The balanced relationship between COVID-19 and non-coronavirus utilization tipped during the second quarter, leading some of the largest health insurance companies to raise profit forecasts while health systems bemoaned the negative impact on their finances.
Health systems attributed the slump in inpatient services to staff shortages that limited procedures, telemedicine alternatives and fewer acute COVID-19 patients. Insurers credited the decline to patients deferring care due to rising inflation, the availability of more cost-efficient value-based care payment arrangements and care shifting from hospitals to less expensive outpatient sites.
This condition may be short-lived. Volume is down compared with before COVID-19 arrived, but that appears to be gradually changing. “It's not at 2019 levels, but it's trending towards that,” said Glenn Melnick, a health economics and policy professor at the University of Southern California. “Volume is going from minus 10 to minus five to minus three-something. It's still below, but the trend suggests that it's going to return to normal, certainly at some point this year.”
Changes in volume
Fewer patients are being admitted to hospitals but those who are tend to be sicker, said Erik Swanson, senior vice president of data and analytics at the consulting firm Kaufman Hall. Higher inpatient acuity and longer stays at Mass General Brigham led to a 5% decrease in discharges during the quarter that ended June 30, which denied the Boston-based not-for-profit hospital of revenue it would have gained from new intakes.
Inpatient surgeries, in particular, are lagging. Those volumes are about 18% below the pre-pandemic level, according to a Kaufman Hall analysis of 900 hospitals. Inpatient surgery volume fell 4% in the second quarter at Nashville, Tennessee-based HCA Healthcare's facilities. Inpatient surgeries at Boulder Community Hospital in Colorado were down 3.4% in the first half of 2022.
Community Health Systems CEO Tim Hingtgen described second-quarter volumes as “relatively choppy, kind of fits and starts” in an earnings call last month. The Franklin, Tennessee-based for-profit company experienced an uptick in volume after the omicron surge early in the year. However, volumes lapsed in the back half of the second quarter, which the health system cited as a factor in its $326 million net loss that period.
“There’s not really a long-term view on how to get volumes up,” said Bill Dixon, managing director at consulting firm Pearl Meyer. “There are just so many things that are uncertain right now that I don’t know that a lot of health systems yet know how to work their way through it, other than getting through each day and doing the best they can.”
Care is shifting toward outpatient settings as a lower-cost option for hospitals, patients and insurers.
Vernon Memorial Healthcare shifted orthopedic implant surgeries to outpatient when Medicare lifted the inpatient-only designation for knee and hip procedures, said Scott Leckey, the Viroqua, Wisconsin-based health system's chief financial officer.
Two orthopedic surgeons were not-for-profit Vernon’s biggest admitting physicians, he said. As a result, about 80% of surgical procedures were outpatient during the first half of 2022, compared with 51% a year ago. Outpatient visits increased during the first half for cardiac rehabilitation, respiratory therapy and lab services, and diagnostic tests such as X-rays, ultrasounds and mammograms also occurred at higher volumes.
However, the uptick in testing depends on geography and public knowledge of COVID-19 cases. Some patients in areas with higher case counts are still more reluctant to go in for medical appointments, said Brad Ellis, senior director at credit rating agency Fitch Ratings.
The shift to outpatient care has been a challenge for Genesis Health System-Davenport in Iowa, as improvements in length of stay for these procedures are not enough to offset decreased revenue, President Jordan Voigt said.The Davenport operations are growing in every service line but that will be difficult to maintain with staff shortages, he said.