While the extraordinary impact of COVID-19 is becoming increasingly clear for societies and economies across the world, the impacts on healthcare systems—and the healthcare companies that supply them—are varied by company, time period, and often by geography. Understanding the variations, time-frames, and geographic differences will be crucial for the healthcare industry as players adjust their strategies to address the new normal. Most important, long-term healthcare reform trends involving expanded access, cost control, and technological advancement are likely to accelerate in light of the crisis, requiring companies to address near-term disruptions while also adopting new philosophies and business models to thrive once we emerge on the other side of the crisis.
Varied impacts by subsector & company
Unsurprisingly, companies that produce diagnostic tests (e.g., Thermo Fisher) to identify the presence of coronavirus and companies that produce therapeutics (e.g., possibly Gilead Sciences) to alleviate its symptoms are likely to be the beneficiaries of increasing healthcare spending tied to COVID-19. Eventually, companies that are successful in developing a COVID-19 vaccine (e.g., possibly Moderna Therapeutics) are likely to see a boost to the bottom line as governments across the world increase spending to prevent a recurrence of the pandemic. However, healthcare companies not directly tied to COVID-19—and those that don’t produce hospital beds, protective equipment, or infrastructure support—are likely to see business disruptions similar to those in other industries beset by the fallout of the pandemic.
Varied impacts by timeframe
For planning purposes, it’s imperative to think about the impacts of COVID-19 on the healthcare industry and healthcare systems in terms of short-, medium-, and long-term timeframes. The non-exhaustive list of impacts below will generally be found across all healthcare systems, addressing significant numbers of COVID-19 cases.
Short-term (next 3–6 months)
- Pressures on hospital infrastructure: Hospitals are being overwhelmed across Europe and the US, with the same fate likely in developing countries as COVID-19 spreads there.
- Delays in elective procedures: Companies providing treatments and devices tied to non-urgent surgeries—with the definition of non-urgent depending on the hospital and how affected it is by COVID-19—will see temporary large declines in demand.
- Payment delays: Even if certain procedures move forward, reimbursement may be delayed because of sheer administrative overload or lack of liquidity as payments are diverted to COVID-19 treatments.
Medium-term (6–12 months)
- Increased investment in primary and intensive care: Once healthcare systems turn the corner on the worst of the crisis, they are likely to increase funding for—or divert existing funding toward—expanding capabilities in the two areas proven inadequate by COVID-19.
- Financing pressure for payers and providers: Public payers may face financing constraints as the costs of diagnosis and treatment mount, and/or broader economic conditions restrain funding, in some geographies, while private payers may face solvency issues in some cases, threatening reimbursements across a wide range of medical treatments.
- Gradual return of sales forces to hospitals: After abandoning the in-person sales approach so fundamental to hospital sales as the pandemic took hold, pharma and medical technology firms will gradually return their sales forces to the field as the crisis subsides.
Long-term (1 year+)
- Reprioritization of long-term healthcare agendas: COVID-19 will poignantly illustrate the shortcomings in healthcare systems around the world in coverage, cost, and quality; once aspirational, or distant, reform agendas are likely to have more urgency and political support, with healthcare likely to command more share of the resource pie.
- Acceleration of adoption of telehealth and other digital solutions: For several years, telehealth and digital health have been heralded as the future of healthcare, but that future has been slow to arrive due to behavioral obstacles and regulations, more so than technology. We’re already seeing governments relax regulations, and the social distancing mandated by COVID-19 is providing a forced natural experiment in remote care. Most governments are unlikely to revert to the status quo, and indeed an acceleration is likely.
- Refocus on value-based pricing and alternative pricing models: The lingering resource constraints driven by COVID-19 will only further encourage the focus on healthcare outcomes and outcome-based contracts. The expansion of telehealth and digital health will help provide the real-world data and evidence that form the backbone of such agreements.
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