With the number of Covid-19 hospitalizations soaring to over 100,000 nationwide and new cases of the novel coronavirus surpassing 200,000 daily, health systems are beginning to reach the limits of their ability to simultaneously manage Covid-19 and non-Covid-19 patients. Many have had no choice but to reduce the number of elective procedures they perform—especially those requiring an overnight stay or ICU care—to preserve staff or capacity.

How Covid-19 will impact the supply chain

But with a vaccine in sight, safety precautions in place, looser regulatory guidelines, and a more robust supply of PPE, the volume outlook for providers may not look quite as grim as it did in April 2020, despite higher case counts. Unlike before, regulators are now targeting mandatory shutdowns at individual regions—rather than the whole state—and some states are leaving cancellation decisions up to health systems. This gives providers flexibility in the type and timing of elective procedure postponement decisions. For many, there is also less urgency to postpone outpatient visits and procedures given the increased availability of PPE. Finally, providers now have safety precautions in place to remain open—assuming consumers are willing to come.

Still, there are many unknowns related to vaccine rollouts, new governmental policies, and the trajectory of Covid-19 infections that could significantly alter the volume outlook for providers. We expect any one of three likely scenarios to take shape across the first half of 2021.

Scenario 1: Persistent regional surges (most likely)

Local outbreaks occur on a continual and unpredictable basis. Vaccine supply shortages are in part resolved by the end of the first quarter (Q1) of 2021, but lack of demand from consumers leaves a large population susceptible to infection. Still, some consumers choose to take the vaccine, making peaks less severe with time. Providers are able to operate as usual during later peaks due to accommodations made to ensure safety and preserve capacity. However, consumers avoid health care settings at a higher rate when surges happen in their community.

Scenario 2: Early immunity (optimistic)

Infection rates steadily decline with time. A rising number of infections in December 2020 and January 2021 means that a significant number of individuals are now immune to reinfection (at least for the short-term). Manufacturers are able to significantly ramp up vaccine production meeting or exceeding initial expectations. These vaccines are evenly distributed among health care workers and the most vulnerable populations that would potentially require hospitalization. Providers will observe weakened demand mostly due to lingering poor economic conditions and from permanent shifts to telehealth, but they will not be forced to postpone services after the initial peak due to capacity or staff constraints.

Scenario 3: Uncontrolled spread (pessimistic)

The rate of viral transmission remains high and steadily increases in Q1 2021. Vaccine supply and demand is insufficient to achieve herd immunity, but the existence of a vaccine makes individuals less vigilant. The rising number of Covid-19 hospitalizations requires the majority of providers to temporarily postpone all or a portion of inpatient elective procedures. Some must also limit outpatient care to free up staff.

These scenarios will have very different implications for provider volumes and finances—providers should plan for each. Stay tuned for our upcoming projections in early 2021 on what these scenarios will mean for outpatient visits, procedure volume, and admissions in the new year.