Covid 19 - Year One

BEACON GROUP CONSULTING
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COVID 19: YEAR ONE
OLIVER RICHARDS
CLIFFORD H. FARRAH - President & Chairman
cfarrah@beacongroupconsulting.com
OLIVER RICHARDS– Senior Vice President, Healthcare & Life Sciences
orichards@beacongroupconsulting.com

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The Beacon Group is a strategy consulting firm that provides guidance to Fortune 500
companies on their global organic and inorganic growth strategies and tactics. Since 2001,
Beacon has completed over 1,500 projects for its clients across practice areas.
Beacon combines our in-house, primary-research-driven process with decades of growth
strategy and industry experience from our Healthcare & Life Sciences leadership team to
ensure the actionability and credibility of our growth strategies.
Beacon assists our clients with maximizing the adoption of current therapies and solutions
by developing impactful clinical and economic value propositions, communicating this
value to both traditional clinical and increasingly influential economic decision-makers,
and positioning against existing or emerging competitors.
“Our central thesis has long been that COVID hasn’t dramatically changed the healthcare
industry, rather it has dramatically accelerated different trends in the healthcare space
that were already simmering before March 2020”
Beacon produced a series of white papers over the first one hundred days of COVID
offering our take on the massive disruptions to the healthcare industry, where we
highlighted some of the surprising impacts that the pandemic would have on the industry.
When we published our “COVID-19: 100 Days” white paper
(https://www.beacongroupconsulting.com/white-papers/covid19-100-days), it felt like
we had hit a hard-fought milestone of making it through the initial shutdown, economic
uncertainty, and fear of the unknown. Despite the increasing COVID-fatigue that we are
all suffering in varying ways, one year of living with COVID is a significant timepoint to
again take stock of what this all means for the healthcare industry.
Our central thesis has long been that COVID hasn’t dramatically changed the healthcare
industry, rather it has dramatically accelerated different trends in the healthcare space
that were already simmering before March 2020. Given the usually slow pace at which
the healthcare market typically moves, COVID served as a shock to the system and an
accelerator that created a window to drive meaningful change. In this whitepaper, we will
examine several changes that were less obvious in the early days of the pandemic and
assess their longevity as we (hopefully) move into a post-COVID world.
SALES MODEL DISRUPTION
Early in the pandemic, we predicted significant impacts on pharma and medical device
sales models due to lack of customer access from pandemic restrictions. What was harder
to predict at the time was the apparent permanence of some of these changes.
As we’ve recently discussed in another white paper
(https://www.beacongroupconsulting.com/white-papers/digital-engagement-in-a-post-
covid-world), reps supporting surgical and interventional procedures have largely been
able to resume hospital access since the initial shutdown. However, less critical device
and pharma reps have largely shifted to a digital engagement model, and customers
expect this type of structure to maintain for the foreseeable future. Companies like
Amgen are starting to reduce their sales forces while espousing a new focus on digital

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marketing.1
While clinicians are frustrated with some elements of in-person engagement
like the difficulty of getting questions quickly answered and the perceived lack of product
information education, they appreciate the relative efficiencies of this model.
 Given this shift, manufacturers need to plan for digital engagement to be a norm
for the foreseeable future. Building an effective omni-channel marketing
approach that incorporates digital engagement is becoming table stakes to
compete in the pharma and medical device market. The next big challenge to
solve is how to effectively drive remote trialing and education for more
complicated devices – in other words, how can companies facilitate a “virtual
cadaver lab”?
CLINICIAN AND ALLIED MEDICAL STAFF FATIGUE/SHORTAGES
While the pandemic has not been easy on anyone, clinicians and allied medical staff,
especially in hospital settings, have experienced a particularly difficult time period.
Clinicians and nurses, especially those in ER or ICU roles have dealt with almost non-stop
stress and physical/mental fatigue over the last year. This has already started to drive
provider burnout and staff shortages and those are expected to become even bigger issues
as the most acute dangers of COVID hopefully subside. Other clinicians may not have faced
as much direct stress and fatigue, but many, especially those who own outpatient facilities,
have experienced financial stress due to reduced patient and procedure volumes. The
magnitude of physician/staff burnout and how hospitals respond will be a new challenge
to the healthcare system over the next year plus.
 There is an opportunity for provider wellness and automation solutions to help
both clinicians and hospitals. There has been a recent push toward solutions that
drive provider wellness and minimize the risks encountered in clinical settings,
risks that are only getting worse due to pandemic-driven fatigue. Solutions
ranging from safety needles and surgical smoke evacuation systems to ergonomic
devices to reduce repetitive use injuries have been successfully rolled out and well
received on the market. Similarly, solutions that can enable automated care
delivery/monitoring can both help reduce the stress on clinicians/staff and help
drive workflow efficiencies in the face of workforce shortages.
MASSIVE DIAGNOSTIC INFRASTRUCTURE
After early and well-publicized missteps, the U.S. has built up a massive diagnostics
infrastructure in response to COVID. This has enabled over two million COVID tests to be
run per day in the country.2
These COVID tests not only represent a huge increase in
diagnostic usage, but have also pushed the boundaries of where and how diagnostic
testing is performed. From the now ubiquitous drive-through testing model to rapid
molecular tests at a pharmacy to at-home COVID tests, the diagnostics market has
changed dramatically in the last year. The big question now is what happens to this
1
“Amgen cuts 500 U.S. jobs, primarily sales reps, as COVID-19 speeds a shift to digital,” Fierce Pharma,
February 3rd
, 2021
2
“US Daily Tests,” The COVID Tracking Project at The Atlantic, February 22nd
, 2021

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capacity and infrastructure post-COVID. What will the on-site testing capacity that has
been built up across hospitals, clinics, and pharmacies be targeting? As COVID levels
continue to subside over the next year, there is an opportunity to direct this infrastructure
to have dramatic impacts on other problems.
 Manufacturers can help to shape post-COVID diagnostic utilization toward high-
impact use cases across infectious disease, chronic disease, and/or consumer-
focused solutions. The diagnostic infrastructure could quickly be directed toward
infectious disease surveillance of seasonal flu, RSV, mosquito/tick-borne diseases,
and/or COVID (probably) or toward surveillance of emerging pandemic threats. In
fact, Abbott recently announced a global network focused on early detection of
and rapid response to new pandemic threats.3
Alternatively, this infrastructure
could be applied toward population health uses focused on early detection,
progression monitoring, and prevention of chronic diseases like heart disease,
diabetes, etc. The emergence of home-based COVID tests could drive increased
testing for other diseases in the home setting, e.g. flu, STDs, etc. Given the recent
capacity build-out and primer on diagnostics that the world has received in the
next year, there is significant opportunity for manufacturers to shape the direction
of this market evolution over the next several years.
RETURN-TO-WORK/DIGITAL PASSPORT
Remote work and Zoom calls quickly became the norm as the pandemic hit, but with
vaccines on the way, there is hopefully an end in sight. While many companies are
planning to maintain a virtual or hybrid model, others are actively working to plan
strategies for employees returning to the office. That said, most employers do not have
public health professionals on payroll and have received incomplete or contradictory
guidance from local, state, and national governments. Given these challenges, a number
of manufacturers and health systems are working to develop services and solutions to
support return-to-work efforts. Large providers like Mayo Clinic, Cleveland Clinic, and
others have developed a range of return-to-work resources that range from free playbooks
to customized fee-based consulting services. In parallel with these efforts, a number of
big tech players, start-ups, and non-profits are racing to develop digital passports to enable
people to demonstrate their COVID-19 vaccine status.4
These solutions could accelerate
return-to-work efforts, shorten or eliminate travel quarantines, and streamline air travel
for the foreseeable future.
 These trends accelerate both employer autonomy for their employees’
healthcare and consumer ownership of their health data. For years, large
employers have been exploring self-insuring options vs. relying on payers. One
could argue this was the biggest goal of Haven, the Amazon/JP Morgan/Berkshire
Hathaway partnership. Employer partnerships on return-to-work initiatives could
open the door for agreements with medical device manufacturers on value-based
care. Similarly, patient ownership of health data through a passport-type of
3
“Abbott Announces Its Pandemic Defense Coalition: A Global Network Of Expert Collaborators
Designed To Help Prevent Future Pandemics, Currently Searching For Covid-19 Variants,” Abbott
Press Release, March 11th
, 2021
4
“Coming Soon: ‘The Vaccine Passport’”, New York Times, February 4th
,

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solution could help to address the myriad of interoperability and data access
challenges that have historically slowed personalized medicine initiatives.
LONGER-TERM HEALTH CRISES
While procedures and doctor visits largely rebounded quickly after the initial COVID
shutdowns in spring 2020, we are experiencing what will be longer term impacts caused
by the pandemics reduction in traditional screening, diagnosis, and prevention activities.
This will lead to a global medium-and-long term health crisis. Fear of going to a doctor’s
office or hospital has caused a subset of patients to forego these activities for the last year.
A recent study in the UK estimates that more than 3,500 people had been diagnosed for
colorectal cancer over the course of 2020 than would have been expected due to reduced
numbers of colonoscopies and subsequent referrals.5
Similarly, Blue Cross Blue Shield
Association recently reported a 13.5% decrease in HPV vaccinations through October
2020,6
putting a number of children/teenagers at potentially higher risk for cancers later
in life. Multiply these effects across numerous other oncology, cardiovascular, and chronic
illness categories and the long-term impact of delayed care from COVID-19 could be
staggering. This backlog of screening is not a U.S.-centric issue as similar trends are playing
out at a global level.
 The impacts of delayed care will further strain the health system even as we exit
the acute phase of the pandemic. For years, payers and providers have been
moving toward better prevention and chronic disease management solutions as a
way to improve patient outcomes and reduce healthcare costs. The chronic
disease impacts of the pandemic will have the opposite effect, with more seriously
ill patients presenting later in disease progression. This will drive the need for
more surgical resections, interventions, and later line pharmaceutical treatments
vs. less aggressive measures. Similarly, Long COVID will necessitate innovation
around new therapies or more systematic treatment approaches. It remains to be
seen how effective COVID vaccines will be in resolving this condition.
LONG COVID
In parallel with the impact on delayed care, one of the more insidious aspects of the
COVID-19 pandemic has been the lingering side effects that have afflicted people even 9-
12 months post-recovery from the initial infection. These symptoms have been widely
publicized and include fatigue, shortness of breath, “brain fog”, sleep disorders, fevers,
gastrointestinal symptoms, anxiety, and depression.7
Even with the rollout of vaccines,
there are likely millions of people across the globe who will be suffering through “Long
COVID”. Pharmaceutical companies are already starting to explore therapeutic
approaches to Long COVID as case numbers grow.
5
“Impact of the COVID-19 pandemic on the detection and management of colorectal cancer in
England: a population-based study”, The Lancet, January 14th
, 2021
6
“HPV vaccination rate low despite risks of related cancers”, Blue Cross Blue Shield The Health of
America, February 25th
, 2021
7
“NIH launches new initiative to study ‘Long COVID’”, NIH, February 23rd
, 2021

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 Long COVID represents a “new” disease state and therapeutic target for
pharmaceutical companies. Long COVID will necessitate innovation around new
therapies or more systematic treatment approaches. The increased public
awareness of Long COVID may shine a brighter light on broader post-viral
syndrome or even chronic fatigue patients, and therapies that have been explored
for these indications may provide a starting point for treating Long COVID patients.
It also remains to be seen how effective COVID vaccines will be in resolving this
condition.
PROVIDER HAVES AND HAVE NOTS
As we predicted early on in the pandemic, rural and community hospitals economics have
suffered significantly due to COVID. This has been driven by a reduction of elective
procedures and emergency room visits, a corresponding reduction in non-COVID ICU
patient volumes, and a significant increase in pandemic-related costs. These financial
losses have been partially offset by the multiple rounds of federal stimulus, but suffice it
to say that rural and community hospitals in the U.S. are struggling. What has emerged
over the second half of 2020 and early 2021 is that larger and more prestigious hospitals
and health systems actually weathered the storm quite well and many even grew in 2020.
For example, Mayo Clinic announced 1.5% revenue growth in 2020 and UPMC’s revenue
grew 12% in 2020.8,9
This has been driven by a number of factors. First, larger providers
were better able to quickly pivot during COVID, including COVID test development, supply
chain flexibility, telehealth adoption, and even the creation of new consultative services
for employers struggling with COVID/back-to-work issues. Second, larger providers that
have done well typically engage in higher levels of payer and risk-bearing activities, which
balanced out any losses in revenue from fee-for-service activities during COVID. Third,
many of these larger providers had healthier financial profiles entering the pandemic and
were better able to weather the storm of the shutdown and increase in direct pandemic-
related costs. Finally, larger providers have continued to invest in revenue generation
even during 2020, including investment in cardiovascular, robotic surgery, and
neuroscience departments among others. This longer-term mindset and focus on
innovation and value have helped to drive growth even during the most challenging
financial timeframe for hospitals in recent memory.
 Manufacturers will need to continue to tailor engagement by hospital type.
Savvy medical device and pharma manufacturers have already taken different
approaches to customer engagement by type, but as with many things COVID-
related, past account differences are being further exacerbated. This means that
larger, more well-off hospitals and systems will continue to focus on revenue
generation and will remain interested in manufacturer partnerships focused on
value. In contrast, smaller and rural hospitals will be even more cost-focused over
the next several years and will look to delay non-essential capital purchases and
to drive cost efficiencies wherever possible. This could create opportunities for
more financially acceptable offerings (e.g. as-a-service, or performance-based
solutions) for smaller hospitals. All of this comes with the caveat that the hospital
8
“Mayo Clinic’s revenue slightly increases in 2020 despite financial hit from pandemic,” Fierce
Healthcare, March 1st
, 2021
9
“UPMC annual operating revenue hits $23B,” Beckers Hospital Review, March 1st
, 2021

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market is expected to continue to consolidate in light of the financial pressures of
COVID.
CONSUMERIZATION FINALLY EMERGING
The COVID pandemic has also opened a door to increased consumer and patient control
of access to healthcare services. Consumers have traditionally had to choose from a
narrow slate of options based on their individual situation and availability of employer or
governmental options. This was already starting to change on a small scale pre-COVID,
with the emergence of concierge physician practices that charge patients out-of-pocket
for premium care. The emergence of telehealth, the increased focus of retail chains on
healthcare, and the movement of diagnostic testing out of hospitals and clinics due to
COVID will further accelerate these trends. Retail chain investment in healthcare services
will continue to change rapidly over the next year. For example, Walgreens has been
building a suite of digital health services via partnership that will enable mental health
support, virtual eye care, and remote colon cancer screenings.10
Other retail players like
CVS Health, Walmart, and even Best Buy are making similar bets to enable easier consumer
access to care.
 There will be increasing opportunities for direct-to-consumer solutions. Given
the amount of money that flows through traditional channels, we are not
expecting a wholesale market disruption over the near-term. However, by
presenting consumers with easier and/or better services, retail players will pull an
increasing number of patients through their channels, with or without full
reimbursement. That innovative payers like United Health and CVS Health are
making their own bets in the retail/consumer space will only accelerate this trend.
VACCINE ACCESS INEQUALITY
I’ve had conversations with clients in the EU and Canada over the last several weeks, and
there is a growing sense of concern about vaccine access inequalities between high
vaccinating countries like the U.S., UK, and Israel and other developed markets. At the
time of this writing, the U.S. has delivered first doses of a COVID vaccine to approximately
20% of its population vs. the EU and Canada delivering first doses to approximately 5% of
their populations. Some of the disparities are caused by the successes or failures of
individual country-level rollout plans, supply chains, and investment levels. But there are
clearly also vaccine access disparities as Pfizer, Moderna, J&J, and AstraZeneca work to
fulfill and prioritize their different contracts. What this means practically is that even if
the U.S. achieves its goals of broadly available vaccines by mid-summer 2021, many
countries will still be struggling to achieve a similar status through the end of 2021 and
beyond.
 Hospitals in many countries will continue to struggle with COVID patients
through at least the end of 2021. Hospitals in the U.S. market will hopefully shift
back to more of a business-as-usual focus in the second half of 2021, which should
enable more normal discussions with manufacturers about non-COVID priorities
10
“Walgreens expands digital services with Hinge Health, Abbott,” Fierce Healthcare, March 4th
, 2021.

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and investment. In contrast, many of the issues we have referenced in this
whitepaper will continue to impact hospitals in many other developed and
developing markets for the foreseeable future. This is expected to include
pressures on hospital capital budgets, short-term vs. long-term focus, and
continued backlogs of diagnoses/procedures for some portion of the population.
Manufacturers will need to carefully assess the local market environments and
vaccination progress in developing country-level forecasts and strategies to
account for this.
As we start to move into a post-COVID world, the impacts of COVID’s disruption on the
healthcare system will continue to be felt for the foreseeable future. As we mark the one
year anniversary of the COVID shutdowns in the U.S., we are working with healthcare
manufacturers to drive growth in the following areas:
• Driving value-added customer engagement through digital channels
• Supporting physician wellness and provider shortage challenges
• Deploying the newly built diagnostic infrastructure in innovative ways post-COVID
• Creating solutions to support faster return to work and travel
• Proactively seeking therapies and solutions for underdiagnosed chronic illness and
Long COVID patients
• Tailoring engagement strategy and value-based offerings based on provider
innovation/financial health
• Enabling consumer-focused solutions and engagement
• Planning and forecasting appropriately based on local vaccination timelines
As we enter into year two of the pandemic we will be watching how the healthcare market
continues to evolve in response to COVID. Early areas of interest include the continued
massive investment in and rapid deployment of telehealth solutions, what the new normal
looks like as countries reach higher rates of vaccination, the impact of COVID variants in
the short- and medium-term, and the continued movement of care delivery from the
hospital to the broader community. Through it all, Beacon will continue to work with our
healthcare clients to take an active role in shaping vs. reacting to the changes that COVID
has driven.
The Beacon Group is a growth-focused strategy consulting firm founded in 2001 and
based in Portland, ME. Our Healthcare & Life Sciences practice comprises one of Beacon’s
five practice areas. Beacon works with Fortune 500 clients to identify and execute upon
organic and inorganic growth opportunities.
Find out more about our firm at:
www.beacongroupconsulting.com

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For more information please contact:
OLIVER RICHARDS
Senior Vice President, Healthcare & Life Sciences
orichards@beacongroupconsulting.com
CLIFFORD H. FARRAH
President & Chairman
cfarrah@beacongroupconsulting.com
Find out more about our firm at:
888.700.0300
www.beacongroupconsulting.com

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