Recession-Proof Healthcare? Hardly

September 27, 2010

Large numbers of Americans have been cutting back deeply on needed and preventive care. Now is the time to plot a survival strategy with fewer patients who spend more frugally.

Healthcare is a troubled and frustrating industry, but with America mired in the worst economy since the Depression, it’s tempting to count your blessings.

You’re highly educated and have a skill that will always be in demand. You may at one time have envied some of your old classmates who chose careers with shorter formal training periods and bigger potential rewards. But now you see them struggle to find clients, customers, or jobs and think you dodged a bullet. Recessions affect demand for lots of products and services, but not healthcare.

Healthcare is recession-proof.

Right?

Not quite.

In fact, large numbers of Americans have been cutting back deeply on needed and preventive care. Physicians are starting to notice the affect on their practices. And while the newly passed health reform law may eventually mitigate some of the problems, things are likely to get worse before they start getting better.

Consider:

A survey of citizens of five Western countries sponsored by the National Bureau of Economic Research, a nonpartisan academic group, found that more than one in four Americans have reduced their spending on healthcare since the beginning of the economic crisis in 2008. Compare that with the Canadians (5.3 percent) or the French (12 percent), countries where near-universal coverage blunt the impact of recessions on the healthcare industry. I hear often from physicians fed up with government interference, insisting that patients would be better off if healthcare were treated like any other free market service - with customers paying for what they get and service providers charging what the market will bear.

But the market isn’t bearing up very well these days. The 15 percent of Americans who are uninsured are already purchasing whatever healthcare they’re getting out of pocket - and they’re the ones who retrench the most in times of economic peril.

Yet it’s not just the uninsured whose healthcare spending is being affected by the Great Recession. The latest national survey of employer health benefits, released in September, found that companies shifted all of the last year’s increase in insurance premiums onto workers - not most of the increase as usual, but all of it. Employees’ share of premiums jumped 14 percent, now approaching $4,000 annually for the average family plan.

What does that mean for you? It means that even as fewer people have jobs and insurance, more people are still working will opt out of employer health coverage, or opt for cheaper plans that limit what doctors they can see and what their doctors can do for them.

Many of you are already discovering the recession’s affect on your practice. Among the many surprising facts about the lives and views of the modern doctor revealed this month by our Great American Physician Survey is this: More than half of you told us that patients are coming to see you less often. Sizable minorities have noticed increased appointment cancellations, reduced treatment follow-up, and other patient-initiated cutbacks. Only 15 percent of you said the recession has not affected your practice.

I’m not saying the end is nigh. But I suspect that more of you will soon begin to notice less-crowded reception rooms, shorter appointment wait times, and patients delaying or declining expensive treatments and procedures.

It’s not clear how the health reform law will affect these trends. It’s most ambitious components won’t happen until 2014, assuming they happen at all. Regardless, you need to plot now a survival strategy with a patient base that for the next several years is likely to be smaller and more frugal.

Bob Keaveney is Editorial Director of Physicians Practice. Have you noticed the affects of the recession on your practice? Tell us how you have you dealt with it in the comment field below.

This article originally appeared in the October 2010 issue of Physicians Practice.