Elective surgeries – a “significant portion” of hospital revenue – are being deferred or cancelled. A former VP at HCA Healthcare Inc commented in an Interview that, among the impacts, there could be difficulties when restarting booking surgeries. “They’re not seeing patients, so they’re not building additional tail into their business, and so consequently when they come back, they’re going to have to pick up from where they were.” However, there is likely to be pent-up demand, as “nobody forgets that they need a knee replacement”, but the timing of the bounceback depends on the depth of the current recession and employment levels. People will wait until they’re employed again and therefore insured before seeking treatment rather than paying out of pocket.
One salient question is what will need to happen before people feel comfortable returning to hospitals. As the aforementioned expert puts it: “when people can come back and they need that elective procedure, they will choose a location that is, quote, unquote, COVID-free.” This is where ambulatory surgery centres (ASCs) could come in, as they feel removed from usual hospital settings where patients with COVID-19 are being treated. As the name suggests, ASCs focus on outpatient surgery, but they can also include preventive and diagnostic procedures. Insurers prefer ASCs from a cost perspective, the expert noted, and as a result may also be more liable to direct people there too. “Overall, I think ASCs will be a big winner from this, and I think that habit will stay for a long time, especially if patients receive amazing care at the ASCs.”
Many specialties are reeling from the cancellations wrought by COVID-19. Radiology, one area that Third Bridge explored in Q2, has seen volumes plunge by “50-70% in some cases”, since the start of the pandemic, according to a former VP at Radiology Partners Inc. A second wave could be disastrous for radiology providers. While some companies would be able to weather the storm for a few months, “people aren’t making any money, there’s no volume coming in the door.” With the variety of firms across the US, it’s obviously only possible to look at it on a case-by-case basis, but our specialist believes that “smaller to mid-sized groups probably have somewhat of an advantage right now.”
Despite the substantial volume declines, “the good news about imaging is that it can come back very quickly”, as radiology is integral to myriad healthcare functions. Although many radiologists are already set up to work from home, “you still have to have a patient come somewhere to get scanned”. Resuming normal radiology services will therefore partly depend on people’s comfort levels – the same issue with surgery. Disinfecting rooms between patients could take 30-45 minutes, according to the former VP, reducing the amount of patients that can be seen and adding costs. This is particularly damaging, as “the name of the game in imaging, honestly, is how much volume can you bring in. It obviously has to do with patient care but it is about volume, first and foremost.”
More than one specialist believed that people’s behaviour when accessing treatment could change permanently. Telemedicine enables people to communicate with doctors and access treatment while helping to reduce the spread of COVID-19. As a former VP from Teladoc Health Inc pointed out, there should be stickiness as people experience the benefits: “the data has always said that once someone uses telemedicine one time, they come back to it multiple times.” Indeed, the Centers for Medicare & Medicaid Services (CMS) changed its rules surrounding telehealth in response to COVID-19. Prior to 2018, the CMS did not allow for much reimbursement in this area. However, among the recent adjustments, CMS has expanded telehealth coverage to all beneficiaries and made it easier for healthcare providers to offer such services.
The US market is “much more penetrated than international markets”. Notable players include Teladoc, American Well and Doctor on Demand. Some companies opt to focus on partnering with payers and health plans, whereas others, such as Teladoc, zone in on the employer market. There are positives to each approach. For example, payers provide a greater member volume, whereas direct relationships with employers leads to greater utilisation, as explained in our Interview. One “elephant in the room” for the competitive landscape is the question of “what is Amazon doing with their healthcare venture that they’ve been working on over the past couple of years?” Amazon has already entered into pharmaceutical delivery, and made some healthcare acquisitions, but the company is seemingly keeping its cards close to its chest.
Looking into specific services that could be in-demand as a result of the coronavirus pandemic, behavioural health was brought up by two specialists. As one expert explained: “I think in the months moving forward, the providers that have the well-built-out behavioural health capabilities are going to be the ones that are a little more sticky for a member.” With people isolated for extended periods of time and living in highly stressful situations, there has, according to another expert, already been a pick-up in demand for these services, “and I don’t think that’s going to go away”.
States’ varying initial responses to the pandemic, in addition to some prematurely resuming “normal” life, is leading to a fractured landscape across America. Although there seem to be some bright spots among what is a badly affected healthcare system, the recession and upcoming presidential election add to the country’s future uncertainty.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
For any enquiries, please contact sales@thirdbridge.com
