Interview: Craig Humphrey

Craig Humphrey

President & COO FirstCarolinaCare Insurance Company

What are the advantages of being a health insurance company owned by a health system?

We were designed to offer community members local health insurance that wouldn’t leave anyone behind. We created products that initially the hospital would help subsidize for a lot of the small employers, employers with 25 people and under, who really were not offering health insurance at the time. We don’t have shareholders like our national peers do, so the dollars we spend on healthcare stay in the community. We also partner with other provider groups, so even though we may be owned by two hospital systems, we really have brought a lot of the medical community together to participate in our quality initiatives. This elevates the level of care for the member because we partner with their doctor to ensure that the focus is on finding areas of shared value and opportunities for innovation that improve outcomes.

What is your view of price transparency?

Health insurance has been focused on transparency for a number of years. Members are able to go to their plan website and get an estimate of their out-of-pocket cost for care. Since the start of this year, transparency in pricing has been introduced at all hospitals, so that is a good next step. I think the real issue is that healthcare can be complex. Because healthcare is complex, it makes health insurance very complex. The average person doesn’t really understand their insurance benefits. They know they have insurance and they will typically refer to it by the name of the insurers but they don’t understand what that means. In recent years, so many folks chose to move into high deductible health plans, which are great for those who tend to be healthy but one must remember that this is not a great product for everyone. We’re working with employers to do a better job building education, encouraging them to inform their employees about what their benefits are. Part of this education is understanding the value of using participating providers in their insurance plan network. That understanding leads to more transparency. ( ) Immediately in March 2020, Duke Health, WakeMed and UNC Health all announced they would be delaying elective surgeries to conserve supplies for the fight against the pandemic. By October, the hospitals were readmitting elective procedures but had to fight through a huge backlog.

The problem was exacerbated by serious health problems that had emerged during the pandemic as people became reluctant to seek help from care providers at the height of lockdown. The financial impact of this reduction in elective procedure volume is estimated to have caused $200 billion in financial losses for hospitals and health systems nationwide between March and June 2020. According to McKinsey, it could take up to two years for hospitals to work through the backlogs.

The situation was further complicated at the beginning of 2021 when hospitals began to fill up again amid critical staffing shortages. North Carolina hospitals, including WakeMed, began to once again review their surgical schedules to find ways to push procedures back, especially those requiring inpatient stays. UNC REX stopped scheduling orthopedic and bariatric procedures and most life-changing gender reassignment surgeries for transgender patients were also pushed back. The main issue facing hospitals, rather than availability of beds and supplies, continues to be staff shortages. Even with more beds, the already-stretched hospital staff would be unable to maintain them, experts believe.

Notable developments Although the Triangle’s health systems were put under pressure by the pandemic, research institutions were eager to step up to the plate and help with the testing and vaccination efforts. In January 2021, pharmaceutical firm Novavax delivered promising phase 3 clinical trial results after Raleigh-based Wake Research Associates enrolled 2,000 of the almost 30,000 trial volunteers. Overall, the firm has enrolled 6,000 people in COVID-19 vaccine trials. And even earlier, prior to approval of the Pfizer and Moderna vaccines, Durham refrigeration technology company Phononic was approached to discuss distribution efforts. The Pfizer vaccine requires storage at -80°C to -60°C, requiring highly specialized storage and distribution networks.

As with any crisis, the pandemic created both challenges and opportunities for companies. Raleigh-based insurer and physician services firm Curi announced in April 2021 that it would acquire Charlotte-based analytics company Arrowlytics in a push to expand its services. And Bain-backed, Raleigh-based behavioral health firm Broadstep Behavioral Health in June acquired a portion of Wisconsin-based Bethesda Lutheran Communities’

residential and support programs in Illinois, Indiana and Wisconsin, expanding its footprint outside of North Carolina.

Also in April, Duke Regional Hospital opened a new $102 million, 112,000-square-foot facility at its Durham campus with 11 more outpatient clinic rooms, and 13 more ER treatment rooms. The space, designed for behavioral health patients, also features a secure behavioral health treatment emergency unit with 18 spaces. And in June, Duke Health, UNC Health and Southpoint Surgery Center all submitted applications to provide some or all of the 40 additional acute care beds and four additional ORs by 2023 required by Durham and Caswell counties. UNC Health’s proposal involved a new $251.9 million hospital with 40 acute care beds and two operating rooms.

Medicaid expansion could also create some further hospital opportunities, according to Care4Carolina. Wake and Durham counties could collectively see almost 8,500 new jobs, just over $1.5 billion in new business activity and about $18.4 million in new county revenue if the change was enacted. Expansion, however, remains a contested issue in the state legislature with Democratic Gov. Roy Cooper pushing for it and Republican lawmakers firmly against the change.

The pandemic also paved the way for a new form of medicine to gain momentum. Although telehealth has been used for several years, uptake has been slow due to reluctance to adopt the technology and a fear of an inferior level of care. However, after the pandemic forced insurance companies in particular to accept telehealth claims, the practice took off.

By September, the North Carolina Department of Health and Human Services announced that Medicaid had processed more than 1.1 million telehealth and 350,000 telephonic doctor’s visits. Many patients reported increased satisfaction and healthcare providers found that the practice could lower healthcare costs, while increasing efficiency. According to the numbers, increased telehealth uptake could save U.S. companies $6 billion per year and healthcare insiders say that even post-pandemic, it is here to stay. Many experts believe that, in the future, telehealth will serve as a complement to in-person visits for routine or minor primary care appointments that do not require physical examination.

Job growth The pandemic year undoubtedly took the biggest toll on healthcare professionals. Even pre-COVID, North Carolina was slated to have one of the worst nursing shortages in the United States, with 13,000 required by 2025, according to a report by Georgetown University. When hospital admissions began to surge, nurses and doctors were on the frontlines and before long, care providers were reporting high levels of burnout and stress.

According to Mental Health America, 76% of healthcare workers reported exhaustion and burnout during the pandemic and 70% had trouble sleeping. Claims have since been made against the federal government regarding unsafe working conditions, lack of PPE and low pay. And in a year that mental health came into sharper focus than ever before, nurses and doctors described their experience in hospitals at the peak of the pandemic as worse than a war zone.

This has exacerbated the nursing shortage as many who worked through the pandemic burned out or simply wanted to retire early. UNC REX is working to fill about 240 positions, a number representing 10% of its total nursing staff. The hospital was bringing on 100 new

graduates and hopes more nurses will return in the fall.

Until then, some solutions are emerging, including the phenomenon of travel nurses. These nurses are paid competitive amounts to fill care gaps across the country at hospitals that are pressed. The market for travel nurses is estimated at $10 billion and is growing. In a 2020 survey, 90% of hospital systems reported using travel nurses compared to just 60% in 2019.

The crisis has even pushed North Carolina legislators to reconsider SB 249/HB 277, or the SAVE Act, which failed to get off the ground in 2019. The act would modernize regulations to allow Advanced Nursing Practitioners (ARPs) to treat patients without doctor supervision, increasing efficiency and freeing up more staff, with the potential to save $4.3 billion per year in healthcare costs.

Health insurance market According to 2019 census data, about 11.4% of Raleigh city’s population and 14% of Durham County’s population is uninsured. The Kaiser Family Foundation reported at the beginning of 2020 that 33.5% of North Carolina residents had incomes below 200% of the federal poverty level, outstripping the US average. As a result, the state has more health problems, with its health ranking slipping to 36 in 2019 from 31 in 2015. The same report found that over 15% of North Carolina residents do not see a physician when needed due to cost.

The Affordable Care Act (ACA) helped many North Carolinians access health insurance, with almost 536,000 enrolled through the state’s exchange for 2021, up from 447,680 in 2019. The state consistently has one of the highest ACA figures in the country and the number of people with health insurance increased 17% from 2010 to 2019.

The Research Triangle Park leads the United States in vaccine manufacturing.