COPING STRATEGIES

How three big names from Nashville’s health care ecosystem tackled the COVID crisis

BY KARA HARTNETT

s our cover story illustrates, companies

A responded to the shock of COVID-19 with a wide range of strategies. ose whose shares are traded on stock exchanges have had to do so in much more public ways. Here are overviews of how three publicly traded companies from dierent parts of Middle Tennessee’s wide health care landscape responded to the shock of COVID-19 — starting with the biggest sh in the sea.

HCA Healthcare e pandemic struck HCA Healthcare at one of the most protable times in the company’s history. And while that provided a solid nancial base for the Nashville-based hospital giant as it prepped for an unprecedented global pandemic, executives say they may now have to reimagine their growth strategies.

“We were outperforming our internal expectations and o to what we believed was going to be a great 2020 — and that was after a really strong 2019,” HCA CEO Sam Hazen told attendees of an RBC Capital Markets conference in May. “We turned the calendar with a lot of momentum.”

By the end of March, that momentum was gone with lucrative elective procedures suspended and many hospitals preparing for a wave of patients some feared would test their limits. HCA executives lined up $2 billion in nancing and — a week later — started cutting salaries across its workforce to preserve cash as revenues fell. ough no employees were fully furloughed, a number of departments saw across-the-board pay cuts and clinicians whose procedures were suspended or canceled were either reassigned or paid only 70 percent of their salary. In addition, contract workers were cut from payrolls and overtime pay was limited. ose moves helped lead to several run-ins with nurses unions, members of which complained about shortages of protective gear and said HCA was seeking to delay scheduled pay raises or threatened layos. Executives adopted a similar strategy for corporate employees in early April, ordering a 10 percent cut in salaries in order to retain every job while shielding providers from salary cuts through the brunt of the pandemic.

At the same time, HCA was partnering with Google to develop a COVID-19 data repository to help communities and researchers understand how the virus was spreading and aecting hospitals across the country. HCA’s 185-facility network — which already tracks more than 35 million patient encounters annually — and 4,000 other hospitals across the country now submit data to the platform daily, updating metrics such as bed utilization, ventilator supply and syndromic trends.

HCA was one of few hospital operators that could say it wasn’t facing potential supply shortages in April, although executives did put in place conservation protocols to help build up stores. When the American Hospital Association developed a public-private partnership to address the severe lack of ventilators on the federal level, Hazen was able to take part in a White House brieng to say HCA could contribute 1,000 of its ventilators without putting any of its hospitals at a disadvantage.

To date, HCA has received nearly $1 billion in federal coronavirus aid — the largest pay

out received by any hospital operator in the country. at has come with some criticism of the company — which netted $3.5 billion in prots last year — but Hazen says the aid doesn’t even begin to cover revenue losses.

“It recognized the signicant revenue disruptions providers had during this response and the expense they had in preparing for COVID patients in their marketplace,” he says of the federal funds. “I view that as much more a business interruption insurance kind of eort. It was a fraction of a percentage of the revenue disruptions that I think systems had over time.”

Now, Hazen says his team is assessing how changed consumer demand and the expected growth of telehealth will shift HCA’s growth strategy. Prior to the pandemic and counter to most market trends, HCA had grown its same-facility admissions for 23 consecutive quarters. By the end of April, however, its inpatient admissions were down 30 percent and surgeries were o 50 percent.

As states began reopening in May — notably Florida, Texas and Tennessee, which are the company’s largest markets — those metrics began to recover. By mid-May, Hazen said admissions were down only 15 percent yearover-year while surgeries were down 20 percent. But with coronavirus fears still looming and unemployment likely to be an ongoing economic drag, where those numbers settle remains to be seen.

Tivity Health As gyms shuttered and nursing homes went into lockdown across the country to protect people from becoming infected with COVID-19, programs projected to make up more than half of Tivity Health’s sales were grinding to a halt. Worse still, the lockdowns were coming after the company in February had written down about a quarter of the value of its Nutrisystem acquisition and CEO Donato Tramuto left, moves that dealt a massive blow to Tivity’s share price. Combined with the COVID-induced market slide, Tivity shares tumbled from more than $20 at the beginning of the year to below $2 by mid-March.

Tivity leaders said they began to see membership drop and account suspensions rise in mid-March. ey reached 10,000 by the end of the month. ey mobilized resources — while transitioning 1,000 oce workers to work from home — to take their agship SilverSneakers senior tness program and other oerings virtual and quickly went from having hosted 500 online events in the company’s history to staging more than 7,000 in a matter of months. e SilverSneakers brand also oered free weekly workout sessions on Facebook Live, which executives say quickly attracted more than 50,000 viewers on average. e transition to virtual tness oerings did not make up for lost revenue from gyms shutting down, Tivity execs said in their rst-quarter earnings call, but the project does pave the way for additional revenue streams in the future.

Nutrisystem, too, changed course some as the pandemic took hold. By the end of March, a number of health insurers turned to Tivity seeking a way to provide food to isolated seniors. e managers of Tivity’s Wisely Well brand, launched in November as the rst spin-o product from the $1.4 billion Nutrisystem buy, began bundling packages of nutritional shakes, snacks and meals for delivery. e program was so popular that Tivity execs say that their entire stock was spoken for in short order.

Wisely Well’s success provided the rst glimpse of the Tivity-Nutrisystem deal’s promised cross-selling opportunities. Even as they’ve begun pondering a sale of Nutrisystem less than 18 months after buying the business, Tivity’s leaders are planning to keep the Wisely Well brand and say they would look to continue to partner with Nutrisystem should they unload that division.

What to do with Nutrisystem and how to position Tivity in a world where most gyms still aren’t open at full capacity is now in the hands of former Walgreens executive Richard Ashworth, who came aboard as Tramuto’s replacement in early June. By the middle of the month, Tivity shares had climbed back to about $11, near where they were changing hands after the news of the Nutrisystem writedown and Tramuto’s exit.

Cumberland Pharmaceuticals e COVID outbreak hit the United States as Cumberland Pharmaceuticals executives were in the middle of a national launch of their latest opioid-alternative pain management therapy focused on the country’s addiction crisis. CEO A.J. Kazimi and his team soon had to reprioritize their portfolio to home in on hospitals’ needs during a pandemic expected to test their capacity limits. e rollout of their next-generation Caldolor, an injectable form of ibuprofen the company markets as a hospital-based alternative to opioids, would have to make way.

“Hospital admissions have slowed and many elective surgeries have been postponed,” Executive Vice President and Chief Commercial Of- cer Martin Cearnal said early this spring. “We look forward to working with patients who can benet from Caldolor as places reopen.”

Instead, Cearnal said the team turned to the drugs in Cumberland’s portfolio that help hospitals free up valuable intensive care beds by treating symptoms associated with hospital-acquired infections. e company refocused its sales team on those eorts and marked down the prices of two of its brands — Vibativ and Vaprisol — to increase access for hospitals. Vibativ is a treatment Cumberland acquired in late 2018 for symptoms related to hospital-acquired and ventilator-associated pneumonia. It generated net revenues of $2.4 million in the rst quarter, 18 percent more than in early 2019. Vaprisol is an injection that balances sodium concentration in a patient’s blood from a condition known as hyponatremia commonly found in critical care units. It brought in about $209,000 in Q1 sales, down from more than $285,000 a year earlier.

By May, communities across the country had warded o worst-case scenarios for hospital usage associated with the pandemic. Hospitals began to reopen for elective surgeries but analysts have no indication on where volumes may settle. is could hurt Cumberland beyond cutting into sales: Clinical studies being conducted by the company are being delayed, Cearnal said in a call to investors, and could ultimately push back regulatory approvals of therapies now in experimental phases.

“Enrollment in the studies is currently limited due to the decrease patient ow and other restrictions associated with the medical centers across the country,” he said. “And while we wait for new enrollment, we are making sure patients who have already entered into study continue to receive their medication.”