LSU-oriented hospitals Shreveport, Monroe, New Orleans, Lafayette, Houma and Lake Charles, with the Shreveport and Monroe hospitals reopening October 1st of last year as University Health when placed underneath new management of the Biomedical Research Foundation subsidiary. The management teams of each respective institution have been made aware of the CMS’s decision, as has the state department of health by the CMS, personally. Management board Chairman Steve Skrivanos commented on the CMS’s decision saying, “[The] CMS’s rejection is for technical reasons, not related in any way to quality of or access to care by Medicaid or uninsured patients.” Skrivanos said in the statement.
The reasoning for declining Jindal’s budget was indeed no reflection of any respective hospital’s performance or management staff as Skrivanos states, but that the proposed budget inherently failed to meet federal Medicaid and Medicare standards. The CMS stated the agreements did not meeting federal guidelines governing how the appropriated Medicaid dollars would or could be spent.
The Center for Medicare and Medicaid services recently issued a statement commenting on their decision stating, “To maintain the fiscal integrity of the Medicaid program, CMS is unable to approve the state plan amendment request made by Louisiana,” the federal agency said in a statement. “We look forward to continuing to work with the state to ensure Louisianans receive high quality Medicaid coverage.”
The big picture problem here is that not only is this a significant blow to the Jindal administration, but that this decision could create massive upheaval within the state’s budget. The predetermined budget for the 2014 year depended upon secured Medicare/Medicaid funds, but now the state is operating within a budget that has been refused. Additionally, Jindal did not wait for CMS approval before making the decision to shift hospital management teams, as alluded to above, and now the hospitals are operating underneath management plans without state approval.
Although state health department officials say there are no short-term budget impacts on the hospitals, the whole seems to be growing for Jindal and his administration to crawl out from. Some Louisiana hospitals have already shifted into the privatization plans, those in New Orleans, Lafayette and Houma, as late as last June.
“In a meeting between the Louisiana Department of Health and Hospitals and the former LSU hospitals last week, Acting Secretary of DHH, Kathy Kliebert, informed the new owners that complex technical appeals involving Medicaid funding could extend over a year. Consequently, no change in funding can occur before September 2015.”
“In our conversations with CMS officials, they indicated that they want to start early next week discussing a financially viable alternative for the partnerships. The state does have other options to fund the partnerships, including alternative types of uncompensated care payments,” Kliebert said in the statement.
A silver lining of the debacle resulted in one federally-approved partnership concerning the transfer of inpatient services from LSU’s Earl K. Long Medical Center in Baton Rouge to a private hospital, Our Lady of the Lake Regional Medical Center. The privatization deals have already taken effect in eight university hospitals and their respective clinical, with one still left to go. As a way to cut state costs, Jindal and his administration hoped these initiatives would improve care for the poor and uninsured and enhance medical training programs; however, the deals are costing the state a total of $1.1 billion in its budget this year, with most of that relying on expected federal health care dollars.
The challenges to vaccine distribution affecting everyone
While it is comforting to know that vaccines against COVID-19 are showing remarkable efficacy, the world still faces intractable challenges with vaccine distribution. Specifically, the sheer number of vaccines required and the complexity of global supply chains are sure to present problems we have neither experienced nor even imagined.
Current projections estimate that we could need 12-15 billion doses of vaccine, but the largest vaccine manufacturers produce less than half this volume in a year. To understand the scale of the problem, imagine stacking one billion pennies – you would have a stack that is 950 miles high. Now, think of that times ten. This is a massive problem that one nation can’t solve alone.
Even if we have a vaccine – can we make enough? Based on current projections, Pfizer expects to produce up to 1.3 billion doses this year. Moderna is working to expand its capacity to one billion units this year. Serum Institute of India, the world’s largest vaccine producer, is likely to produce 60% of the 3 billion doses committed by AstraZeneca, Johnson & Johnson and Sanofi. This leaves us about 7 billion doses short.
Expanding vaccine production for most regions in the world is complicated and time-consuming. Unlike many traditional manufacturing operations that can expand relatively quickly and with limited regulation, pharmaceutical production must meet current good manufacturing practice (CGMP) guidelines. So, not only does it take time to transition from R&D to commercial manufacturing, but it could also take an additional six months to achieve CGMP certification.
The problem becomes even more complex when considering the co-products required. Glass vials and syringes are just two of the most essential co-products needed to produce a vaccine. Last year, before COVID-19, global demand for glass vials was 12 billion. Even if it is safe to dispense ten doses per vial, there is certain to be significant pressure on world supply of the materials needed to package and distribute a vaccine.
It is imperative drug manufacturers and their raw material suppliers have clear visibility of production plans and raw material availability if there is any hope of optimizing scarce resources and maximising production yield.
It is widely known by now that temperature is a critical factor for the COVID-19 vaccine. Even the regions with the most developed logistics infrastructures and resources needed to support a cold-chain network are sure to struggle with distribution.
For the United States alone, State and local health agencies have determined distribution costs will exceed $8.4 billion, including $3 billion for workforce recruitment and training; $1.2 billion for cold-chain, $1 billion vaccination sites and $0.5 billion IT upgrades.
The complexity of the problem increases further when considering countries such as India that do not have cold-chain logistics networks that meet vaccine requirements. Despite India’s network of 28,000 cold-chain units, none are capable of transporting vaccines below -25°Celsius. While India’s Serum Institute has licensed to manufacture AstraZeneca’s vaccine, which can reportedly be stored in standard refrigerated environments, even a regular vaccine cold chain poses major challenges.
Furthermore, security will undoubtedly become a significant concern that global authorities must address with a coordinated solution. According to the Pharmaceutical Security Institute, theft and counterfeiting of pharmaceutical products rose nearly 70% over the past five years. As with any valuable and scarce product, counterfeits will emerge. Suppliers and producers are actively working on innovative approaches to limit black-market interference. Corning, for example, is equipping vials with black-light verification to curb counterfeiting.
Clearly, this is a global problem that will require an unprecedented level of collaboration and coordination.
Disconnected information systems
While it is unreasonable to expect every country around the world will suddenly adopt a standard technology that would provide immediate, accurate and available information for everyone, it is not unreasonable to think that we can align on a standard taxonomy that can serve as a Rosetta Stone for collaboration.
A shared view of the situation (inventory, raw materials, delivery, defects) will provide every nation with the necessary information to make life-saving decisions, such as resource pooling, stock allocations and population coverage.
By allowing one central authority, such as the World Health Organization, to organize and align global leaders to a single collaboration standard, such as GS1, and a standard sharing protocol, such as DSCSA, then every supply chain participant will have the ability to predict, plan and execute in a way that maximises global health.
Political influence and social equality
As if we don’t have enough stress and churn in today’s geopolitical environment, we must now include the challenge of “vaccine nationalism.” While this might not appear to be a supply chain problem, per se, it is a critical challenge that will hinge on supply chain capabilities.
In response to the critical supply issues the world experienced with SARS-CoV-2, the World Health Organization, Gavi, the Vaccine Alliance and the Coalition for Epidemic Preparedness Innovations (CEPI) formed Covax: a coalition dedicated to equitable distribution of 2 billion doses of approved vaccines to its 172 member countries. Covax is currently facilitating a purchasing pool and has made commitments to buy massive quantities of approved vaccines when they become available.
However, several political powerhouse countries, such as the United States and Russia, are not participating. Instead, they are striking bilateral deals with drug manufacturers – essentially, competing with the rest of the world to secure a national supply. Allocating scarce resources is never easy, but when availability could mean the difference between life and death, it becomes almost impossible.
Global production, distribution and social equality present dependent yet conflicting realities that will demand global supply chains provide complete transparency and an immutable chain of custody imperative to vaccine distribution.
The technology is available today – we just need to use it. We have the ability to track every batch, pallet, box, vile and dose along the supply chain. We have the ability to know with absolute certainty that the vaccine is approved, where and when it was manufactured, how it was handled and whether it was compromised at any point in the supply chain. Modern blockchain technologies should be applied so that every nation, institution, regulator, doctor and patient can have confidence in knowing that they are making an impact in eradicating COVID-19.