- A Moody’s Investors Service report on Thursday suggests that the
U.S. healthcare industry is on the rebound from COVID-19, but recovery
will likely to slow and uneven. Moreover, the report expressed concerns
that regional flareups of coronavirus could majorly set back the return
to normal volumes.
- Investment firm Jefferies affirmed those worries in hospital traffic
data shared Friday, noting “a sharp reversal” in hotspot state Arizona.
Analysts tracked “record lows” in Arizona’s hospital traffic last week,
down from what was thought to be the trough in April and sagging below
May recovery amid a significant uptick in COVID-19 cases and protests.
- “Whether states can continue their recovery even as cases increase,
as we’ve seen in [Texas] and others, or if the recent reversals in
[Arizona, Illinois,] etc. become more widespread is a trend to watch in
coming weeks,” Jefferies analysts wrote.
Large sections of the healthcare sector all but shut down during the
spring as the coronavirus led to nationwide shelter-in-place orders.
However, as states and municipalities slowly reopen, so are the doors
for hospitals, ambulatory surgical centers, clinics and other integral
components of healthcare delivery.
As a result, Moody’s reported “considerable sequential
improvement” during May. For example, while for-profit hospitals saw
surgery volumes drop as much as 70% in April compared to the same period
in 2019, May volumes were down about 20% to 40% compared to last
year’s. Hospital-operated ambulatory surgical centers saw an 80% to 90%
drop in April volumes, but only a 30% to 40% drop in May.
However, Moody’s noted that the “path to normalized volumes are not
linear.” It also pointed out that emergency room care volumes, which
dropped as much as 60% in April, have yet to really rebound, as they
still appeared depressed as much as 50% in May.
“This could reflect the prevalence of working-from-home arrangements
and people generally staying home, which is leading to a decrease in
automobile and other accidents outside the home. Weak ER volumes also
suggest that many people remain apprehensive to enter a hospital,
particularly for lower acuity care,” the Moody’s report said.
The firm also noted that “the shape of recovery will vary by state,
region and service line, reinforcing the importance of diversification
for credit quality among healthcare service providers.”
However, Moody’s believes that the darkest days of March and April
are behind much of the healthcare sector. It noted that most providers
have stockpiled appropriate personal protective equipment and have
reconfigured their offices, waiting rooms and other infrastructure to
protect the health of both patients and employees.
Traffic data from 3,300 U.S. hospitals, tracked by Jefferies via
mobile device pings, indicates that compared to January 2019 levels,
national traffic lows of 43.7% in mid-April improved to 63.3% by early
June.
But state-by-state analysis reveals some parts of the country are
trending backwards. Arizona fell to a new low of 28.5% last week after
hitting 51.5% on May 20. The analysts also reported Illinois hit its own
new low on June 7.
While Moody’s did express some concern about regional outbreaks, it
concluded that the precautions already taken “make it less likely that
the U.S. would once again shut down all non-elective care across the
nation if there is a second wave of coronavirus infections.”
Moody’s did express some concerns about hospital finances, but noted
that for-profit hospitals “have unusually strong liquidity” due to
payouts from the CARES Act and other government-sponsored financial
relief programs.
Medical device firms should be prepared for a long and uneven
recovery, according to Moody’s. The dental and orthopaedic sectors “will
see a greater than average impact from consumers’ inability to pay for
procedures or their unwillingness to engage with the healthcare
system.” Moody’s forecast “a gradual, uneven pace of recovery,” with
pre-tax earnings to decline as much as 30% in 2020 compared to 2019,
while revenues will shrink around 10%. It expects that earnings will
rebound in 2021 to 2019 levels.
Companies that operate in discretionary sectors will be hit harder as
they rely on patients able to meet large deductibles or co-payments or
to pay for related procedures entirely on their own. Moody’s noted that a
large number of these procedures are performed in acute care hospitals
with the assistance of robotics, but hospitals may be more conservative
in their robotics investments given new budget constraints.
https://www.healthcaredive.com/news/moodys-us-healthcare-system-rebounds-from-covid-19-in-may-but-a-bumpy-ro/580152/
