Executives from two huge health care delivery companies — HCA Healthcare Inc. and Quest Diagnostics Inc. — say that the COVID-19 pandemic has reduced U.S. use of different types of health care by about 30% to 70%.
The executives say they expect pent-up demand for care to increase volume in the second half of the year, but aren’t really sure what to expect.
Quest is the largest single provider of laboratory services in the United States. It accounts for about 9% of the U.S. medical lab market, according to figures in a company presentation slidedeck created in 2018.
Company executives talked about the COVID-19 pandemic during conference calls the companies held to go over earnings for the first quarter of the year with securities analysts.
HCA is reporting $698 million in net income for the first quarter on $13 billion in revenue, compared with $1.2 billion in net income on $13 billion in revenue for the first quarter of 2019.
Quest is reporting $106 million in net income for the latest quarter on $1.8 billion in revenue, compared with $176 million in net income on $1.9 billion in revenue for the year-earlier quarter.
HCA executives say their company has a great deal of cash on hand and has a strong level of liquidity, or ability to come up with the cash needed to meet obligations.
Quest says that, if current conditions keep up, it might need to get flexibility from lenders to keep its current “revolving credit facilities,” or corporate versions of credit cards, in place, but that it’s confident that it will get that flexibility.
The World Since March 15
Executives from both company said their companies’ conference calls that patient volume fell off a cliff in the middle of March, after many state and local governments began making serious preparations for a surge in hospital patients with COVID-19, reacting to an influx of hospital patients with confirmed cases of COVID-19, and telling people to stay in their homes, to keep people from giving each other severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), the virus that causes COVID-19 pneumonia, heart problems and kidney problems.
Patient volume is down partly because hospitals reconfigured their operations, to prepare for a spike in the number of COVID-19 patients who might need to be on ventilators; partly because hospitals and physicians’ offices are trying to avoid many procedures, to reduce the risk that patients and health care providers will give each other SARS-CoV-2; and partly because patients themselves have been reluctant to run the risk of contracting SARS-CoV-2 at a medical facility.
At Quest, for example, revenue growth was up 4% for the two-month period from Jan. 1 through Feb. 29, relative to revenue for the comparable period in 2019; fell less than 10%, year-over-year, for the first two weeks of March; plunged almost 40% in the third week of March; and sank about 50% in the fourth week of March.
“So far in April, we have indications that volume declines have stabilized in the 50% to 60% range,” Mark Guinan, the company’s chief financial officer, said during the Quest conference call.
Company executives said they saw declines in volume for a wide range of tests, including tests used to track cancer.
They said that they are preparing to launch a testing program that should be able to process about 200,000 SARS-CoV-2 antibody tests per day, and the use of other types of tests should start to recover.