Covid-19 (Coronavirus): How We See It (Chapter 3)

      DMS held three crisis conference calls last week with primary sources. The subject areas were those that we thought clients and friends would find valuable in the short term.

      • First, we held a discussion on how to lay the foundation of a data science approach to studying a pandemic like Covid-19.
      • Second, we spoke directly with senior government policy officials from the United Kingdom to understand how economic and social policy is being decided and operationalized.
      • Lastly, representatives from large institutional allocators’ operational due diligence departments discussed their views on crisis ODD priorities.

      In total, we welcomed over 350 leading firms onto these calls, and the feedback we received has been extremely positive with requests for us to do more of the same.


      Our discussions were hosted by John D’Agostino and the summaries of these calls are set out below. Please note that the findings should not be considered attributable to our speakers, who are kind enough to agree to present under the condition that their comments remain off the record.

      Data Analytics surrounding Pandemics

      Our discussion with Mathematica centered around the significant difficulties associated with finding clean, reliable signals in the vast amounts of new, disparate data sets that are being generated by Covid-19. We covered some of the most likely data sources, specifically:

      Claims/admin data Claims are the backbone for research, predictive models, value-based payment models, certain quality measures, hospital quality improvement, and actuarial rate setting.
      1. Identifying Covid-19: three phases (pre-CDC guidance, interim CDC guidance, FY2021).
      2. Payment changes: Medicare is increasing all payments by 2% (removing sequestration), and hospitalizations with a Covid-19 diagnosis are bumped up 20%
      3. Location of services: increased flexibility for telehealth and medical care (e.g., ASCs, field hospitals, hotels, convention centers)
      Value-based purchasing (VBP) All payers craft VBP programs for a variety of providers and patient populations
      1. Volume vs. risk. Elective procedures are being reduced and discouraged, but VBP plans are waiving downside risks.
      2. Adjusting quality measures. Requirements for reporting data on quality are being relaxed or removed, meaning that quality measures will be missing or appear different for many providers. In addition, high-volume procedures that produced reliable metrics will now have much more statistical noise.
      Actuarial Payers and actuarial firms set rates based on historical claims data
      1. Challenge:Covid-19 is transforming payment rates and utilization, so traditional workflows and methods need to be adjusted.
      Technology Payers and regulators are opening up telehealth, virtual visits, and remote monitoring
      1. Patient perspective: which patients have access to telehealth and experience a benefit?
      2. Provider perspective: is reimbursement sufficient, and how will this change in-person visits longer term?
      3. Technology perspective: which platforms are most deployable at scale and achieve the desired outcomes?

      The UK’s Economic Policy Approach

      Representatives from the UK Consulate in New York reviewed the series of business support measures being implemented in the UK in response to Covid-19. The landing page for the measures discussed is hyperlinked here, as is the page for those that are self-employed.

      The UK Chancellor has set out a package of temporary, timely and targeted measures to support public services, people and businesses through this period of disruption, including:

      • A Coronavirus Job Retention Scheme
      • The deferment of VAT and Self-Assessment payments
      • A Self-employed Income Support Scheme
      • A statutory Sick Pay Relief Package for small and medium sized businesses (SMEs)
      • A 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England
      • Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
      • Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
      • The Coronavirus Business Interruption Loan Scheme, offering loans of up to £5 million for SMEs through the British Business Bank
      • A new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge disruption to their cash flows through loans
      • The HMRC Time To Pay Scheme.

      Allocator ODD Call

      We had a lively discussion with representatives from the operational due diligence community representing two large institutional investors. In general, and based on this discussion, allocators currently seem cautiously optimistic that business continuity plans are functioning. Due diligence functions for existing investors are adapting, with allocators and managers relying more on virtual meetings. The importance of third-party verifications/reference checks, has understandably increased.

      There has not been any indication that audits (for example) will be delayed. It was pointed out that there is an understanding on behalf of allocators that these are increasingly busy and stressful times for managers, and there is no interest in adding to that burden. Additional issues raised on this call are set out below:

      • Mid/long term BCP operations
        • ensuring that ongoing operational standards can be maintained if lockdowns continue, for example timely NAV production, risk oversight and audits
        • ensuring that regulatory standards are maintained for trader oversight
      • Monitoring vendors to ensure back-offices can sustain pandemic increases in parts of the world where outsourcing is centralized
      • Maintaining communication with investors if valuation or other critically important issues emerge
        • Particularly important if subscription/redemption activity will occur during volatile periods or periods where pricing data deteriorates
      • Planning for likely redemptions and ensuring that liquidity is generated in a reasonable and fair manner to remaining investors (i.e. not selectively selling off the most liquid parts of the portfolio).
      • Managers offering fee-discounted share classes to attract new or follow investment during the crisis should communicate how fee income will sufficiently support essential infrastructure.


      DMS continues to stay up to date with the latest Covid-19 (Coronavirus) developments and is following the guidelines provided by the World Health Organisation (WHO). During this time, the health and well-being of our staff, their families and our clients is our priority. The global DMS team is now working remotely and we are grateful for the hard work of our staff who have made this a seamless transition.


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