(Bloomberg) -- The influx of patients returning to hospitals for elective surgeries reversed in November, signaling the collapse of an “air pocket” of demand that was pulled forward after U.S. lockdowns, according to Piper Sandler.
What had been a growing number of patients has since come under pressure as Covid-19 cases spike across the Midwest and more populous states such as New York and California, despite efforts by hospitals and insurers to boost the number of procedures at lower-cost sites. Piper Sandler said pandemic-related financial issues paired with the rise in cases could harm the seasonal, benefit-driven demand for surgeries in December.
A slowdown in more profitable surgeries such as knee and hip replacements could lower revenue for U.S. hospital chains HCA Healthcare Inc., Tenet Healthcare Corp. and Community Health Systems Inc., whose facilities are starting to be overwhelmed by Covid cases. And an extended decline in demand for elective procedures could reverse recent gains for medical device stocks. Already, Nuvasive Inc., Boston Scientific Corp. and Livanova Plc. are among medical technology providers that have struggled this year.
“Increasing financial issues were cited across all regions,” Piper analyst Sarah James wrote in a Dec. 2 report. That could pressure “December volume seasonality as consumers have tighter budgets and many have not reached their deductible.”
Outpatient volumes declined by almost 1% in Piper’s November survey compared with last year, a reversal from improvements seen in October. The decline comes after October showed the first month of year-over-year growth since the start of the pandemic, the bank wrote.
To be sure, consumer preferences to have surgeries on an outpatient basis could help boost profit margins at HCA Healthcare and Tenet Healthcare in particular, James wrote. The push for patients to have surgeries in outpatient settings where there is less perceived risk of Covid-19 exposure could benefit medical-loss ratio, or MLR, for health insurance providers like UnitedHealth Group Inc.
But despite a pickup in volume, surgical centers away from hospitals also cite Covid-19 restrictions and more time between procedures as among the headwinds stopping them from reaching full capacity.
A basket of managed care stocks rose on Thursday for a third day.
©2020 Bloomberg L.P.
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