Much has been written about the glucagon-like peptide-1 (GLP-1) drugs that have shown success in treating Type 2 diabetes and obesity, two of the more prevalent chronic conditions in the United States. The CDC reports that one in ten Americans have diabetes, primarily Type 2 (non-insulin), while 73.6% of adults over the age of 20 are either overweight or suffer from obesity.
It’s nearly impossible to watch television or any streaming device without seeing a slick commercial advertising these drugs. The first commercial to run in my viewing area during the Presidential Debate was for one of the weight-loss injectables. Novo Nordisk, which produces Ozempic (for Type 2 diabetes) and Wegovy (for weight loss), is single-handedly credited with driving up Denmark’s Gross Domestic Product by 1.8% last year, reversing what would have otherwise been a contraction. Eli Lilly and Company manufactures two drugs that use a similar GLP-1 technology: Mounjaro (Type 2 diabetes) and Zepbound, for Type 2 diabetes and weight loss, respectively. Other applications of GLP-1s are in clinical trials and include kidney disease management, sleep apnea, and addiction.
GLP-1s could significantly advance decades of population health management, the aims of which include improving access to healthcare and the use of preventive medicine for chronic diseases such as Type 2 diabetes. One could imagine that GLP-1s could be as impactful as the smallpox vaccine, penicillin, or fluoridated water. But unlike those groundbreaking medicinal and public health advances, GLP-1 drugs require changes in individual behavior to be effective over the long term. The drug elongates the digestion process, effectively suppressing the appetite, but it only works while an individual is taking it. If that individual doesn’t make lifestyle changes after discontinuing the drug, the risks of weight gain and Type 2 diabetes return. Also, these drugs may be cost-prohibitive unless covered by insurance or until generic brands are developed. Presently, Medicare covers the cost of the drug for Type 2 diabetes treatment but not for weight loss only.
Given the prevalence of obesity and Type 2 diabetes, it stands to reason that if one drug can change the trajectory of health outcomes, it can change how hospital care is delivered over the long-term. One could foresee a long-term capital planning exercise that would undergo new considerations such as a permanent shift in acuity if primary and secondary care volumes decline (like what the industry experienced during the pandemic) and a need for a higher skilled workforce if acuity increases. For decades, many hospitals have envisioned a future where their facilities become giant Intensive Care Units rather than general med/surg facilities. Emergency rooms would be utilized for true emergent care rather than a high-cost substitute for a primary care physician’s office. Could GLP-1s accelerate that vision if the blockbuster uptake of these drugs continues and patients learn to manage their lifestyle choices?
It is too early to know what the long-term health impact from GLP-1s will be, but we can learn from examining two relatively recent advances: statins, which manage cholesterol, and smoke-free health policies. Both have contributed to longer life expectancies. But longer life expectancies are also contributing to the increasing share of the population that is 65 and older, an effect compounded by declining U.S. birth rates. This means that Medicare’s role as the largest consumer of healthcare will grow, reducing price elasticity for many hospitals.
The Medicare program is already grappling with the healthcare economics of GLP-1 use. Recent analysis by the Congressional Budget Office (CBO) finds that the current prices of the drugs far outweigh any medical cost savings resulting from their use (although the CBO acknowledges that more research on the link between use of the drugs and spending on medical services is needed). As use of GLP-1 drugs becomes more widespread, we will have a better understanding of the long-term effectiveness of the drugs in managing chronic conditions and of their impact on life expectancy. Hospital leaders will also need to consider how these drugs may impact operations. Will certain service lines lose volume? At least one system has announced it will discontinue bariatric surgeries due to the increase in GLP-1 drugs. Will volume increases be seen elsewhere, as the healthcare needs of an aging population increase? How might shifts in volumes affect payer mix and revenues? What changes to operations will be required to maintain sustainable financial results that support capital affordability?
These questions are largely unanswered today. But now is the time to start thinking about what the impacts of this new generation of drugs might be. Over the longer term, capital and financial planning will need to balance the competing themes of shifting volumes, revenue impacts, and the healthcare needs of an aging population that these drugs—and other pharmaceuticals currently in development—might introduce.
