The COVID-19 pandemic has set off global economic shockwaves, pushing the nation and much of the world into a deepening recession. While hospices have taken significant financial blows stemming from the outbreak, leaders in the space have displayed confidence that hospice remains a recession-proof industry.
The National Bureau of Economic Research (NBER) has indicated that the recession began in February of this year as the pandemic began to pick up steam.
“The unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions,” NBER wrote.
Earlier this week, the International Monetary Fund announced that it expected the recession to worsen as the pandemic rages on, predicting a 4.9% contraction of the global gross domestic product.
The fund said Wednesday it now expects global gross domestic product to shrink 4.9% this year, more than the 3% predicted in April. For 2021, the fund sees growth of 5.4%, down from 5.8%.
Nevertheless, hospice leaders remain confident that demographic tailwinds associated with the aging population, as well as increasing demand for their services will help them maintain a strong financial position.
“We believe we’re counter-cyclical from a recession perspective. We believe we’re relatively recession-proof in our business, because it largely responds around finding and keeping good people,” Amedisys (NASDAQ: AMED) CEO Paul Kusserow said at the BMO Capital Markets’ 2020 Prescription for Success Healthcare Virtual Conference. “We find in a recessionary environment, we tend to do better. So we feel very good about where we’re going. Our main focus is to grow substantially for the second half of the year and to put ourselves back to where we thought we’d be or as close as we can, so that we can come into 2021 with a full head of steam.”
In some instances, the recession may have a positive effect on some aspects of hospice business, such as the potential for reduced employee turnover. Long before COVID-19 emerged, hospice leaders have been wringing their hands over staffing concerns as workforce shortages persist.
“I think that there’s a significant staffing element in hospice, particularly within the aide and the paraprofessional population. If they’ve got a job, and if they’re getting benefits, they’re going to hold on to that during a recession,” Joan Gumbel, principal at JMG Hospice & Healthcare Consulting, told Hospice News. “They’re not going to look for the grass to be greener someplace else, particularly during a pandemic.”
More than 26% of hospice providers in a recent Hospice News poll indicated that staffing would be the greatest challenge they would face during 2020, compared to 18% who cited increased competition and another 18% who said new payment models were their biggest concern. More than 300 providers responded to the survey, conducted in collaboration with Homecare Homebase.
“We’ve been fortunate that we’ve been able to attract and retain folks that we have recruited and wanted to add to our team. I think we’ve still had some challenges in some markets in recruiting the patient care staff, and I think that the recession would help us in that perspective, and the fact that we are continuing to grow,” Andrea Bohannen, CEO of Three Oaks Hospice, said. “We would have to still find creative ways to identify patients. If due to COVID or for whatever reason, they weren’t accessing health care system in the ways that they’ve done before, we’re going to have to be closer to the physician groups and closer to the payer groups to be able to identify those patients at the appropriate time to ensure that they receive the hospice care that they need.”