The True Impact of Covid on the Specialty of Anesthesia in 2020
Summary: 2020 was a very exceptional year. The coronavirus had a profound impact on the U.S. economy, American medicine and the specialty of anesthesia. While case volumes have recovered for most clients, the implications of the canceling of elective cases in March proved to be one of the ultimate practice management challenges. A careful review of the trends sheds some interesting light on the future of the specialty.
When we started hearing about the coronavirus early last year, most of us assumed it would have a significant impact on all anesthesia practices, but that it would only be an issue for four to six months. Now that we are into the next year, it is clear that while the worst of the storm may have passed, the residual implications may prove to be quite significant. Not all practices are back to 100% of their pre-Covid surgical volumes; many are still down five to ten percent. When it comes to collections, these are still lagging. The question we are all asking is what the new normal will look like.
Looking at overall volume trends, it is useful to think of activity in three phases: pre-Covid, Covid and post-Covid. Pre-Covid metrics could be based on the months of January and February or an average of monthly production for 2019. For purposes of this analysis, we have only used January, February and the first two weeks of March. In most localities, hospitals stopped booking elective cases on March 15. As the chart below indicates, case volumes dropped in March, bottomed out in April and started to recover in June—the period we define as Covid.
Some practices might include June in the Covid phase, but many practices saw a restoration of elective schedules in June. For purposes of this discussion, June through October can be clearly defined as the post-Covid period for charge production. It is important to remember that the collections' recovery would lag at least 45 to 60 days. In other words, for most practices, June and July would suffer the lowest amounts of deposits.
This chart represents the average production levels for a large sample of our client practices. As one would expect, there are many outliers in both directions, some much slower to recover and some much faster. As the table below demonstrates, 80 percent of these clients saw at least a 90 percent post-Covid recovery. In addition, 42 percent actually saw post-Covid volumes that exceeded pre-Covid average monthly volumes. Many factors have distinguished the practices that recovered fastest from those that are still lagging behind. Location and demographics are key. Practices with strong volume trends prior to Covid tended to bounce back fastest.
As we all know, not all cases are the same. We have found it particularly useful to distinguish three categories: obstetric cases, endoscopy cases and all other cases. As one might imagine, today's deliveries are impacted more by what happened nine months ago than what has happened in the previous few months. The question many practices are asking, however, is whether the extensive lockdowns and quarantines may result in a baby boom in the first quarter of 2021.
Endoscopy presents an interesting case study. Since most endoscopic procedures, especially screening colonoscopies, are essentially elective procedures, patients tended to defer procedures scheduled last year. As the chart below clearly indicates, many practices dropped to volumes of 20 percent of their pre-Covid average. The place of service was also a significant factor as many ambulatory centers essentially shut down for a couple of months. It is also useful to note that endoscopy has represented a line of business that has experienced significant growth over the past five or six years. Busy endoscopy centers were often some of the most profitable facilities served and drop in volume has had a dramatic impact on many practices.
Low case volumes mean less revenue potential. It is one thing to see case volumes ramp back up, the question is whether collections posted have recovered commensurately. The answer is that, for many practices, this has not been the case. The reality is that the coronavirus had such a significant impact that all aspects of the American economy have been affected. While most of the major insurance plans, including Medicare, continued to process claims efficiently through the Covid period, every other aspect of the revenue cycle was clearly impacted. Denials tended to take longer to get resolved, which had some impact; but the most profound impact was on patients' ability to pay their share of the bill. Growing unemployment had a most significant and persistent impact on patient ability and willingness to pay their share of deductibles and co-insurance.
There is no doubt that 2020 was a traumatic year for most Americans, and anesthesia practices were no exceptions. Most survived thanks to CARES Act Provider Relief payments and creative approaches to staffing, but it should be noted that many did not. In retrospect, we can say that the coronavirus represented a tectonic shift in American medicine, which has left most practices scratching their heads about the future. What will the new normal look like? We know the Medicare unit rate has dropped three percent this year. What other trends can we identify that will allow us to reasonably predict the reality of the year ahead?
Feel free to contact your ABC account executive for an analysis of the underlying trends that impacted your practice in 2020 and how they may play out in 2021. We have been carefully assessing trends and patterns across our entire client base. You can always reach out to us at info@anesthesiallc.com.