Data Mine: COVID-19 misery — How the pandemic affected practice financial performance

When analyzing the national economy, most economists consider healthcare to be immune to several events that can disturb the manufacturing, construction, financial and service sectors of the economy. Severe weather or natural disasters have an immediate economic shock in these sectors as hourly workers lose wages and consumers are prevented from purchasing goods and services.

However, the demand for healthcare services typically remains constant, as disease and natural aging continue irrespective of the economy. Also, most of the U.S. population is covered by health insurance that continues for a period even if workers lose their jobs. Physicians and hospitals continue to be paid, at least in the short run, even if most of the economy is experiencing a major recession and unemployment.

In general, the financial performance of healthcare organizations lags behind the rest of the national economy. While physicians and hospitals are slow to lose business, a significant change in insurance coverage will eventually cause patients to refuse elective procedures and even to defer necessary services with the eventual financial impact on providers.

The COVID-19 pandemic seems to be an exception to this theory. With much of the population self-quarantining and not wanting to risk exposure to the disease, medical group practices reported a significant and immediate shift in patient volume in the early months of the pandemic with a slow recovery during the rest of the year. My July Data Mine column, “COVID-19 Misery: How the pandemic affected physician compensation,” described that across all specialties, physician production [measured in monthly work RVUs (wRVUs)] had a significant decline in February, March and April 2020 and recovered only late in the year, as primary care specialties reported an increase in physician compensation in 2020, but medical and surgical specialists experienced a compensation decrease compared to 2019.1