Healthcare professional revenue falls nearly 50% during COVID-19 pandemic

In April, during the midst of the COVID-19 pandemic, healthcare professional services declined 68% in utilization and 48% in revenue based on total estimated in-network amounts compared to April 2019 nationally. In the Northeast, the region hit hardest at that time by the pandemic, professionals experienced particularly sharp drops in utilization (80%) and revenue (79%) in April.

These are among the findings of FAIR Health's third COVID-19 study: Healthcare Professionals and the Impact of COVID-19: A Comparative Study of Revenue and Utilization.

During March and April, deferral of elective procedures and many routine in-person medical visits imposed a financial burden on healthcare providers and caused changes to their practices, such as a new emphasis on telehealth.

To study these issues, FAIR Health drew on its repository of private-claims data to analyze, on a monthly basis, changes in utilization and estimated in-network reimbursement amounts for professionals in the first four months of 2020 as compared to the same months in 2019 (adjusted by Consumer Price Index).

The second part of the study focused on seven specialties: cardiology, dermatology, oral surgery, gastroenterology, orthopedics, pediatric primary care and adult primary care, analyzing utilization and reimbursement changes for each specialty, as well as changes in the five most common procedures in the first four months of 2020.

WHAT'S THE IMPACT?

Of the specialties studied, oral surgery had the largest decreases in utilization and revenue in both March and April. In March, oral surgery utilization declined by 80%, and revenue based on total estimated in-network amounts dropped 84%. In April, oral surgery utilization declined 81% and revenue 92%. Gastroenterology had the second-largest decreases in all four categories.

Pediatric primary care had the smallest decreases in three of four categories: March utilization (52%), April utilization (32%) and April revenue based on total estimated in-network amounts (35%). Adult primary care had the smallest decrease in March revenue (47%).

Comparing March 2019 to March 2020, utilization of professional services decreased 65% and professional revenue based on total estimated in-network amounts decreased 45%. In the Northeast over that span, utilization of professional services fell 60% and revenue based on total estimated in-network amounts declined 55%.

Across many specialties from January to April, office or other outpatient evaluation and management visits became more common relative to other procedures, both by utilization and total estimated in-network amounts. This may have been due in part to the fact that many of these E&M services could be rendered via telehealth, whereas certain other procedures that became less common required in-person visits.

In oral surgery, a procedure specifically for telehealth – telephone E&M by a physician or other qualified healthcare professional for 11-20 minutes – climbed from number 131 in utilization in January to number one in April.

Total knee replacement and total hip replacement ranked high in the orthopedic top-five procedures by total estimated in-network amounts in January. They fell out of the top five by April.

For pediatric patients up to age four, there was little change in preventive care visits from March-April 2019, compared to March-April 2020, whether from the standpoint of utilization or revenue based on total estimated in-network amounts. Decreases in these months were much greater for preventive care visits for older pediatric patients (5-17 years of age) and adults (18 and older).

THE LARGER TREND

As the surge in COVID-19 patients begins to recede in some areas of the country, hospitals are considering when and how to resume elective procedures.

Patients will most likely come back to their elective procedures in waves, Vizient found. The initial wave of patients will include those pining to move forward, no matter the risk (oncology patients, patients impaired in their activities of daily living or those in pain), followed by a second wave that may feel safe because of their perceived low personal risk or need for a low-risk procedure with little follow-up.

These cancelled elective procedures have had a profound impact on margins, with operating EBITDA margins falling to -19% in April. They fell 174%, or 2,791 basis points, compared to the same period last year, and 118% compared to March. This shows a steady and dramatic decline, as EBITDA margins were as high as 6.5% in April.

Twitter: @JELagasse

Email the writer: jeff.lagasse@himssmedia.com