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Regional Report: Healthcare & the Economy

A GPEC Virtual Series

The recent regional report from the  Greater Phoenix Economic Council (GPEC) focused on the latest updates related to COVID-19, testing, healthcare infrastructure and how the pandemic is impacting the region’s economy. The hour-long discussion was moderated by Eric Sperling, managing director of the Social Television Network, and the panelists included four Greater Phoenix healthcare and economy leaders.

Speakers Included:

The Economy

GPEC President & CEO, Chris Camacho, started the discussion with an overview of Greater Phoenix’s economy and what must be done to accelerate Greater Phoenix’s economic recovery anchored in our ability to minimize the spread of COVID-19.

“We’ve had to put a lot of our economic acceleration plans that traditionally we would be ready to go and amplify our work in both domestic and foreign markets, but because of the serious spread of COVID, and the impact to the healthcare infrastructure…our focus is going to be how do we ensure Arizona gets healthy number one,” he says. “Then we can move on to economic acceleration.”

Camacho emphasized the need for everybody to wear a mask and practice safe habits.

“I was out doing a visit today with a client in the market and 100 percent of the people [were] wearing masks, we were all socially distanced,” he says. “Those kinds of practices are going to allow us to move back into society, spend money in society and get this economic train back on the track. I encourage you to first and foremost ensure those practices are maintained.”

Camacho mentioned the precipitous job losses in the state and throughout the country, and when numbers are reported later this month, he anticipates as many as 275,000 jobs being lost directly related to the pandemic. He says a third of American’s that have rent, or mortgages did not pay their monthly balances in full and this could be a sign of very scary times in terms of a mortgage crises in the event COVID continues to spread and we can’t open up society and spend money as we’re accustomed to.

“There is a tremendous amount of work to do, but first we have to start with addressing the healthcare pandemic and getting our numbers back on track,” he says.

The hardest hit industries in Arizona have been leisure and hospitality. 82 percent of the more than 180,000 jobs lost to-date have been tied to those sectors. Camacho is concerned because unlike the ‘The Great Recession’ in 2008 where job loss across all incomes, industries and education background, the pandemic is disproportionately impacting what Camacho calls the “middle-skill workers.”

GPEC’s economic acceleration plan will center on addressing the competitiveness of the region and bringing new companies and high-wage jobs, but creating equity and upskilling are paramount.

“The upskilling aspect is largely going to be a 200,000 plus individuals that are going to have be retrained for new jobs and new skills,” he says. “There’s going to have to be a tremendous alignment with the community college network, high schools. This will not be a short-term fix. This will be a long-term kind of categorical shift in how we educate and transition the labor pool.”

Camacho highlighted the Federal Reserve policies during COVID-19 and says, “we’ve propped up the U.S. economy so significantly with capital. A high-percentage of our GDP, against our GDP, has been in the form of pushing capital into markets.”

With the additional $600 in unemployment benefits slated to end this month, Camacho is going to be looking at the actions of congress to see how they will support the workers most effected by the pandemic.

“We’re going to need a fourth iteration of a stimulus act so more liquidity, more spending measures being placed in the U.S. economy to help sustain third quarter,” he says. “The number for Q2 were anywhere from 30 to 38 some percent contraction. Pretty graphic downward trend in GDP overwhelmingly, however Q3 is projected to be a very strong recovery.”

Camacho points to the fact that the U.S. is more focused on loans, guarantees and equity reinforcement compared to the rest of the world who have taken different approaches.

“These measures I do believe are going to get us on a more accelerated track, but again, I guard that optimism to some degree by the fact that we have still a significant number of our small and medium-sized businesses not only struggling, but struggling to hold on,” he says.

The Paycheck Protection Program (PPP) has allowed some to weather the storm, but Camacho says the storm will last longer in Arizona because of the continued spread of COVID-19.

Franc Del Fosse, of counsel at Ballard Spahr, highlighted the ‘Mainstreet Lending Program, which was passed in March as part of the CARES Act and has roughly $600 billion to deploy to assist medium-sized businesses.

“Unlike the PPP, a wider swath of businesses are eligible for this if you have 15,000 or less employees and you have less than $5 billion of revenues for 2019, “ says Del Fosse. “That creates a huge opportunity for a number of businesses.”

Del Fosse noted that while the PPP was set up for banks to maintain their relationships, the ‘Mainstreet Lending Program’ will see banks looking to expands their client portfolio.

“You can’t refinance your own debt,” he says. “You can go to a new lender, and that lender is going to be incentivized to participate in this program with you because they don’t have a current relationship with you. If you’re coming into a liquidity crunch and you need to refinance, this is a great program.”

It’s no secret that Greater Phoenix was on a roll pre-COVID, and GPEC and its partners were able to continue positive business attraction momentum even when up against strong headwinds. However, due to Arizona’s healthcare crisis, Camacho says 13 companies this month have paused their market visits, which further delays the prospecting process given it can take 6-9 months for a business to finalize a relocation or expansion decision.

Camacho reiterated the need for Arizonan’s to do their part in helping stop the spread of the virus and outlined likely economic recovery scenarios on either end of the spectrum, which are contingent on how we handle the healthcare aspect.

Camacho provided a jobs forecast with a six percent contraction in 2020, but there is strong optimism for recovery and growth in 2021, but that’s predicated on getting COVID-19 under control throughout the state.

A specific reason for optimism is how companies will re-shift headcount with remote worker models and central location hubs, which is advantageous for Greater Phoenix.

“I do believe Greater Phoenix is going to win dramatically in this game,” he says.

Healthcare

An AZ Big Media article posted on Friday, July 10, reports confirmed COVID-19 cases in Arizona surpassed 112,000 on July 9, and the number of deaths attributed to COVID-19 reached 2,038 after an increase of 75 from the previous day. Confirmed COVID-19 cases in Arizona now stand at 112,671, increasing 4,057 from the previous day, according to the Arizona Department of Health Services. Of the total number of COVID-19 cases in Arizona since the start of the pandemic in January, 25,246 cases — or about 25 percent — have come in the last seven days.

“We’re hoping the governor has heard us loud and clear, and he and Dr. Christ [director, Arizona Department of Health Services] are going to help us with this issue shortly,” says, Linda Hunt, CEO of Arizona Hospitals at Dignity Health.

Tomás León, SVP of Marketing & Strategy at Equality Health is calling for collective action at the local level between stakeholders, and city and state government to address the pandemic.

“We have to do it together in order to slow the spread of COVID-19 and keep our families and the community safe and healthy,” he says.

Hunt solidified Arizona’s standing in terms of positive cases and gave the audience a look at where healthcare infrastructure stands.

“We have another 4,000 plus day of positive testing. The frightening thing about this is that we’re seeing inpatient admissions in our hospitals double every nine days,” she says. We were prepared as the governor [Doug Ducey] asked acute care to be; prepared to go up to 150 percent of capacity and we’re nearing that surge capacity now.”

According to Hunt, Arizona has seen a rise in positive cases of those between 20 and 44, and even though younger patients are not as sick, they still need to be admitted. The state is currently seeing a 50/50 split between genders in terms of positive tests, but men are at higher risk for death, as are those 65 and above.

“We had workforce shortages before COVID, now we are in dire strait. We are having to import nurses through traveling nurse programs from all over the country,” says Hunt. “We are every day still short of help with the amount of patients that we have. The front leaders and all of our staff are burned out, they’re exhausted, they’re tired, but they know they have to keep going because there is no one else.”

The situation is even worse in rural communities as they have an inadequate healthcare workforce to deal with the volume of patients, which pushes patient volume out of rural communities and into urban hospitals, which are now at surge capacity.

“Many of us have double and triple in patients in normal rooms to hit the surge capacity, so it’s been very dire situations and at times we are at 100 percent,” says Hunt. “The biggest issue for us is that our front door is wide open. Unfortunately, these people stay in our hospitals a long time and many post-acute facilities will not take the patients. Demand for post-acute is skyrocketing, and at this point, we still don’t have a resolution.”

León highlighted how Equality Health hospitals are innovating in terms of telehealth to try and deal with the sheer number of patients needing care.

“When this pandemic hit we deployed telehealth technology to our over 4,100 primary care providers in Arizona to be able to create greater access to healthcare for their patients amidst this pandemic,” he says.

Since March, 85 Equality Health providers are actively using telehealth and have conducted more than 7,430 visits. From April to June, the average number of visits per providers is 30.

The challenges will persist.

“Workforce shortage is not going to go away. This has really pointed out to us is healthcare disparities not only in our Native American population, but all of our people of color,” Hunt says. “We have to look at how to improve the overall quality of care and access to care.”

León provided recent data to ground Hunt’s point.

“Point your attention to the rise in overall cases of the Hispanic, Latino cases at 24 percent, which is now the leading population here in Arizona. Nearly 36 percent of hospitalized cases,” he says. “There’s a disproportionate impact on the Hispanic community and we focused on that so that we can come together with our partners and implement a community-based testing model to be able to address those issues.”

León spoke to Equality Health’s testing model, which uses local and state data to identify zip codes and communities at higher risk with minimal access to testing. Equality Health has launched a number of testing events in the underserved communities and have worked with local municipalities like City of Phoenix and the City of Glendale and are currently having talks with others to bring the testing model and events to other communities.

“Testing is the strategy part, but you have to create education around COVID for people to understand the symptoms, to understand how to prevent, and keep themselves and their families and loved ones safe,” he says.

Both Hunt and León discussed the lag in testing results and because of a huge increase in demand and supply chain issues, there is a bottleneck in the process and work is being undertaken to help create efficiencies and quick result turnarounds for patients. Equality Health is working to set up a ‘Core Lab’ that should be up and running by September, which will allow for up to 20,000 tests a day with a six to 24-hour turnaround for results thanks to a machine called a Panther.

With flu season around the corner, the situation could worsen.

“The worst thing that could happen to us is we have a convergence of flu and COVID at the same time,” says Hunt.

When asked during the Q&A portion what a worst-case scenario looked like and how close Arizona hospitals were to reach that point, Hunt said this.

“We have three zones – we have green, yellow and red. I’d say the hospital systems are on orange because our ICU beds are anywhere between 90 and 98 percent occupied as well as our general beds,” she says. “This is the greatest issue for us.”

As mentioned earlier, our economic recovery is anchored in our ability minimize the spread of COVID-19. GPEC encourages all Arizonans to take action and here’s a few things we can all do together.

  1. Wear a mask [#MaskUpAZ]
  2. Stay home [as much as possible]
  3. Social distance [if you have to go out]
  4. Buy local [small businesses depend on us]

 

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