Physician and hospital spending sink to lowest point in more than 10 years

By | June 17, 2020

Hospital and physician spending has been hit hard by the COVID-19 pandemic — so hard, in fact, that in April it reached its lowest point in more than a decade.

A recent Altarum analysis shows that, due to the cancellation of elective procedures and low patient volume, tanking healthcare usage has contributed to a 24.3% decline in spending over a 12-month span, hitting a low of $ 2.88 trillion in April. Hospital care spending dipped from $ 1.25 trillion to $ 746 billion during that time.


Hospital spending and physician and clinical services spending fell by 40.7% and 40.9%, respectively, while dental services declined by 60.8% year over year. As in March, spending declined in all major personal healthcare categories except nursing home care and prescription drugs, which rose 6.3% and 5.1% year over year, respectively.

Interestingly, the prescription drug rate is down from 14% in March, when patients may have been stocking up over concerns such as stay-at-home orders.

The health spending share of GDP fell to 15.7% in April. That’s compared to 17.1% in March and a mostly steady trend near 18% over the past four years, meaning that healthcare spending is falling faster than the overall economy.

Overall, national health spending is at its lowest point since July 2013; in just two months, the country has gone from a seasonally adjusted annual rate of $ 3.98 trillion to $ 2.88 trillion.

Several ominous milestones have been met. Personal healthcare is the lowest since February 2011; hospital care spending was last lower in December 2008; physician and clinical services is the lowest since November 2006; and dental services spending is at its lowest since July 1998.

With the start of reopening of the U.S. economy in May, Altarum anticipates a modest reversal of these spending declines.


With the gradual opening of the economy comes the resumption of elective procedures, and a recent Vizient survey found that more than half of patients feel at least somewhat safe about returning to the hospital for these procedures.

Patients will most likely come back to their elective procedures in waves, Vizient found. The initial wave of patients will include those pining to move forward no matter the risk (oncology patients, patients impaired in their activities of daily living or those in pain), followed by a second wave that may feel safe because of their perceived low personal risk or need for a low-risk procedure with little follow-up.

When these first two waves are scheduled for their elective procedures, physicians will need to engage the next potential group of patients – those who feel less safe – to ensure a steady stream of revenue. These patients are almost guaranteed to have questions and will need to have discussions with their doctor about their risks and benefits.

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