As we look back on 2020, there is no doubt that the impacts we have seen as a result of the COVID-19 pandemic will stay with us for the next few years at the very least. The pandemic has drastically changed how we go about our daily lives, how we work, and how we interact with others.
One industry that has been at the forefront of these pandemic impacts is the healthcare industry. Since the coronavirus outbreak started in the US, the healthcare industry has made drastic changes to how facilities operate, allocate resources, and how their staffs handle patients. There is little doubt that these impacts will have long-term effects.
Impacts on Revenues
Unlike previous recessions where the healthcare industry continued to thrive during an economic downturn, the COVID-19 pandemic resulted in lower revenues for many hospitals and healthcare facilities. This negative impact on revenues is primarily attributed to the fact that many of these facilities have reduced or even eliminated elective procedures and visits to help reduce the spread of the virus. While most think of cosmetic procedures when they hear “elective,” it also includes a wide variety of procedures like removing kidney stones or cancerous tumors.
The vast majority of facilities impacted by these changes were private practices, such as dental offices, OB/GYN offices, and urology offices. Many of these private practices also closed down temporarily at the start of the pandemic. Once they reopened, they had to reduce the number of patients seen on a daily basis.
Hospitals also experienced a downturn in revenues as many procedures were canceled or postponed due to the outbreak. It’s estimated that between $16.3 and $17.7 billion are lost each month. Additionally, many healthcare facilities and private practices had to put off improvements to their facilities or rethink plans for expansion to help recuperate some of the losses for the year.
These impacts on revenues have also resulted in negative impacts on other areas, such as employment.
Impacts on Healthcare Employment
In the early months of the pandemic, the unemployment rate hit 14.7% — the highest seen since the Great Depression — with all sectors of the economy impacted in some form or another.
Historically, the healthcare industry has been viewed as “recession-proof” and mostly immune to many of the impacts that result from these periods of economic downturn. However, from February to May of 2020, the US Bureau of Labor and Statistics reported a change of -30% in employment at dental offices, -9% at physicians offices, -3% at hospitals, and -16% for other healthcare practitioners. While most of these private practice jobs have since returned as the economy reopened, we still see negative impacts on hospital jobs.
Overall, hospital jobs in 2020 are down 1.84% from January to October (see Figure 1 below). Compare this to the Great Recession, where there was actually an employment increase of 2.13% for hospital jobs in 2008. In fact, 2008 saw a steady increase in hospital jobs throughout the year with no period of downturn or job loss (see Figure 2 below).
Figure 1
*October and November are Preliminary Employment Numbers
Source: US Bureau of Labor & Statistics – https://www.bls.gov/iag/tgs/iag622.htm#workforce
Figure 2
Source: US Bureau of Labor & Statistics – https://www.bls.gov/iag/tgs/iag622.htm#workforce
In Figure 3, we have all hospital employment data from 2007 through 2020. Over the years, we see a steady increase in employment levels of hospital workers — that is, up until coronavirus hit the US.
2020 is the only year where employment numbers dipped considerably over the span of the data. Throughout the recession of 2008, hospital employment levels increased before eventually plateauing between 2009 and 2011.
While overall employment levels within the US have started to rise again, it is clear that employment for hospital workers still remains below pre-COVID levels.
Figure 3
Source: US Bureau of Labor & Statistics – https://www.bls.gov/iag/tgs/iag622.htm#workforce
Impacts on Supporting Industries
Supporting industries in healthcare, such as those related to construction and compliance services, have also felt the impact of Covid-19 .
The medical gas services and installation industry is an example of one of these supporting industries. Medical gas inspectors and installers play a crucial role in providing services and equipment to care facilities that require life saving medical oxygen and air. While medical gas inspectors are more insulated from the impacts of covid due to regulatory requirements, installers are suffering due to postponed construction projects.
Loss of revenues from elective surgeries and exhausted budgets are the main reason for these postponed construction projects. While facilities are experiencing huge losses in revenue, they are also having to dig into emergency funds to facilitate the demands of Covid patients. While the main focus of healthcare facilities is on developing new emergency preparedness budgets, expansion and construction projects will take a back seat and will likely not recover until 2022.
Long-Term Implications
As the country continues to battle the second wave of coronavirus cases, it is clear that the impacts from the pandemic will not be soon forgotten. The healthcare industry in particular will feel these effects into the future and will see permanent changes made to how they operate.
With lockdowns still taking place in some areas, it is unlikely that many surgical facilities or private practices will be able to ramp up the number of patients seen to pre-COVID levels, which will continue to have a negative impact on their business and their ability to keep staff employed.
While hospitals continue to see more coronavirus patients each day, they continue to suffer financially from the canceled/postponed procedures that make up a large portion of their business model.
As a result, it is safe to say that recovery within the healthcare industry is very unlikely in the short-term, and many of these negative impacts will have long-term implications on the industry.
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