Trend | Financial Sustainability

COVID-19's impact on healthcare drives the need for a consumer focus

Trend | Financial Sustainability

COVID-19's impact on healthcare drives the need for a consumer focus

COVID-19 continues to severely effect consumers, physicians and health systems, and the end of its profound impact is not clearly in sight. During the pandemic, healthcare leaders found a way to focus and take decisive action to implement life-saving new care processes and embrace new ways to serve consumers, such as through telehealth. Many in the healthcare industry anticipate a post-COVID emergence of a "new" or "next" normal in healthcare.

Yet there is a real possibility that as COVID-19’s adverse impacts on health risks, service delivery volume and financial performance begin to recede, many physicians and health systems will simply revert to how care delivery was prior to the pandemic. Healthcare providers should resist this temptation and continue to focus on the consumer. Physicians and health system leaders should remain focused, agile and ready to partner to innovate to meet consumer expectations and gain their loyalty and trust.

Recent interviews with physicians participating in multiple delivery systems frame both the uncertainty and varying expectations about the post-COVID world. Our conversations with physicians elicited a variety of responses as follows:

  • A cardiac surgeon said, "I think we will be back to more normal soon."
  • A primary care physician remarked, "We’re never going back to the way things were."
  • A medical director proclaimed, "It’s a whole new world, and we have to drive constructive change."
  • A urologist reflected, "Patients prefer to come in and be seen."

An August survey by the Physicians Foundation found nearly 50% of the nation’s physicians believe the COVID-19 pandemic will not be under control until after June 1, 2021.a In the meantime, physicians and health systems must continue to deal with patient anxiety, reduced volumes, unfavorable changes in payer mix and poor financial performance. Consider the following impacts.

Reduced elective procedure volume. The pandemic’s disruption of the healthcare marketplace reduced the volume of elective procedures and ambulatory care encounters, creating a deep financial hole for many providers, particularly physician group practices of various sizes and specialties. On average, practices surveyed by MGMA in 2020 reported a 55% decrease in revenue and a 60% decrease in patient volume since the onset of the pandemic.b Procedural specialties suffered the greatest volume decline, with ophthalmology down 79%, dermatology down 73%, surgery down 66% and cognitive specialties declining between 30% and 47% in April 2020, the Commonwealth Fund reported in May.c

Reduced patient visits to providers. Despite a recent rebound, the Commonwealth Fund also reported the number of provider visits dropped by one-quarter to one-third lower than pre-pandemic levels. Moreover, the August Physicians Foundation survey found that some 16,000 physicians (8% of the nation’s 200,000 practicing physicians) closed their practices because of the pandemic’s impact. Although the impact of COVID-19 varies by market, provider organization and health system, the downward pressure it has placed on volumes and financial performance is widespread and irrefutable.

Deteriorating payer mix. On top of service volume declines, payer mix continues to deteriorate due to major increases in unemployment, leading to losses of private insurance coverage and increased reliance on Medicaid and self-payment by consumers that have heightened price sensitivity and an inability to pay. In an Urban Institute analysis, under a base case scenario, the uninsured population would likely grow by 7 million, employer-sponsored insurance could lose about 25 million lives (43 million under a high scenario), Medicaid could gain up to 12 million lives and the health insurance exchange would gain up to 6 million lives.d The Physicians Foundation survey found that 76% of the nation’s physicians believe that employment changes and the resulting loss of health insurance represents the second-greatest source of potential harm to their patients, behind the number one source of harm cited by 88% of physicians: a wave of COVID-19 cases in the fall or winter of 2020-21, which has come to pass.

Increased patient anxiety. The pandemic has created tremendous anxiety among patients. Consumer concerns include safety, their well-being, access to more convenient sites of care and use of services that allow them to stay at home. It is little wonder that people continue to avoid elective appointments or skip interactions with physicians and hospitals altogether. A recent survey found that over 50% of consumers were willing to defer their treatment for elective procedures for up to six months or longer until lockdowns ended.e Consumers are looking for safety and trying to regain a sense of hope, control, and connection, and to reduce feelings of isolation and anxiety. It will be critical for health systems and physicians actively pursue approaches to mitigate patient fear, improve safety, build trust and provide a connected and coordinated environment for patients.

Footnotes

a Physicians Foundation, 2020 survey of America’s physicians: COVID-19 impact edition, August 2020.

b MGMA, “COVID-19 financial impact on medical practices,” survey conducted April 7-8, 2020, with 724 applicable responses, about 75% from independent practices employing fewer than 50 FTE physicians.

c Mehrotra, A., et al., “The impact of the COVID-19 pandemic on outpatient visits: A rebound emerges.” The Commonwealth Fund, May 19, 2020.

d Garret, B., and Gangopadhyaha, A., “How the COVID-19 recession could affect health insurance coverage,” Urban Institute, May 2020.

e Changing consumer preferences towards healthcare services: The impact of COVID-19, Deloitte, August 2020.

About the Authors

Robert A. Dickinson, MBA,

is a director, BDC Advisors, San Francisco (bob.dickinson@bdcadvisors.com)

Pam Nicholson, MBA,

is a director, BDC Advisors, Denver (pam.nicholson@bdcadvisors.com).

Richard E. Ward, MD,

is a senior advisor, BDC Advisors, Detroit  (rick.ward@bdcadvisors.com).

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