OVERVIEW
We placed HRC on our short bias as we anticipate pressure on hospital capital and operating budgets in the post-COVID recovery as at risk populations avoid care and the economic impact of high unemployment and other impact continue to flow through the economy. We spoke to the CFO of a large academic hospital system to collect anecdotes about the recovery and spending plans. On the one hand, patient volumes have come back "faster than expected" but in some areas, such as Orthopedics and Opthamology, appear to be lagging. While there are not yet signs that the at-risk patient population (older, comorbidities) are staying away from physicians and the hospital generally out of fear of becoming infected, his metropolitan area was only modestly impacted by COVID. It is worth noting the recovery in Ophthalmology is lagging. Eye exams require close face-to-face contact and the patient population is skewed heavily toward the CDC's definition of patients at greater risk of a COVID-19 infection.
Our forecast tool draws on public time series and points to deceleration. We'll be incorporating this series for core revenue growth in our modeling.
Field Notes
- Recovery is happening faster than expected, expect to be at 95% of pre-COVID by the end of the year
- Not much difference between high end practices and downtown clinic in terms of pace of recovery
- Physicians choosing to stay with video and telemedicine
- We use Epic MyChart for telemedicine
- Average daily census is now 612 versus 620 pre-COVID
- OR is 70-75% recovered compared to pre-COVID
- Outpatient visits are at 104% of pre-COVID
- 10-20% of the current volume may be pent-up demand
- Social distancing throughout the facility and campus
- Masks required in all clinical settings
- "We are not an efficient organization" with 20% inefficiency built in pre-COVID
- The processes that slow patient throughput are likely being offset by gains in new processes
- Acuity and case mix is a "little higher"
- Payor mix has moved +1.5% Medicaid and -1.5% Commercial, while Medicare is down 30bps
- No signs at risk patients are avoiding care
- Procedures are back up and running, elective procedures like colonoscopy
- GI conduct 80% of their visits via telemedicine but are back doing procedures and colonoscopies
- Internal medicine at 50% video
- Psych is 80% video
- Cardio is 80% of pre-COVID
- Ortho 1100 visits per day, now running 801 per day, less rebound likely due to less urgent need
- Urgent Care is 50% of pre-COVID, although this has not hurt us financially
- ED is where patients come into hospital, not Urgent Care
- Ophthalmology has been the hardest hit, close exam between patient and doctor, at risk population
- The competing practice is not scheduling yet though
- Patient intake requires patient to wear a mask, temperature taken, interview about travel
- Capital spending was initially put on hold for review as COVID broke out
- Capital projects have all restarted, although that may be unique to our relationship to the university
- We have cut back labor and clinical staff only modestly
- Second wave won't change capital plans
- Second wave would not cause us to buy more med-surg or ICU beds, much easier to re-deploy existing
- We never really had much COVID case volume, 20-30 daily COVID census, small spikes here and there
- Mexican nationals and COVID patients are crossing the border contributing to hospital COVID volume, could be a bigger problem elsewhere
All data available upon request. Please reach out to with any inquiries.
