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Long Road Ahead

Jim Molpus, for HealthLeaders Magazine, August 12, 2009
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The economy has to recover before healthcare can recover. And the economy isn't recovering anytime soon.

The year 2009 has been a good year to explode economic myths, the first being that healthcare was somehow recession-proof. Rising unemployment that now threatens 10% was among the negative forces that kept people from seeking healthcare, forcing layoffs and margins of red for the nation's providers.

Whether 2010 will be any better remains largely unpredictable because the sequences that link the healthcare financial chain have never been so disjointed.

"Our economic analysis is that the recession will end in September, which is a technical end to a 22-month recession," says Paul Keckley, PhD, director of the Washington, D.C.-based Deloitte Center for Health Solutions.

One myth that may still hold true is that "all healthcare is local." Market-by-market variances in key indicators will mean certain regions recover sooner than others. Unemployment as an indicator is not always reliable. As a February 2008 article in Health Affairs indicated, the number of uninsured has actually risen as the economy recovered from prior recessions. June projections from the Bureau of Labor Statistics see unemployment rising to 9.5%. While projections call for the rate of job loss to decrease gradually through 2009 and into 2010, overall unemployment is expected to crest at 10%. The Kaiser Family Foundation predicts that for every 1% rise in the rate of unemployed, there is a corresponding 3-4% decrease in state revenues, and an additional 1 million uninsured.

Predicting a healthcare recovery date depends to a great extent on predicting the "lag" between a general upward trend in the economy and when consumers will seek healthcare. Just because consumers may get jobs back—and benefits within a waiting period—does not mean they will immediately seek care. "It won't be until the third quarter of 2010 before consumer behavior may start to turn around," Keckley says.

A recent survey by Thomson Reuters found 28% of 1,200 consumers surveyed said they were very likely to postpone or cancel elective surgical procedures, with cost being the reason most often cited for the delay. Another 13% said they would delay or cancel routine physician visits, 15% would delay or cancel therapy visits, and 17% would delay or cancel physician visits for minor illness or surgery.

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