key: cord-1021407-ami34znt
authors: Anoushiravani, Afshin A.; O’Connor, Casey M.; DiCaprio, Matthew R.; Iorio, Richard
title: Economic Impacts of the COVID-19 Crisis: An Orthopaedic Perspective
date: 2020-04-21
journal: J Bone Joint Surg Am
DOI: 10.2106/jbjs.20.00557
sha: 6f5d477d9be06ba6ede950a5fa91a12fcd2894e3
doc_id: 1021407
cord_uid: ami34znt

nan

The pandemic has challenged health-care organizations on many fronts, such as training medical staff on new protocols, securing scarce PPE and ventilators, and creating additional intensive care unit (ICU) and COVID-19 recovery beds, to name a few 9 . Without federal and state relief, the moratorium on elective procedures will further increase the financial burdens already threatening the viability of marginally resourced hospitals. Even without the pandemic, 22 health-care organizations filed for bankruptcy in 2019; this number will only increase in 2020 10 .

Elective procedures account for 48% of hospital costs and potentially an even larger percentage of revenues 9, 11 . Five musculoskeletal procedures (hip arthroplasty, knee arthroplasty, laminectomy, spinal fusion, and treatment of lower extremity fracture or dislocation) account for 17% of all operating room procedures in U.S. hospitals 11 . Without elective orthopaedic procedures, marginal health-care systems are at risk for insolvency.

The current pandemic has forced the health-care system into uncharted territory. Our health-care system relies disproportionately on elective surgical procedures as a revenue source, with these revenues being used to indirectly subsidize the care of other patients. Health care represents ‡18% of the gross domestic product, and the loss of 3 months of elective surgery will lead to an annual decrease of hospital revenue of approximately 12.5% 12 . Hospital profit margins on average are not able to overcome these losses. This will cause financial constraints for hospitals and surgeons, leading to budget cuts and employee furloughs. Given the size of the health-care sector, this contraction will greatly contribute to growing unemployment and recession in the overall national economy. In response to the crisis, the federal government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion relief fund strategically aiding individuals, businesses, and state and local governments, while maintaining public services 13 (Fig. 1) . Aside from the centerpiece deployment of "helicopter money"-a $1,200 direct payment to individuals and families-the bill designates $100 billion to hospitals and raises Medicare reimbursements by 20% for care rendered to COVID patients. Although it is still unclear how the $100 billion will be allotted (e.g., demand versus caseload, rural versus urban, academic versus community organizations), the Secretary of Health and Human Services (HHS) has been empowered to quickly oversee its distribution, providing hospitals with funding for expenses relating to constructing temporary structures and obtaining medical supplies (e.g., ventilators, PPE). In the absence of more specific guidelines, the funding will potentially disproportionately benefit larger health-care organizations 14 .

Health-care systems are not solely affected. Orthopaedic practices spend >$33,000 per month per surgeon to maintain overhead for their offices 15 . Orthopaedic private practices face additional costs for maintaining ambulatory surgical centers and high medical malpractice costs, while reduced reimbursement rates have increased the capital expenditures needed to run a successful practice. As a result, orthopaedic practices have become reliant on elective procedures, exposing them to increased financial risk. The COVID-19 crisis has resulted in the rapid cancellation of elective procedures, replacing revenue with liabilities as seen in the hypothetical example shown in Table I . The moratorium on elective procedures, combined with the high overhead costs of maintaining a private orthopaedic practice, has placed orthopaedic groups in a difficult position. New England Orthopedic Surgeons, based in Springfield, Massachusetts, has had to withhold all surgeon pay and furlough 168 employees 16 . Similarly, the Rothman Institute, in Philadelphia, has made the decision to retain employees in lieu of paying its surgeons 17 . Many other orthopaedic groups are facing the same challenges. Emergency funding from the government loan programs offers potential aid for private orthopaedic practices during this crisis. The CARES Act has designated an additional $350 billion in new loans to small businesses, which include private orthopaedic practices 13 . The United States Small Business Administration (SBA) now has several programs available for businesses with £500 employees (Table II) 18 . The program most applicable to private orthopaedic practices is the Paycheck Protection Program (PPP), which provides a maximum of $10 million or 2.5 times the average monthly payroll in 2019 (whichever is less). In addition, regulators have reduced all SBA-levied fees, the maximum interest rate is locked at 1%, and a guarantor is no longer needed. These loans are eligible for full or partial forgiveness if used to fund (1) payroll, (2) utilities, (3) rent, (4) mortgage, and/or (5) existing business debt. To maintain eligibility for forgiveness, businesses must not terminate contracts with current employees or must rehire employees and maintain employment until the end of June. If the number of employees is reduced during the first 8 weeks after loan distribution, the amount of forgiveness will decrease, and, if the employees who were laid off made <$100,000 per year, the amount of forgiveness may further decrease. Notably, the PPP can be combined with other SBA programs, including the Economic Injury Disaster Loan (EIDL) program; however, these programs have funding caps and are being dispensed on a rolling basis. Unfortunately, given the high capital expenditure inherent to orthopaedic surgery practices, the PPP and EIDL loans will not be sufficient for the largest groups. It is still unclear which loan programs these large groups will qualify for.

We are in the midst of a health-care crisis that presents unique challenges for all Americans. During times of hardship, it is important that all health-care professionals, regardless of their training, come together and do what is best for their patients, families, and colleagues. Orthopaedic surgeons have done their part in drastically reducing non-urgent surgical case volumes with the goal of minimizing exposure and preserving PPEs. We recommend a continued reduction in all nonessential procedures as we move through the most critical period. In addition, we strongly recommend that all private orthopaedic practices review the SBA PPP guidelines and how they best apply to their groups. The programs and relief funds that have been instituted should ease the economic burden; however, it is imperative that orthopaedic surgeons take an active role. Last When the time comes that we are emerging from the peak in COVID-19 cases, great care will need to be taken when returning to elective surgical cases in order to ensure the safety of surgical staff, patients, and the care team. The availability of accurate, timely testing for all who are involved in surgical care will be necessary. The continued availability of ventilators, beds, blood supplies, medications, and appropriate PPE for the surgical and care teams will be necessary. A second outbreak in the autumn in North America remains a threat. Reliable antibody tests demonstrating immunity would go a long way toward accelerating our ability to go back to a more normal healthcare reality. National guidelines for returning to normal elective surgical schedules will help to ensure a smooth, safe transition. n

World Health Organization

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