What Does Healthcare in the U.S. Look Like Post-COVID?

This month marks the one-year anniversary of the COVID-19 disease forcing businesses across the country to shut down. Over the past year, these shutdowns have taken a huge toll on the U.S. economy and affected every industry within it, including the healthcare industry. Hospitals and other providers lost significant revenue due to a sharp decrease in routine visits and elective procedures. To offset these losses, multiple pandemic relief bills have provided billions of dollars in financial assistance to health systems nationwide. Additionally, many providers were able to reopen their doors to offer routine and elective healthcare in the latter half of 2020. While these developments have certainly helped, the economic fallout from the pandemic remains a significant challenge to the U.S. healthcare system.

Going forward, the healthcare industry will need to adapt to address both immediate financial concerns and long-term changes in health and consumer trends. However, this change doesn’t have to be all bad; it is also an opportunity to change the status quo and improve certain aspects of the U.S. healthcare delivery system. In this article, Deltek identifies four major post-COVID health trends and how they will shape the country’s healthcare landscape.

Telehealth

While telehealth appointments have been around for decades, they were on the periphery of the healthcare system. When the pandemic hit and telehealth became a necessity, barriers to reimbursement, technology, and licensure began to fall. This transition was not without its challenges though, namely lack of broadband access in many areas and high implementation costs. To address these challenges, major investments in broadband and IT infrastructure have been made at the national and local levels.

Telehealth presents some other significant concerns, like the difficulty some patients experience when navigating new platforms, the nonverbal cues providers can miss, or the inability of providers to show empathy in traditional ways. Although these challenges are legitimate, many experts agree that telehealth is a safe, convenient, and promising avenue for healthcare delivery going forward. Indeed, telehealth use remains high following its exponential growth at the onset of the pandemic. Last month, the bipartisan Telehealth Modernization Act was reintroduced in both the House and the Senate. At a time when Congress finds itself particularly divided, the unity that its Members have demonstrated with this bill is telling – telehealth is here to stay.

Healthcare Consolidation

Small businesses were undoubtedly the biggest losers of the COVID-19 pandemic, with many local stores, bars, and restaurants closing their doors for good. Similarly, many small independent doctors’ offices are experiencing financial troubles they may never recover from. As a result, healthcare consolidation will likely become more prevalent over the next few months and years. Many independent practices will feel pressure to sell to hospital systems or merge with other physician groups. According to Bloomberg Law, this trend is already materializing in 2021. The first two months of the year saw 71 healthcare transactions involving physician services, against just 208 deals in 2020. With these numbers, deals involving physician services are on pace to reach well over 300 in 2021.

Changes to Employee Benefits

In the wake of the pandemic, employers are facing both decreased revenues and increased healthcare costs. In previous recessions, employers have responded by shifting healthcare costs onto employees, but that option carries several risks during a health-driven crisis. Instead, employers will need to seek out new approaches to reducing costs and some of them may involve cutting back on other benefits. For example, employees may notice reductions in their retirement packages or vacation benefits. Another option is that some employers may choose to utilize health reimbursement accounts (HRAs). With HRAs, employers reimburse employees for medical expenses and in some cases, insurance premiums – in place of providing insurance to employees as a company.

Reduction of Administrative Costs

To address financial strain, providers have been forced to reduce their administrative costs over the past year, such as letting go of some administrative and support staff. These types of changes are likely to become permanent, potentially impacting the organizational and payment structures used by providers. Additionally, for much of the past year, federal requirements related to measuring and reporting quality metrics were eased, reducing the reporting burden for providers. Some industry experts worry these changes may threaten the adoption of value-based care, but private health systems are likely to make similar changes as well since time and money can be saved.

For the latest research and analysis on the COVID-19 pandemic, check out GovWin’s Coronavirus Government Response Resource Center.