Patient volumes at hospitals have rebounded after major dips in March and April due to the COVID-19 pandemic. But new data show they are still below pre-pandemic levels and could stay there for a while.
The stagnant volumes and the persistent spread of the virus have forced some hospitals to plan more conservatively in their budgets for the next year and embrace new ways to generate revenue, experts say.
“What we’ve seen since April is a slow recovery over time in particular with volumes and revenues,” Eric Swanson, vice president at consulting firm Kaufman Hall, told Fierce Healthcare. “However, it continues to be slow and it hasn’t been enough to make up for the impacts that were received in March and April.”
Inpatient volumes are still well below what they were last year, but outpatient volumes were only slightly below 2019 levels, he added.
“We’re seeing a long slog in the recovery of volumes,” he said. “Depending on the indicator we’re looking at, they’re 6% to 7% below here they were last year with [emergency room] visits down substantially more than that.”
A recent report from consulting firm Crowe found that volumes nationally for emergency departments were down 22.7% in June compared with average weekly volumes for the year prior to March 15. The report examined patient transactions for nearly 1,500 hospitals and more than 100,000 physicians using the Crowe Revenue Cycle Analytics solution.
That number is better than the volume emergency departments did on April 5, which was down by nearly 50%.
Crowe also found that outpatient services were down 7.2% in June, and surgery volume dipped 8.4% the same month.
The volumes haven’t appeared to improve in July, said Brian Sanderson, national managing principal for healthcare services at Crowe.
“We are gathering July data now and [it] looks similar,” he told Fierce Healthcare. “Every single health system [chief financial officer] I talked to in August follows the same pattern of the data you see there.”
Hospital profit margins, a key indicator of overall hospital performance, are also down. Kaufman Hall reported that operating margins were down 28% in the first seven months of the year—buoyed in part by federal COVID-19 relief funding—for more than 800 hospitals compared to the same period last year.
How to adapt
Hospitals are planning for the stagnant volumes to stick around for a while, especially as COVID-19 continues to spread across most of the country.
There are some hospitals that have their fiscal year end on Sept. 30 and are in the midst of planning their budgets, Sanderson said.
“What they are doing is they are projecting a 5% reduction in volume in the next fiscal year,” Sanderson said, referring to anecdotal talks he has had with hospital executives.
Others are being as conservative as projecting a 10% decline.
Hospitals need to think of new ways to weather the declines, which can range from cutting costs to finding new streams of revenue.
Many organizations have instituted furloughs and other cost controls to curtail expenses. But those measures have been offset by increased expenses in personal protective equipment and drug costs, Swanson said.
Hospitals could also start to cut certain types of specialty care that weren’t profitable but “from a continuum of care were good to have,” said Sanderson.
Providers could also look to new lines of revenue and create a more integrated system that brings payer and provider together, said Chris Plance, healthcare expert with PA Consulting.
He referred to systems like Kaiser Permanente and the University of Pittsburgh Medical Center (UPMC) that developed their own insurance plans.
“Even though the provider side reduced volume, the payer side has reduced medical expenses,” he said.
UPMC reported this past week that gains in its insurance business helped offset a major decline in volume on the healthcare services side.
A system should explore whether it can build a health plan to “sit on both sides of the volume,” Plance added.