Healthcare Spending, Utilization Remain Low in 2021

Healthcare spending and utilization dropped significantly at the onset of COVID-19 as more people pushed off care. New data from Peterson-KFF’s Health System Tracker show that spending and utilization remain just as low in 2021, pointing to oncoming financial struggles and deteriorating bottom lines for providers.

Peterson-KFF used data from 10 million admissions in the Epic health record system, along with Bureau of Economic Analysis data to analyze trends in health services spending. Researchers found that at least through June 2021, healthcare spending remained below expected levels. Despite patients delaying care in 2020, hospital admissions have not risen.

On an annualized seasonally adjusted basis, health services spending for hospitals and ambulatory care remained 7.1 percent below expected spending in June 2021. Spending on hospitals was 4.1 percent below anticipated levels for June 2021.

During the week of April 3, 2021, hospital admissions were 85.5 percent of what was expected, and 89.4 percent of what would have been expected had the pandemic not happened.

“Though vaccinations significantly reduced the rates of hospitalizations for COVID-19 in early April 2021 from peak COVID hospitalizations in January 2021, the pandemic is still driving a significant share of hospital admissions,” the report explained.

“If we remove patients with a COVID-19 diagnosis, we see that all other admissions are 80.7 [percent] of expected levels based on pre-pandemic usage in the week of April 3, 2021.”

The Provider Relief Fund (PRF) kept many providers afloat during the pandemic. But PRF money is dwindling, and researchers suggested that the decrease in healthcare utilization could impact the finances of hospitals and providers across the country.

“Health insurers, in contrast, may be benefiting financially from this decline in hospital admissions and certain other medical services since the start of the pandemic,” the report stated.

Analysis revealed healthy margins for insurers across the group market, individual market, Medicare Advantage market, and Medicaid Managed Care market in 2020 compared to 2019 and 2018.

The report pointed out that public health experts do not yet know how the low levels of healthcare utilization during the pandemic will impact population health. Fear of contracting COVID-19, along with economic struggles and cost concerns may have contributed to patients forgoing care altogether rather than just delaying it.

Suppressed health care use may not be driven only by demand,” the report noted.

“A more limited supply of health care workers may also lead to continued delays in the availability of care. Health sector employment declined somewhat in the pandemic, and even as health employment rebounds, it may take time for appointment slots to fully reopen.”

Many providers are hesitant to mandate COVID-19 vaccinations for employees out of fear of worsening the staffing shortage, especially at a time when ICU beds are filling as the Delta variant makes its way across the country.

It will take years for researchers to quantify the impact of COVID-19 on population health. But it is clear that the pandemic changed the way patients receive care, and in many cases that meant forgoing care altogether, if not seeking alternative methods such as telemedicine.

Time will also tell how providers will be impacted financially by the pandemic as federal funding runs out and staffing shortages put strain on the workers who are still struggling to deliver quality care in the middle of a public health crisis.