New variant, new challenges: How are we coping with Omicron?

In this episode of The McKinsey Podcast, Shubham Singhal, senior partner and global leader of McKinsey’s Healthcare Practice and Public Sector and Social Sector Practice, shares his expert thoughts with Lucia Rahilly, global editorial director, on the impact of the COVID-19 Omicron variant, telltale signs of an endemic, and how business and society must continue to adapt. After their conversation, we hear from Katharine Hayhoe, a climate scientist and author who says when it comes to the environment, there’s a case for hope. The following transcript has been edited for clarity.

The McKinsey Podcast is cohosted by Roberta Fusaro and Lucia Rahilly.

The state of Omicron

Lucia Rahilly: Shubham, welcome to the podcast.

Shubham Singhal: Thanks, Lucia. Glad to be here.

Lucia Rahilly: Let’s start with a little bit of context on why the Omicron variant seems to move so staggeringly quickly.

Shubham Singhal: The Omicron variant has a few important characteristics that makes it spread so fast. First, it actually evades prior immunity. The mutations were enough that even if you have a vaccine or if you’ve had prior infections, it evades that. That means that many more people will get the infection and are not immune to it.

The second part of it is it is more transmissible. Even if you have a mild infection, you can spread it to others. That’s why we see this very, very rapid increase in the number of cases.

Lucia Rahilly: And is that a typical trajectory for virus variants?

Shubham Singhal: In general, for a new variant not to emerge but to take hold, it has to out-compete the dominant strain. The way it out-competes is by spreading faster. So, yes, that is the natural trajectory. That doesn’t mean that every variant that emerges is going to be more transmissible, but the one that takes hold is more transmissible just by definition.

Lucia Rahilly: We heard a lot about herd immunity at earlier stages of this pandemic. What do we expect there?

Shubham Singhal: I think early on there was hope that, particularly with vaccinations and also by prior infection, we could get to herd immunity in a sense that we would be immune from further infection.

There’s general consensus today that we’re unlikely to reach that. Just take Omicron, for example. If it can evade immunity as a new variant, then it’s really hard to say we can get to herd immunity. If a virus will break through, there is no real definition of herd immunity.

The consensus is that COVID-19 will become endemic from the pandemic, which means that we will live with it like we do with the flu without as grave consequences as today.

Signs of an endemic—are we there yet?

Lucia Rahilly: So many of us who were hoping for that hard stop have to recalibrate now toward endemicity. How do we know when we’re in an endemic phase?

Shubham Singhal: It is not a light switch event to get to an endemic phase, because it is as much about the behavior and psychology that we all exhibit as it is about the epidemiology of the virus itself. So what do I mean by that? A few things will have to be true. We will have to have a level of disease burden—let’s think about deaths and severe disease, which gets to a level where we’re not overwhelming the healthcare system or having very large numbers of fatalities.

This is where, for example, Omicron has given some hope because it is a less severe strain, which has now taken hold. For the most part, particularly for those that are vaccinated or have some prior immunity, the disease is not very severe.

The second part of it, which is as important, is do we mentally get to a place in endemic that we are comfortable getting on with life? We’re comfortable going to schools. We’re comfortable going to a mall. We’re comfortable going to restaurants. We’re comfortable getting together in our homes with our friends. That is a bit of a psychological point that people have to get to and say, “You know, this is something we’ll live with.”

As we write in our article that we published on pandemic to endemic, we all still get into a car, strap on our seatbelt, and drive. We still have a lot of deaths on the roads, even today. And another part we can explore has less to do with the disease itself but rather its impact on business and on the economy and our lives and livelihoods, and that is when we are just able to be in a sense of normal without quite the level of volatility that we have.

Lucia Rahilly: That’s really interesting. Let’s go a little deeper into a few of those examples.

Do you see movements toward endemic-style behavior in, for example, the US public-school systems where policy makers seem to be assessing the trade-offs differently than during earlier phases in the pandemic? And here I’ll say that were we recording this conversation last year at this time, I would have been bracing myself for the interruption of one of my school-age kids asking me for a cookie. Both of them are now fully back in the classroom. Is that an example of a shift toward more endemic-style decision making?

Shubham Singhal: It is. There are two things on this where consensus has to emerge. One is, what is the risk? So, again, essentially severe disease or death, what is the risk?

And for a lot of the population, as vaccinations have happened—including for children, although not all of them are eligible for a vaccine—there’s a greater degree of comfort that people have that at least the worst outcome is largely off the table: death.

The other side of it is, we learned through the lockdown, that the learning loss was quite meaningful and substantial. If you just look at math, the learning loss is quite a lot more substantial for younger students. First of all, this happened because the way that they learn is by being in person and interacting and not just sitting on a video call, if you will. The second part of it is that we saw a degree of inequality really emerge as well.

So it’s one thing for those who have the resources and have the space in their homes, and good Wi-Fi, and an extra computer, and so on, versus neighborhoods and populations where they don’t have access to that. So we now understood what the risk is on the other side, which is we will have a population fall behind and inequality increase. We then balance that against a reduced risk of severe disease or death, which, as vaccines came in, we looked at it and said, “We have to just have schools go on with [in-person learning], recognizing the risks, recognizing that we’ll need masks and other protocols. But we just have to keep moving forward because the cost is too high.”

Healthcare hit hard

Lucia Rahilly: Media headlines now seem to be teeming with stories of hospitals under strain. We spoke recently on this podcast with Gretchen Berlin, one of your colleagues in the healthcare practice at McKinsey, about the protracted pressure that nurses are laboring under and what might be done to help. What are you hearing from hospital employers about what they’re grappling with now?

Shubham Singhal: I was talking to the CEO of a pretty significant hospital system in the Midwest. This was at the beginning of January, and he said, “For the month of January, I’ve had to postpone all of the other care and elective surgeries because we are overwhelmed with COVID-19 patients.”

What is further interesting within that, in the ICU [intensive-care unit], beds are full, and for 93 percent of the admits, the patients were not vaccinated. Which is why Omicron, while it is less severe, for those that don’t have a vaccination or in some cases a prior immunity, they are ending up in the hospital, and so we have overwhelmed them. We have seen this in other geographies, where there’s higher vaccination rates. Some countries in Europe, you don’t see that same pattern of the system getting overwhelmed.

The other side of it is exactly as you said. As Omicron spread and particularly spread to those who are also vaccinated, not only is nursing staff stretched, a lot of the nurses then fall ill or get infected and are not able to work.

So the combination of the two is causing a fair amount of overwhelming of the system now. In a world where we are vaccinated, in a world where we have a degree of immunity where infection does not lead to hospitalization as much or as often, then our health system can handle it.

And that’s the definition of endemic. Because our health system is designed for and should be able to handle severe conditions. But it is not designed for these kinds of spikes that we’ve seen during COVID-19.

One other thing, Lucia, is that there is a real human cost to some of these overwhelming of the healthcare system. Elective surgeries have been postponed. These are not discretionary. This is not like, “Oh, it’ll be fine. A bypass is an elective surgery.” Bad things can happen with your cardiac condition, with a number of conditions that people have. So there’s also a very real cost that has emerged on people’s lives, of not getting their required care, because we’re so overwhelmed with COVID-19 patients.

The talent gap widens

Lucia Rahilly: There’s the human cost of that, which is obviously enormous, and the priority. There’s also the way that the interruption to health and well-being contributes to loss of work, as you described with the nurses getting sick. Are we seeing talent shortages and the talent gap, which was looming as we went into this pandemic, getting worse during this Omicron surge, and how are leaders navigating that?

Shubham Singhal: It absolutely is. We’re still short by four or five million employees. Some amount of that is due to the accelerated retirement of those who were close to retirement. Are we going to get them back? I don’t know. Some of it is, for example, women with children who deal with the disruption with schools and the like. And, frankly, in many cases fear, where, if you have children under age five who don’t yet have a vaccine, how do you protect your family?

So that’s another issue that is kind of straining the system in terms of a talent shortage. On the other hand, when COVID-19 hit, we worried, “Wow, the economy will go into a deep recession.” It was deep, but it was very short-lived and bounced out.

We have eclipsed the size of the economy we had prepandemic with the growth that we’ve had. So now just imagine we’ve got the same size or bigger of an economy with five million fewer workers. That is a lot for us to be able to absorb. And that’s why, across the board, we have talent shortages that are playing out.

What Omicron did with the airlines, they have a protocol if employees get infected: they have to quarantine for an amount of time and not show up to work. You already have a worker shortage. You add to it when people have to be out of work.

The continued supply chain challenges

Lucia Rahilly: That’s right. Shubham, you also mentioned supply chain and the supply chain issues that have resulted from the pandemic. How do we expect the current spike in COVID-19 infections to affect supply chain resilience?

Shubham Singhal: It’s a very good question, Lucia. First of all, over the years or decades, we built up a very efficient global supply chain for most things, which was built to be just in time and highly efficient. What we learned is that while it is designed to do those things, and it’s quite remarkable, it’s not necessarily as resilient as we would like it to be.

To be fair, there’s also a demand spike on goods that has happened during the pandemic. People can spend on services to go out and go to restaurants, et cetera. They spent a lot in goods: a 17 percent global increase in demand for goods is a lot to be able to fulfill. That is just on the demand side. On the supply side, you can have manufacturing shut down. You can have ports shut down due to not being able to operate at full strength when there aren’t enough people to come in because they’re infected.

The realignment of supply chains to incorporate resiliency takes time. But also, I would be hard pressed to imagine that we’ll continue to have many years where we would have close to 20 percent increase in goods demand that is straining it in either direction.

As we hopefully get beyond this, we’ll all stabilize our own purchasing patterns, spending more on services and experiences and a little less toward the goods that we’ve all been buying from our favorite online retail store while we’ve been sitting at home. So that will readjust too, and will help alleviate the pressure.

Lucia Rahilly: Let’s turn to talk a little bit about what business leaders can do. When Omicron emerged, many companies were on the brink of implementing plans for at least a partial return to the office. How can business define its new normal? Does Omicron simply mean delaying that return? Or does it materially change the calculus for how returns should be managed?

Shubham Singhal: One of the things that we said about the transition from pandemic to endemic is to ask what is it that we need to do as a society? Business is a major part of that, and business leaders have to lead within that.

Rather than saying, “Oh, we’ll get beyond Omicron and all will be well,” to really get this comprehensive approach to management for an endemic COVID-19 in place, what is the first pillar of that? Define what the new normal is. And business leaders need to do this with their employee population.

So this is a difficult conversation but one that leaders need to build consensus around as to what will we accept if there’s one case in an office. Will we shut down for the next ten days? Or do we know how to kind of be able to deal with it, in an endemic world? They are going to have to do that, because that alignment and expectation setting with employees is very important. It can’t be, “Oh, come back now because cases are low,” and then, “Well, never mind. We’re not going to do it because the next variant showed up.”

The second part is, they have to be able to track and be transparent on where we are against those goals. So there will be times where the virus spread may be so wide that we have to resort to a bit of a retrenchment from being in person.

What are those thresholds? How do we know, in a way that we can trust, this is actually playing out? Also, there needs to be transparency on what you are going to do. Do you have a vaccine mandate or not? And if you have a vaccine mandate, how is your company stacking up against that mandate? Then we’ll know at this point, we’ll need boosters. Again, how is your company stacking up against booster adoption? Those are all points that will have to be tracked and communicated.

The other thing that workplaces will have to do is to answer, “Are we just going back to the workplace?” Many times we had stale air; we had open cubicles. Or have we learned from this and said, “We have installed and reconfigured our workspaces in a way that we limit some of the spread”?

Business leaders have done a great job through this time working with public-health authorities and others to make sure we have the right level of investment. You know, it is remarkable how quickly we develop the vaccines. It is great to see treatments coming out, but we’re going to have to make sure that we continue on with those, because for those people where bad outcomes happen, we’ll need to have the right treatments available.

Business has a very big stake as leaders to be engaged in making sure that the moment we have a couple of months of low virus spread, that we remember to make the investments needed to ensure that when and if a variant emerges, we’re able to have those protections in place and, frankly, more protections in place than we’ve had in the last year as well.

Companies getting it right

Lucia Rahilly: Are there any sort of specific examples of tools or approaches that you’ve seen leaders adopt successfully, especially those who have already navigated the transition back to in-person working? What’s the role of testing, for example, in return-to-office plans? And do we think testing, to your point about thinking beyond, will cause an immediate slow of the spread?

Shubham Singhal: On your first question, about what we have seen people do—there are many. For example, in manufacturing in the food industry, they went back to work early, well before the vaccines even came out, and they did learn a lot.

We saw one employer that has been able to achieve very high levels of vaccination, above 90 percent. And they are located in a geography that has been persistently low, in the 40-some percent rate of vaccination.

This employer had onsite testing and vaccinations easily available, so no one had to find it, go somewhere, schedule it, et cetera. So they caught infection as early as they could. So they could then kind of contain it from spreading very significantly.

Lucia Rahilly: How did this employer change their office configuration for safety?

Shubham Singhal: They had to figure out and, for example, create pods of employees that came in at different times. They knew, the shift starts at eight, everyone shows up at eight, bunches up around the entrance and so on. We of course don’t want that to happen. So how do you sequence and create different times that different people will come in?

So they did that. They made changes in the factory workshop floor to make sure that only that part of the staff interact with each other. So we minimize the kind of not knowing. So if there is an infection, we can quarantine just that group versus having to shut down the whole site.

They literally mapped through and looked at how people walked through their facilities and reoriented how that happens so that no two people would cross each other as they walked around. You saw this when stores opened as well, pathways that marked where you stood. It was one-directional.

The future of mask wearing

Lucia Rahilly: Do you think testing and masks are kind of durably in our future in the workplace?

Shubham Singhal: Many of the countries that dealt with the early-2000 SARS epidemic were actually quite a bit better prepared going into this pandemic—or the epidemic as it began—in parts of Asia, and they have adopted mask wearing. Particularly at different times of the year, you’ll see many people wear masks.

Now, whether every country will be willing to do that? That’s a societal choice over time. But we do know they are effective, particularly if the spread is high. I can imagine, even in geographies where people don’t want to adopt mask wearing into in their lives, or workplaces, or other places where people gather, you could see adoption emerging seasonally. For example, maybe the summer is OK to [wear a mask], but next fall or winter, we again have heightened risk and we see [the masks] come back. Testing for infection is an interesting one, because I think for a period we would see it used. The reality is it is also quite expensive today.

So how much testing is ubiquitous and not will depend a bit on the ability for us to get some of the cost of testing down. Now, even an antigen test today is somewhere between $15 to $25. If you’re doing that very regularly, that adds up quite quickly, and a PCR test is closer to $200. We are going to have to see if testing becomes and stays a big part of how we manage. We’re going to have to figure out how to innovate, to have the cost come down to about a dollar or $2 a test.

Endemicity across geographies

Lucia Rahilly: How might the timeline to endemicity play out differently across different geographies?

Shubham Singhal: I think the most important driver is, what is the level of immunity in the population? Even if it’s not immunity to infection, it’s immunity to a severe disease and death.

The most effective tool that we have for that today is vaccines. So what you will see is countries in which we have high penetration of vaccines and particularly high penetration of high-efficacy vaccines, and added to that are cases of prior infection which does also bring some degree of immunity. The combination of that will determine how quickly they move to endemic.

Countries have followed very different paths not only on vaccination rates but also on the level of spread that they have in their population. So we will continue to see a great degree of variability across countries in terms of when they approach endemicity.

Optimism as we move forward

Lucia Rahilly: You have been at the forefront of McKinsey’s COVID-19 response efforts since the outbreak of the pandemic almost two years ago. How optimistic are you that we have brighter days to come and on what time frame?

Shubham Singhal: I should say at the outset that the cost to human life in many ways has been very significant and continues to be. That is something that we all have to live with and it has affected us. But if you look ahead, you would say there are brighter days ahead because we have figured out how to do certain things in the space of less than two years. That to me is the part of optimism, that we have done so much and innovated so much because of necessity.

And as we harness that and continue to learn from it, I think it’ll be great. So while we feel great about vaccines and the mRNA platform, the mRNA platform was created to try to treat cancers. Maybe we could get excited about where it goes next with the kinds of treatments we might be able to develop because we have accelerated some of our understanding of how this might work out. I don’t know exactly all the ways in which we will see improvement to people’s lives and livelihoods. I’m certain we will see, and to your point on timing, I think we’ve already seen a lot of it improve. It will only accelerate from here is the way I kind of see it.

There’s a lot to be optimistic about. It just is sobered by the fact that we have had so much loss of life.

Lucia Rahilly: Shubham, thanks so much for joining us today.

Shubham Singhal: Thank you.

Segment two: Author Talks excerpt with Katharine Hayhoe

Roberta Fusaro: Shubham expressed some optimism about the future of mRNA technology. Katharine Hayhoe is optimistic as well, but her focus is on the environment. She’s the chief scientist for the Nature Conservancy, and you’re about to hear a clip of her from our Author Talks series about the book she recently wrote: Saving Us: A Climate Scientist’s Case for Hope and Healing in a Divided World [Simon & Schuster, September 2021].

Katharine Hayhoe: As a climate scientist, I don’t find a lot of hope in the science itself, because often it seems like every new scientific study shows us that climate is changing faster or to a greater extent than we thought or affecting us in new ways.

The giant boulder of climate action is not sitting at the bottom of an impossibly steep cliff with only a few hands trying to push it up. That giant boulder is already at the top of the hill and it’s already rolling down the hill in the right direction.

And it already has millions of hands on it. And if we add ours, it will go a tiny bit faster. And if we use our voice to encourage others, where we work, where we live, that all of the organizations we’re part of, our place of worship, our neighborhood, our children’s school, it will go even faster.

Climate change is the most politically polarized issue in the whole country. And it’s not just the United States. And part of this polarization is expressed through science-y sounding objections.

People say, “Oh, it’s not real. It’s not us. It’s the sun. It’s volcanoes. You climate scientists are just making this all up to line your pockets with government grants.” If we wanted to line our pockets, there are a lot easier ways to do it than inventing a global hoax and maintaining it for 200 years.

That’s how long we’ve known that digging up and burning coal and gas and oil produces heat-trapping gases that wrap an extra blanket around the planet, causing it to warm. But today, just 7 percent are dismissive. Seventy percent of us in the US are worried about climate change already. Every single one of us has a role to play in fixing this.

The time to act is now, but what’s holding people back are two things I talk about in the book, psychological distance and solution aversion. When you poll people across the United States, 70 percent of people are worried, and more than 70 percent agree that it’s real.

About the same numbers agree that climate change will affect future generations. Then you ask will climate change affect you personally, and the numbers plummet. Only about 40 percent of us agree that it will harm us personally. And even those of us who are concerned about it, we still think it’s an issue for the future, for people far away, or for people who care about other things than we do.

The two hardest chapters for me to write in the whole book were the chapters on fear and guilt. Fear serves a purpose. Fear wakes us up. Fear shows us that there’s a problem. And if we don’t fix it, it is the fate of civilization itself that hangs in the balance. It’s not about saving the planet. The planet will be orbiting the sun long after we’re gone. It is quite literally about saving us.

If we know what to do with the fear, if we know how to act, then that fear energizes us. It motivates us to act. Fifty percent of people in the US feel helpless. That idea that if I do something, can I even make a difference? If we don’t think that we can make a difference, if we have no sense of efficacy, fear paralyzes us.

And here’s the thing: if we don’t act, we are doomed.

We have something that is more powerful than our footprint, more powerful than our individual actions. And that is the shadow that we cast.

I started looking at history. I started looking at our modern industrialized society. I started looking at how things had changed radically and significantly. Civil rights, women getting the vote, the eradication of slavery: the world has changed in really massive ways along the same scale of the changes that we’re talking about that must happen today.

And how did it happen? It was because very ordinary people, people of no particular power or wealth or fame, people, many of whom we don’t even know their names today—they used their voices to call for that better world, to advocate for change, to say this is not the way things should be and there is something better.

And because of them, the world changed. That’s the way it’s changed before. And that is the way it can and must change again today.

We all have responsibility, a differentiated responsibility, but a responsibility, nonetheless. So that’s what the big climate meetings are about.

These climate meetings are a chance for all of the countries to show up to the global potluck dinner, so to speak, and to bring their contributions. It becomes painfully obvious who is and who isn’t contributing their fair share to the Paris Agreement.

It encourages us to up our ambition together. So if I were prime minister of another country or the president of another country, I would be looking very carefully at all the dishes that people brought to the global potluck. It begins with them, our leaders using their voices too.

Here’s the thing: if we give up, if we decide that we’re doomed, we are. But what does make a difference is action.