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Economic Consequences of COVID-19 Pandemic on US Health Care Industry

Oana Dickinson, Ankit Mehta

Background: Coronavirus disease 2019 (COVID-19) created an economic crisis alongside a health care crisis. Academic, private and community health care systems are continuing to experience significant lost in revenues. Objective: Health care industry has never experienced an economic shock that was exacerbated by the need to restrict supply of certain services. From February to April 2020, health care has shed 1.5 million jobs, losing in two months all gains of the past five years. Data Sources: According to Medical Group Management Association, 97% of medical group practices experienced negative financial impact directly or indirectly related to COVID-19 pandemic. Practices reported 55% decrease in revenue and 60% decrease in patient volume since start of COVID-19 pandemic. Kaufman Hall's data from 800 U.S. hospitals showed that as volume and revenue declined, along with rising expenses, resulted in a dramatic fall in margin within a matter of weeks. Decline in hospital volume and revenue drove record-poor margin performance, setting stage for difficult recovery and permanently changed health care delivery. Hospitals operating margins fell significantly compared to same period last year and from March 2020. Discussion: US Hospitals continue to suffer significant financial damage for three reasons: majority of elective procedures continue to be canceled, hospital capacity expansion for potential COVID-19 patients surge remain increased and demand for non-COVID-19 related health care issues is significantly decreased. US Presidents signed into law a $2 trillion relief bill that contains provisions to mitigate the economic damage inflicted on doctors and hospitals. Conclusions: COVID-19 pandemic brings an unprecedented economic challenge to US health care system and have set in motion a domino that may impact in an unrecognizable way the face of health care and hospital practices