Recession has hit America's health care industry – and it's brutal. Here's what needs to happen now

Government solutions have failed to solve the government-created problem.

The health care sector is in recession. Hospitals, physician and dental practices and clinical laboratories are hemorrhaging money and furloughing staff. Some are on the brink of bankruptcy.

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As hospitals struggle to remain solvent, furloughs and layoffs have become commonplace. While the world is calling health workers “heroes," many are losing their jobs.

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In April, the sector shed 1.4 million jobs, a 9 percent reduction in the health care workforce in the midst of a health care emergency.

Hospitals aren’t alone in laying off medical personnel. No sector of the medical industry has gone untouched. Clinical laboratories (essential for processing tests for COVID-19) and nursing homes (where 40-50 percent of COVID-19 deaths have occurred) also have seen reductions.

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A ban on non-emergent care, public fear of accessing medical care, and concerns with the supply chain have all contributed to the health and financial crisis.

Hospital executives spent precious health care dollars preparing for a surge of patients from COVID-19 that, thankfully, never materialized in most places. But the cost of preparing for the pandemic and the loss of revenue from services has created an extraordinary challenge.

An infusion of new money into hospitals to stave off losses has not been well-targeted. Because those aged 65 and older account for over 80 percent of COVID-19 deaths and are six times as likely than adults under 50 to be hospitalized with the infection, it made sense for Congress to increase Medicare rates and pay hospitals a 20 percent bonus for COVID-19 admissions.

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But Congress failed to recognize that the hospitals most adversely affected by bans on non-emergent care are those that aren’t treating COVID-19 patients.

Congress also allocated $175 billion for payments to hospitals and other medical providers but gave HHS little guidance on how to distribute the money. Most of the money remains unspent, and critics say that HHS has misallocated much of the money that it has spent.

Meanwhile, the policies prohibiting the provision of non-essential and elective care have placed the health and lives of Americans at risk.

Millions of Americans have foregone surgeries, cancer treatments, and life-saving screenings. Those well-intentioned decisions, meant to slow down the virus and save lives, have had devastating consequences—deadly for some and life-changing for others. It may be years before we fully understand the long-term health consequences of these policy decisions.

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While some restrictions are being relaxed, the U.S. needs a full return of health care services to reverse the damage. And it needs to happen now.

Government solutions, in short, have failed to solve the government-created problem. It is time for government to trust the medical decisions of health care providers and allow the public to choose for themselves whether they feel safe to receive care.

Unlike other sectors of the economy, which may take years to recover from lockdown-induced economic dislocations, the health care industry can recover quickly, but only if government officials and health care leaders work together to take action. Efforts should focus on:

  1. Withdraw sweeping bans on non-emergent care. These bans made sense when little was known about the contagion and steps to protect against a surge in patients were reasonable and prudent. Hospital capacity has proven resilient, and sweeping bans on medically necessary care have proven damaging to patient health and the medical sector.
  2. Target public messaging emphasizing safety and necessity of preventive care and treatment, especially for those with chronic diseases. CDC estimates that nearly 90 percent of patients who die of COVID-19 have comorbidities. It is essential to maintain continuity of medical care, especially for the elderly and chronically ill.
  3. Monitor and improve manufacturing and distribution of vital equipment and supplies.
  4. Develop better strategies for managing future outbreaks, such as designating pandemic hospitals, reviewing federal and state funding priorities, refocusing health care agencies for swifter more effective response, refining data collection and public reporting system, creating coordinated pandemic response plans, and accelerating completion of The National Bio and Agro Defense Facility to monitor for possible threats.
  5. Make health care more flexible and patient-friendly. The private sector, in partnership with government officials, has responded creatively to the pandemic. Telemedicine has become much more common, and states have allowed doctors licensed in one state to see patients in another. Many states also have relaxed or removed barriers to practice by non-physician providers. These temporary changes should be made permanent.

The unprecedented and unpredictable nature of this pandemic has again brought to light gross deficiencies and unnecessary regulatory barriers to care in the health industry. A collective approach is necessary to protect the integrity of the nation’s health care system and return health care choice to the American people.

Amy Anderson, DNP, is a former graduate fellow at The Heritage Foundation. Doug Badger is a visiting fellow in the think tank’s Domestic Policy Studies Department.

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