Health systems in May were seeing a slow return to normal patient volumes as hospitals reopened for scheduled procedures, but the return to normalcy will be slow and nonlinear, according to a Moody's Investors Service report published last week.
Volumes begin to bounce back after extreme lows
Health systems saw a huge decrease in inpatient and outpatient surgeries during the peak of America's new coronavirus epidemic, especially after states commanded hospitals to cancel and delay scheduled procedures to increase capacity for Covid-19 patients and imposed stay-at-home orders to decrease possible coronavirus transmission. However, as states began to reopen, so too did hospitals, ambulatory surgical centers (ASCs), clinics, and other health care organizations, Moody's reports.
As a result, there was "considerable sequential improvement" in May when compared with the lows of April, according to Moody's.
For instance, while total surgeries at for-profit hospitals declined between 55% and 70% in April compared with surgery volumes in April 2019, they improved in May, though they remained down by between 20% and 40% when compared with May 2019. Similarly, procedures at hospital-owned ASCs, which were 80% to 90% lower in April of this year compared with April 2019, were 30% to 40% lower in May of this year when compared with May 2019, Moody's reports.
However, the report found that ED and urgent care volumes did not have as significant of a comeback. In April, ED and urgent care volumes were down by about 50% to 60% compared with April 2019—and in May of this year, these volumes were still down by 35% to 50% compared with patient volumes in May 2019.
Moody's researchers said the slower increase in ED volumes may indicate that "many people remain apprehensive to enter a hospital, particularly for lower acuity care." The volumes could also reflect a lower prevalence of injuries overall, since people are "generally staying home, which is leading to a decrease in automobile and other accidents outside the home," the researchers wrote.
Non-linear path to recovery
Moody's said while the increase in volumes "could be temporary," it is likely the "recovery will continue throughout the rest of the year."
Researchers explained in the report, "Patients [who] had been under the care of physicians before the pandemic will return first … to address known health needs," and "[p]hysicians and surgeons will be motivated to extend office or surgical hours in order to accommodate these patients." However, patients who don't already have a physician or a diagnosed condition might be slower to schedule appointments, potentially leading to higher acuity patients later on.
Further, in the case of regional outbreaks or a second wave of coronavirus cases, the researchers said hospitals have expanded testing capacity and stocked up on personal protective equipment to be more prepared to treat an influx of Covid-19 patients. "As facilities open up, they are reconfiguring their services, processes, and waiting rooms to protect workers and patients," the researchers wrote. "These factors make it less likely that the United States would once again shutdown all nonscheduled care across the nation if there is a second-wave of coronavirus infections."
However, the "path to normalized volumes [is] not linear," the report said. According to the report, it's unclear whether the increase of volumes in May stemmed from "true demand" or merely a "pipelin[e] of postponed procedures."
In addition, the success or failure of various states' reopening plans will likely cause "hospitals' ability to perform scheduled procedures to vary widely across geographies," the report stated. For instance, researchers at Jeffries found that hospitals in Arizona, which is experiencing an increase in new coronavirus cases, saw "record lows" in hospital traffic last week, even after seeing an uptick in May, and Texas recently canceled scheduled procedures in four counties in light of the state's own growing outbreak.
"[T]he shape of recovery will vary by state, region, and service line," the Moody's researchers said.
Bottom lines will likely take a hit, report states
While the Moody's report believes "well-established" hospitals will be able to make it through 2020 without major liquidity challenges, in large part because of government financial relief programs, the researchers said they think bottom lines may take a hit eventually, even if patient volumes return to normal by next year. According to the report, facilities are required to pay back accelerated Medicare payments this summer. In addition, the country's unemployment rate could result in more people losing their employer-sponsored health insurance.
"While we believe volumes could normalize in early 2021, margins will remain challenged if unemployment continues to rise and people who lose their employer-sponsored health insurance shift to Medicaid, buy insurance on the exchanges, or become uninsured," according to the researchers. "This will lead to rising bad debt expense and a higher percentage of revenue generated from Medicaid or [Affordable Care Act] insurance exchange products, which typically pay considerably lower rates than commercial insurance" (King, FierceHealthcare, 6/22; Reuters, MedCity News, 6/22; Shinkman, Healthcare Dive, 6/19; Champagne, Texas Tribune, 6/25).