How Recession Is Affecting Medical Practices
Since April, you may have noticed that the economic picture has become much more gloomy. The possibility of a worldwide recession shortly exists. You may ask, what happens when a recession occurs? The recession impacts make it hard for people to make a living.
Is healthcare recession-proof? Traditionally, healthcare has been recession-resistant. In fact, some economists and healthcare professionals see the healthcare industry as recession-proof.
However, it is still unknown whether this upcoming recession will replicate how medical practices overcame the past economic downturn.
What is a Recession?
A downturn in overall economic activity is referred to as a recession. When the
Growth Domestic Product (GDP) growth rate is negative for two consecutive quarters, a recession is considered to have occurred. They are determined in the United States by a panel of experts at the
National Bureau of Economic Research (NBER).
Is the Healthcare Sector Recession-Proof?
The healthcare sector is recession-proof because it usually performs better during economic downturns. Understanding how the healthcare sector responds to financial situations is important for policymakers seeking an adequate supply of healthcare employees and those retraining displaced workers.
The impact of macroeconomic factors on the healthcare labor market and the pipeline of healthcare workers from 2005-2017 has been
studied. Their data showed that healthcare is stable across
business cycles. The study found that healthcare employment rises when local economies face more severe downturns.
Nevertheless, they still don't know much about how the healthcare industry will do during the recession. The said research provides a necessary background for policymakers to evaluate how to preserve the healthcare sector.
How a Recession Might Affect the Healthcare Practice
Many financial analysts predict an unavoidable
recession in the United States. This downturn may also impact internationally shortly.
A severe economic slump will harm most aspects of people's life. Additionally, this will affect one's money, way of life, and access to healthcare.
Further, the impact(s) of a recession on the healthcare industry may not be immediately apparent. Healthcare firms frequently fail to consider how a downturn in the economy can influence their bottom line.
1. Decreased Demand for Some Healthcare Services
Other economic factors will likely make less need for healthcare workers. People postpone medical treatment during a recession to save money.
The American Academy of Family Physicians (AAFP) performed a survey during the recession. Families with limited means spent money on essential and non-medical items and reduced their healthcare use.
Despite the recession, people still need medical care for critical illnesses. People avoid medical care for non-life-threatening diseases and minor ailments to conserve money. Hospital admissions and optional procedures confirm this trend.
During the recession, the AAFP survey mentioned above found the following patterns in health care:
- Due to having only enough money to pay medical bills, patients are worried.
- The number of patients who missed their appointments soared.
- The number of people with significant stress symptoms went up.
- The number of patients covered by their employer or privately went down.
- Some patients got new illnesses and health problems because they didn't get the recommended preventive care to save money.
2.
Reduced Number of Clinicians
Previous studies tell us that the healthcare sector was resistant during the last recessions. However, industry analysts and healthcare organizations foresee a doctor shortage in the next few years. Usually, temporary or short-term workers frequently fix this problem. During a recession, demand for interim healthcare professionals may fall due to fewer patients requiring specialist care.
Interestingly, a decade ago, healthcare institutions reported a rise in nurses in various U.S. locations during the recession. This was mainly due to retired nurses working again. In other circumstances, nurses postponed retirement or looked for full-time work. The increased number of nurses helped lessen the shortfall.
3.
The Recession Will Impact the Nurses' Employment
Economic downturns and recessions cause budget cuts and service reductions in healthcare, leading to layoffs and hiring freezes. Cost reductions affect nurses, which are the most significant healthcare professional group.
Further, the recession destabilizes the nursing labor market, leading to long-term shortages. The approach helps healthcare decision-makers manage human resources strategically during economic cycles.
Furthermore, a lack of awareness of labor market dynamics and trends may lead policymakers to make incorrect workforce downsizing decisions. After an economic slump, rehiring nurses generally costs more than short-term savings.
So, effective management should help retain nurses by fostering appealing and stable work conditions.
The Economy-Healthcare Link
In the
U.S., the economy affects how employment, health coverage, costs, financial access to care, and health outcomes interact.
Moreover, patients are more prone to put off non-urgent medical services during an economic downturn. The healthcare industry's revenue is negatively impacted by this.
In addition, during the recession, healthcare providers are experiencing more inconvenience financially. This difficulty is due to the rise in consumers choosing not to cover their medical costs in exchange for services.
Consequently, the number of patients who do not pay medical bills for services rendered has increased. This will cause healthcare providers additional financial issues. This means that the healthcare provider has to either write off the amount or add it to the amount that needs to be paid.
Partner With DrCatalyst
To ensure your medical practice is in good hands during a recession, you can entrust your medical revenue cycle with us at DrCatalyst.
Our Comprehensive Revenue Cycle Management service will provide the following:
- Claims management
- Information management that is complete and correct
- Claims management
- Billing services that cover everything
- A dedicated group of medical billing experts
- Reporting that is factual and analytical for your practice.
You can click on the highlighted link to contact us and receive a free demo to understand how we can help your medical practice, given the looming recession.
