The cancellation of elective procedures and low patient volume
are the main culprits, while analysts anticipate a modest rebound.
Hospital
and physician spending has been hit hard by the COVID-19 pandemic -- so hard,
in fact, that in April it reached its lowest point in more than a decade.
A
recent Altarum analysis shows that, due to the
cancellation of elective procedures and low patient volume, tanking healthcare
usage has contributed to a 24.3% decline in spending over a 12-month span,
hitting a low of $2.88 trillion in April. Hospital care spending dipped from
$1.25 trillion to $746 billion during that time.
WHAT'S
THE IMPACT
Hospital
spending and physician and clinical services spending fell by 40.7% and 40.9%,
respectively, while dental services declined by 60.8% year over year. As in
March, spending declined in all major personal healthcare categories except
nursing home care and prescription drugs, which rose 6.3% and 5.1% year over
year, respectively.
Interestingly,
the prescription drug rate is down from 14% in March, when patients may have
been stocking up over concerns such as stay-at-home orders.
The
health spending share of GDP fell to 15.7% in April. That's compared to 17.1%
in March and a mostly steady trend near 18% over the past four years, meaning
that healthcare spending is falling faster than the overall economy.
Overall,
national health spending is at its lowest point since July 2013; in just two
months, the country has gone from a seasonally adjusted annual rate of $3.98
trillion to $2.88 trillion.
Several
ominous milestones have been met. Personal healthcare is the lowest since
February 2011; hospital care spending was last lower in December 2008;
physician and clinical services is the lowest since November 2006; and dental
services spending is at its lowest since July 1998.
With
the start of reopening of the U.S. economy in May, Altarum anticipates a modest
reversal of these spending declines.
THE
LARGER TREND
With
the gradual opening of the economy comes the resumption of elective procedures,
and a recent Vizient survey found that more than half of patients feel at least somewhat safe about returning to
the hospital for these procedures.
Patients
will most likely come back to their elective procedures in waves, Vizient
found. The initial wave of patients will include those pining to move forward
no matter the risk (oncology patients, patients impaired in their activities of
daily living or those in pain), followed by a second wave that may feel safe
because of their perceived low personal risk or need for a low-risk procedure
with little follow-up.
When
these first two waves are scheduled for their elective procedures, physicians
will need to engage the next potential group of patients – those who feel less
safe – to ensure a steady stream of revenue. These patients are almost
guaranteed to have questions and will need to have discussions with their
doctor about their risks and benefits.
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