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COVID-19 Impact on Elective Procedures

Insight by , and

The Cowen Insight

30 U.S. hospital administrators provided their level of optimism for the recovery of U.S. elective procedures. Their responses imply sequential volume improvements throughout 2020, but most (~70%) forecast a full recovery in 2021. The survey results appear relatively positive for MedTech in the short term, but not fully in-line with the bull case which includes a return to revenue growth in 4Q’20.

Hospital Administrators Expect Elective Procedure Volumes To Improve Sequentially; Full Recovery May Have To Wait Until 2021

1Q20 MedTech management team updates have driven Street forecasts for a return to revenue growth for device intensive portfolios as early as 4Q20.

Our survey results indicate hospital administrators are forecasting sequential increases in elective procedure volumes in all device categories. However, the majority of our respondents believe a return to normalized pre-COVID-19 trends won’t occur until 2021.

Our survey respondents’ view is more in-line with Cowen’s outlook. By the end of 4Q20, 31% of the hospital administrators anticipate recovering 91%-100% of pre-COVID-19 elective procedure volumes. Surprisingly, ~21% of the respondents don’t expect to recover 91%-100% of historic volumes before the end of 2021.

Patients’ Willingness To Return For Procedures Could Present A Speed Bump in the Road to Recovery

Patients’ readiness to return to hospitals for elective surgeries has become a crucial element of the volume recovery trajectory. Our administrators believe 2/3 of their patients will regain confidence and move forward with an elective procedure in the next 6 months. The remaining 1/3 think safety concerns could lead to longer delays.

In a recent Cowen Consumer survey, 326 consumers (out of 2,504) reported having their elective procedures postponed. The percentage of patients who were comfortable having their procedure by year-end 2020 was ~83%. These data points underscore the importance of considering patient willingness as a meaningful variable when forecasting the pace of recovery for elective procedures.

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