Effects of Declining Patient Volumes in Healthcare

Since the beginning of the COVID-19 pandemic, patient volume in the healthcare industry has been consistently declining. Diminishing patient volume poses a significant challenge for the sector, with its far-reaching effects becoming an increasingly prominent concern among healthcare professionals. The consequences of this decreasing volume can be widespread, negatively impacting a practice’s finances, resources, and ability to provide quality patient care. The following will examine the results of sinking patient volume in the healthcare industry, explore its implications, and offer potential solutions to lessen the financial impact such that providers may continue to provide high-quality patient care.
Healthcare patient volume has witnessed a notable decline, impacted in large part by COVID-19. In 2020, the Medical Group Management Association (MGMA) found that 97% of surveyed medical practice leaders reported a drop in patient volume following the pandemic, with 71% of practices reporting a reduction in patient volume by 50% or more. Similarly, consulting firm Crowe found that volume for emergency departments had declined 22.7% by June 2021 since the prior year, with an expectation of an additional 5 to 10% decrease in subsequent years. Furthermore, the American Academy of Family Physicians (AAFP) also reported that national patient volume has decreased by 60% since the start of COVID-19. These statistics make it abundantly clear that medical patient volume is dropping rapidly. Fewer patients means less revenue, affecting both the quality of care providers can deliver and overall access to care.
In the coming years, medical practices will find it increasingly difficult to remain afloat. The National Hospital Flash Report of May 2022 reported that present healthcare operating margins are “far from sustainable levels,” with the main driver being “a pulling back of volumes.” With healthcare’s current model, hospitals already struggle to maintain sustainable margins amid reduced patient volume. As volume decreases, revenues will become more scarce. MGMA’s 2020 survey also reported that “the loss of patient visit volumes can lead to a 50 to 80% drop in revenues.” This decline in revenue may threaten the quality of patient care organizations can provide. Reductions in revenue lead to budget cuts, downsizing, or even facility closure. For example, the Cleveland Clinic has experienced a steady patient volume decline since the pandemic, resulting in a $178 million loss in the first quarter of 2022. This level of financial failure is untenable for hospitals and healthcare organizations. It places unnecessary stress on healthcare and administrative staff by threatening their job stability, further fueling the staffing shortages experienced by many healthcare groups. This trend is not likely to slow anytime soon, with large U.S. medical groups such as Tenet Health reporting a 19% reduction in patient volume in early 2022. These reductions, coupled with increasingly prevalent staffing shortages in the healthcare industry, are making it difficult for medical practices to maintain a financially sustainable business model.
Hospitals and medical groups nationwide are beginning to feel the unrelenting effects of declining patient volume. In consulting group McKinsey’s survey on nationwide healthcare, “more than half of respondents said specialist appointments for new patients are taking more than 14 days to schedule.” With reduced patient volume, overhead costs rise, leaving healthcare practices vulnerable to staffing constraints and limiting the timely delivery of care. Furthermore, Commerce Healthcare reported that in late 2022 “nearly 60% of physician, advanced practice provider, and nurse survey respondents said their teams are not adequately staffed and 40% lack resources to operate at full potential.” With the vulnerable state of these resources, practices cannot operate at full capacity, which creates revenue deficiencies that perpetuate the core problem. Furthermore, diminished patient volume can make it difficult for healthcare practices to satisfy payroll obligations. During the pandemic, the U.S. Bureau of Labor Statistics found that nearly 41,000 healthcare employees were dropped from their payroll in March 2020 and these numbers are only expected to grow. Reduced patient volume also affects a healthcare practice’s stability, making it a less attractive workplace for qualified young talent. This contributes to greater staffing shortages, damaging revenue opportunities and impacting the sustainability of the current healthcare model. With reductions in patient volume showing no signs of stagnation, healthcare practices are frantically searching for ways to remain viable.
The healthcare industry has looked to various solutions to curb the vicious long-term effects of patient volume reductions. Many medical practices choose to merge with larger groups to combat receding patient volume. The American Hospital Association identified 1,887 hospital mergers between 1998 and 2021, reducing the number of hospitals in America from around 8,000 to just over 6,000. The University of Pennsylvania’s health institute director David Grande identifies this as “not a new trend” but “rapidly accelerated.” Grande states that “consolidation will reduce access to healthcare for the most vulnerable populations through hospital closures and higher prices in highly consolidated markets.” Based on this, it becomes apparent that, with declining patient volume, surviving medical practices will likely merge with larger organizations to pool patients, staff and resources to create a sustainable business model. While this is one solution for medical groups to combat declining patient volume, it often prevents owners of smaller practices from retaining ownership and control post-merger, negating one of the key reasons the provider chose private practice in the first place. Another drawback of this option is the consolidation of care as expressed by Grande, making it more difficult for vulnerable populations to access quality healthcare in a convenient manner.
For medical groups struggling with diminishing patient volume numbers, many practitioners feel their best option is to sell outright to a larger organization. In the 2023 New York Times article “Corporate Giants Buy Up Primary Care Practices at Rapid Pace”, Reed Abelson outlines a series of primary care groups bought out by large corporations such as CVS Health and Amazon. With declining patient volume, smaller primary care groups often choose to sell to a larger corporation to stabilize patient in-flow and gain access to more resources. Dr. Dan Moore, who recently started his own medical practice in Virginia, states that practices that are bought by these larger groups experience a “loss of autonomy” and do not have enough say in how they care for their patients. On the flip side, these large corporations argue that this trend will bring more coordinated care to patients by allowing doctors to access the resources of the larger organization. However, this must be evaluated against the loss of autonomy expressed by Dr. Moore, as this also becomes an essential factor in assessing whether to sell a practice as a solution to declining patient volume.
Another option that is seeing increased popularity is to outsource revenue cycle management (RCM) to an expert partner that can assist an organization with remaining financially stable. Identifying an RCM partner is one proven way to maintain practice autonomy and control while still maximizing revenue and efficiencies. As such, this solution has become more attractive in recent years, with RevCycle Intelligence reporting that nearly two-thirds of providers plan to outsource within the next 24 months. With more providers outsourcing their billing, the medical billing industry will only expand and get stronger. Future Market Insights reported a 12.5% compound annual growth rate in the medical billing outsourcing business from 2017 to 2021, with projections from Grand View Research predicting a similar compound growth rate of 12.3% through 2028. This consistent growth is driven by more and more healthcare practices outsourcing their medical billing, putting practices in a better position to combat declining patient volume. Through this efficiency, an effective RCM partner focuses on collecting every available cent owed to the practice while minimizing overhead administrative costs. This frees up the practice to dedicate existing staffing and resources to deliver optimal patient care. While not the only solution for healthcare practices to combat declining patient volume, research indicates the outsourcing trend will continue to gain momentum in the future. Over the next several years, patient volume will likely continue its recession. The effects of this can be far-reaching, leaving practitioners with minimal alternatives to maintain financial stability. Some medical groups merge with larger organizations, pooling resources to stabilize rapidly diminishing patient counts. Other organizations choose to sell outright to a larger company, increasing the sustainability of the medical group while sacrificing autonomy. One common solution that insulates provider independence is to outsource medical billing in order to maximize revenue and minimize overhead costs. Ultimately, healthcare practitioners will have to weigh the costs and benefits of all options to determine which solution is most effective for their practice.

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