A post-pandemic economy will resemble a mixture of the business practices that were abruptly put into place during the crisis with a gradual return to the environment that existed prior to the nationwide shutdown, according to the new report “Coronavirus Crisis to Spur Changes in Workplace and Consumer Behavior” published by Moody”™s Investor Service.
The report predicted that the rapid embrace of online service deliveries will continue in several sectors, most notably in healthcare and its new focus on telemedicine.
“Prior to the coronavirus, most healthcare providers had limited telemedicine offerings and largely used the technologies to provide care to rural areas or for remote monitoring of critical-care patients,” the report stated. “Others made telemedicine an option in physician practices to experiment with logistics, consumer demand and the economics of providing service.”
Moody”™s predicted that post-pandemic telemedicine usage will be predicated on consumer preferences and reimbursement.
“The vast majority of hospital systems we rate saw an increase in the number of telemedicine visits by several thousand percent in recent months, when offerings were expanded to many types of office visits and consultations,” the report continued, noting that most consumers appear to be “satisfied with telemedicine, particularly for routine checkups and other types of care that do not require an in-person consultation.”
Moody”™s also observed that the Centers for Medicare & Medicaid Services, state Medicaid programs and major insurance companies relaxed rules around telemedicine reimbursement during the pandemic while extending in-office payment rates for most virtual services. But these entities have yet to formally commit to maintaining these reimbursement rates after the pandemic is over.
“Currently, telemedicine is overwhelmingly credit positive for hospitals because it allows
them to continue generating revenue and widening patient access as in-office visits decline,” the report concluded. “Long-term, the credit implications are highly dependent on whether reimbursement levels will exceed expenses and enable margins to remain at levels similar to pre-coronavirus office visits.”
Moody”™s also predicted that many colleges and universities will move past the pandemic with a continued offering of online courses and a hybrid mix of online and in-person education. Some schools were already going the route prior to the pandemic, primarily the public universities, but Moody”™s stressed that some schools will have problems maintaining this approach.
“More rapid growth in online and hybrid coursework poses credit challenges for traditionally small liberal arts colleges that struggle to attract students,” the report warned. “The value proposition of these institutions has faced scrutiny in recent years and many are grappling with competitive and operating challenges that will make it difficult to invest long term in offering in-person, hybrid and online coursework options.
“Additionally,” the report added, “their smaller scope and size present challenges in terms of hybrid and online course offerings becoming financially worthwhile. Small regional public universities will also be challenged as they have fewer resources and brand recognition to compete with universities that have economies of scale and more robust online programmatic offerings.”
As for K-12 schools, Moody”™s did not envision a post-pandemic state of full online education, pointing out the “social, economic and political benefits of students in a physical classroom.” Furthermore, in-person K-12 education alleviates the childcare concerns of working parents and while offering “key social services for large populations of students.”
One of the most significant changes of the pandemic-era economy has been the rapid rise in remote work. While this enabled companies and organization to remain operational during the crisis, Moody”™s cautioned that a continuation of this after the pandemic “poses financial challenges for major cities in terms of lost tax and other revenue.” But Moody”™s predicted that when the crisis is over, “many workers will choose to return to offices and companies will honor existing leases, softening governments’ economic blow from the pandemic.”
Two industries which underwent dissimilar experiences during the pandemic will come out of the economic maelstrom at very different speeds. Moody”™s forecasted that the leisure travel and tourism industry would not rebound to its pre-pandemic levels until 2023 at the earliest, with cruise lines taking the longest to return to normalcy, while business travel will remain weakened as cash-strapped employers rely on teleconferencing to keep travel costs down.
On the other hand, cybersecurity firms were kept busy during the pandemic as cyberattack risks grew among a remote workforce that was not set up with withstand assaults by digital miscreants. But Moody”™s predicted these firms may not be in heavy demand after the pandemic is over.
“Despite the risks, investing in cybersecurity will prove challenging as lower revenue growth and an environment of fiscal austerity continue with the economic downturn,” the report said.
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