Last week the Nashville Healthcare Council hosted the virtual discussion, “View from a Pandemic: The Road to Economic Recovery,” for more than 130 Council members. Dr. Larry Van Horn, Vanderbilt University’s associate professor of management and executive director of health affairs, and Dr. Arthur Laffer, economist and author, discussed the state of the health care industry and the nation’s economy in the wake of the COVID-19 pandemic.
Van Horn initiated the conversation with statistics compiled by Nashville-based health care analytics firm Preverity Inc. The data illustrated how, when the U.S. shut down on March 15 in response to the coronavirus pandemic, the world changed — especially in the health care realm. Overall health care volumes decreased markedly in the first month of the shutdown, with emergency room volumes decreasing by 50%, outpatient visits by 55% and office visits by 60%. Currently, office visits have rebounded by 30% and if the trajectory continues, Van Horn said, volumes will return to normal by the end of July.
He also discussed the result of a national online survey showing 55% of individuals have delayed or skipped medical care due to the coronavirus. Of those, 53% reported the provider cancelled or postponed their appointment; 35% said they did not feel comfortable visiting the medical facility; 20% had experienced a loss of income; and 16% underwent a change of insurance. “Forty percent of people are waiting four to six months before they will consume medical care,” said Van Horn. “The safety issue and economic and income security issues will temper health care demand going forward.”
As many health care organizations have witnessed firsthand, telehealth visits skyrocketed during the pandemic. Van Horn shared that telehealth accounted for “effectively zero” visits prior to March 15 but went on to reach one million visits per day in the two weeks following. Telehealth services were most commonly used in family practice, internal medicine, psychology and pediatrics, but 90% of health care providers utilized telehealth in some form. “The question is, where will this level off? In my opinion, telehealth will continue to be an important part of the health care fabric going forward,” Van Horn said.
According to Laffer, the U.S. was the best prepared country in the world for COVID-19. The economy was in great shape and the unemployment rate was at an “unheard of” 3.5%. When the pandemic began, the stock market acted as expected and dropped 33%. But this figure is not nearly as negative as in other times of economic downturn, such as the 2008 financial crisis when the market dropped 54%. Laffer said the stock market is an “efficient and unbiased forecaster,” and that since it hit its trough in mid-March, it has been slowly improving and is now down a reasonable 7% from its peak.
Laffer predicted the economy will improve quickly, and the U.S. is already seeing positive trends. In the initial week of the pandemic shutdown, the country received 6.9 million unemployment claims. Today, new claims are below 2 million. Laffer referenced an initiative to implement a payroll tax waiver that covers every employee and employer in the country up to $130,000 of income, with a terminal date of December 31, 2020. Laffer believes the waiver will jumpstart the economy by increasing the incentive for individuals to work and for employers to hire more people and retain current employees.
“Overall, the coronavirus was a very scary event for the economy, but it could’ve been much worse,” said Laffer. “There are benefits to downturns. We all hate downturns because someone’s unemployed, someone loses their job or business, but there is something called creative destruction. When you have an event like this, the less efficient and insolvent companies tend to close. The businesses coming back will be far more efficient and experience increased productivity and prosperity.”
An audience member asked the experts to predict what will happen in health care following the COVID-19 pandemic. Van Horn responded that we need to be cognizant of how the coronavirus has affected the workforce. He anticipates that continued working from home will put a tailwind behind trends toward moving care out of the institutional setting into an outpatient setting or the home. “We have to create health care solutions that mirror where people live their lives and where they want to consume care,” Van Horn said.
The Nashville Health Care Council will continue to offer relevant and timely virtual events during the COVID-19 pandemic. Register now for the next installment in the Council’s virtual series, “Health Care Brass Tacks,” on Tuesday, June 23, at 11:30 a.m.