Summary
Hospitals are experiencing a reduction in the number of Commercial/Privately Insured patients seeking elective procedures. Some hospitals are more significantly impacted by this than others. How low will the patient volume drop and how long will this reduction last?
Analysis
Approximately 50% of hospital inpatient admissions originate from the emergency room (ER). The remaining admissions are often a mix of elective surgeries and admissions from other facilities. The percentage of patients that arrive through the ER are often urgent or emergent cases. These types of cases would not normally be reduced by an economic downturn. The admissions derived from elective surgical procedures will be the ones that will continue to drop.
Therefore, as we analyze the reduction in patient volume its important to differentiate exactly which patients and procedures will be affected. Furthermore, hospitals that have a high percentage of Medicare and Medicaid patients are unlikely to see reductions in either emergent cases or elective procedures. Urban and inner city hospitals are unlikely to experience significant reductions. Medicare will not be reducing reimbursement to hospitals due to a downturn in the economy. state Medicaid agencies are concerned by the increase in enrollments and loss of tax dollars but would be unlikely to reduce payments to hospitals. Medicaid agencies either reduce beneficiary benefits or change eligibility criteria in order to balance the budget. As a result it will be those hospitals that have a significant Commercial payer mix and a high volume of convenience surgeries that will see the reductions.
Suburban community hospitals, academic medical centers and other hospitals that derive revenue from either large orthopedic programs, cosmetic or bariatrics programs are likely to see dramatic reductions in the demand for those services over the next 24 months. Some hospitals are already reporting 20-30% reductions in those areas, based upon an American Hospital Association survey.
This reduction in procedure volume is likely to continue for as long as the recession worsens. As unemployment increases procedure volume will continue to decline. Patients are unlikely to take off from work or pay the deductibles and coinsurance for these procedures.
Martin Gold
Technology Access Partners
