CEDARVILLE, Ohio (WDTN) – The economy has shrunk considerably due to the COVID-19 outbreak and the hardest hit sector is healthcare.
The national gross domestic product fell to -4.8 percent in the first quarter due to the outbreak, according to a report released this week from the Bureau of Economic Analysis. This broke a cycle of positive growth that dated back to at least the beginning of 2016.
The hit taken by the healthcare industry was one of the biggest factors in such negative GDP, according to CNBC. While industries across the board were affected by quarantine and lockdown orders, the healthcare industry saw spending plunge 18 percent, the largest drop of the major economic sectors.
“We made some decisions initially to help hospitals and healthcare,” Dr. Marc Sweeney, Dean of the Cedarville University Pharmacy School, told WDTN.com. “When we decided to go into the stay-at-home order, the intent was to reduce the spike in COVID-19 cases so hospitals wouldn’t exceed the capacity of intensive care units and equipment like ventilators.
“What was started to help the industry has hurt the industry. Elective cases were brought to a halt and many people have been slow to follow up on elective procedures. It’s hurt a lot of health systems across the states.”
In Mid-March, the Ohio Department of Health had ordered all elective and non-essential procedures and surgeries to be postponed due to a potential surge in COVID-19 cases. The economic impact on hospitals was large. Elective surgeries are where hospitals and healthcare systems make the most money. In a statement to WDTN.com in March, Premier Health said the move was part of a strategy to slow the spread of COVID-19.
“This decision was a key strategy in statewide efforts to slow the spread of COVID-19 and to preserve personal protective equipment (PPE) — gloves, gowns, respiratory protection, and eye protection — which is in high demand globally,” Premier Health wrote in a statement to WDTN.com on April 6. The anticipated financial impact has driven many health systems to take necessary cost-cutting measures.”
Hospitals were also hit by the quarantine itself. According to Sweeney, the canceling of school, people being laid off or working from home, and the canceling of spring sports leagues meant a severe drop in the number of patients hospitals would normally have if the outbreak hadn’t occurred.
According to the Cincinnati Enquirer, eight of the top 20 employers in Ohio were healthcare companies, With so many large employers cutting back, it has hit other industries hard.
“When something happens in healthcare it affects the entire economy,” Dr. John Tarwarter said, an Assistant Professor of Finance at Cedarville. “It’s almost circular. Output for automobiles are down 72 percent in April, unemployment is about 14 percent. We saw the Dow jump 900 points because of news of progress on a potential COVID-19 vaccine.”
Tarwater said the economic situation is very unique. He said the healthcare industry has largely been unaffected by the economy at large, but in this situation has been different. Ohio has used a staggered method of re-opening its economy trough the month of May.
Tarwater said even if with some restrictions limited, people are still self-distancing at a rate of around 60 percent.
“If people don’t feel safe, they won’t go to movie theaters or restaurants,” Tarwater said. “You’ll have people who will go out, but if 60 to 70 percent are still not engaging, the economy will be very slow to return. And the longer we take to return, the slower the recovery will be. We’re talking now between one-to-three years. You can’t just make up the $3-4 trillion we put into debt overnight, that just won’t happen.”
Senator Rob Portman (R-OH) told WDTN.com during a conference call on Tuesday that getting people to feel safe at work will include testing and providing businesses with PPE. He said the government and pharmaceutical companies are working on anti-viral medication and most of all testing.
“There’s $238 million specifically for state testing capacity,” Portman said. “It was the dollars best spent in the (CARES Act) package). Because if you can get testing going in Ohio, you can not only re-open but stay re-open. I’m in support of more of that in the next package.
“But ultimately when the economy re-opens, when we send our kids back to school, it won’t be because President Trump, or Gov. DeWine or Rob Portman says it’s time, it will be because people will feel safe.”
The entire Bureau of Economic Analysis Report on the first quarter can be read at www.bea.gov.
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