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COVID-19: The Impact on Hospitals and Elective Medical Procedures

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Though many sectors of the economy have been brought to a halt by COVID-19, global hospitals are under enormous pressure to meet the current high demand of incoming patients suffering from this respiratory illness.
April 7, 2020

Though many sectors of the economy have been brought to a halt by COVID-19, global hospitals are under enormous pressure to meet the current high demand of incoming patients suffering from this respiratory illness.

The impact on hospitals has had ripple effects across the entire healthcare industry. Hospitals, in treating the most severe cases, have made changes to their day to day operations in order to limit the spread of the virus due to its high contagion rate.

Projections of its spread and the evidence seen in other countries have led hospitals to prepare for the possibility of facing high stress in caring for those stricken. To handle the growing need for capacity, hospitals are taking steps to expand the number of both regular hospital beds and ICU beds.

In short the entire health care system has become primarily focused on treating this virus. The Centers for Medicare & Medicaid Services (CMS) announced on March 18, 2020 that all elective surgeries, non-essential medical, surgical, and dental procedures be delayed during the 2020 COVID-19 outbreak.1 This sentiment was seconded by other medical professional organizations like the American Dental Association (ADA),2  the American College of Surgeons (ACS),3 and the American Hospital Association.4

The CMS also released an outline detailing a three tier system to evaluate the delayed surgeries and assess whether or not they should proceed. Most procedures are advised to be postponed unless of high importance.5

In light of the CMS guidelines, hospitals must still provide care to patients with life-threatening illness. Patients with diagnoses like cancer are having to decide whether to undergo or postpone treatment until the worst of the COVID-19 pandemic has passed,6 placing high stress on these patients and their caregivers.

Hospitals must also balance the weight of their decision in postponing elective procedures due to COVID-19 concerns. As of March 21, 2020, some hospitals in the United States were still performing elective surgeries.7 These procedures are lucrative for hospitals, and the delay of elective procedures could harm their financial health.8

To cover their financial requirements, hospitals have increasingly begun to seek short-term commercial loans and expedited federal loans, driven not only by the loss of elective procedure revenue but also the increase in the anticipated supply of equipment needed.9 Hospitals have also begun to accumulate liquidity pools to handle potential financial dislocations in response to the pandemic with many opening lines of credit with banks to cover short term financing needs.10

Most physician practices, those with substantial office visits and elective procedures, have also been significantly impacted. As of March 20, 2020, 78% of respondents to a study stated that the current impact on their practice was high and 97% of respondents also stated that the impact had increased within the past week.11 Additionally, respondents estimated that the office visits had declined more than 50% regardless of specialty.12 Specialty practices and physician practices are also changing their decision making process in response to COVID-19 with many physicians delaying the start of treatment.13  These practices should look into the programs being put in place by the federal government for small business relief. The phase 3 stimulus package includes several programs targeted at them including one program that allows businesses to take out loans for essential expenses such as payroll, rent and utilities with those loans being forgiven if certain terms are met.

In addition part of the stimulus package from the federal government is focused specifically on hospitals. The package creates a $100 billion fund for grants to healthcare providers for COVID-19 care, Medicare payment increase, and delays in Medicare cuts with regard to labs.14 Additionally, the bill requires employers and health insurers to pay hospitals and labs the incurred COVID-19 charges if a contract is not in place and lifts Medicare’s cutting of payments to providers by 2% until the end of the year.15

The impact on hospitals from COVID-19 is clearly significant and will likely create volatility in the healthcare industry once it begins to recover from the strain currently being placed upon it.



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