Since the start of the Covid-19 epidemic in the United States, many have tried to compare the economic fallout from the epidemic to previous crises of the past, especially the 2008-2009 recession.

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In this episode of Radio Advisory, host Rachel Woods sits down with Advisory Board's Yulan Egan and Christopher Kerns to talk about why you shouldn't use the 2008-2009 recession as a proxy for the challenges we face amid Covid-19—and why we need to throw out the recession playbook entirely.

Read a lightly edited excerpt from the interview below, and download the episode for the full conversation.

Rachel Woods: If I reflect on some of the commentary in the media across the last 12 months there's been a consistent comparison between the Covid-19 crisis and the 2008-2009 financial crisis. We even made that comparison early on in the pandemic. Why did we initially make that comparison between the two?

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Yulan Egan: On the surface I think there are some pretty clear parallels. They were both crises that played out on a global stage and that had very clear economic fallout associated with them.

I think there's also the fact that it happened within recent memory, so most of us remember it and a lot of leaders across the industry saw the impact that it had on health care firsthand.

Christopher Kerns: And if there was something that I kept hearing over and over again it was a reminder of how long it took volumes to recover, how it took three years post-2008 for volumes to recover to their previous highs. And I think there was this relatively constant fear that that was going to happen again.

Woods: And now we come around in the opposite direction where, 12-plus months later, we realize that the two crises are different in almost every way, which I actually think is pretty surprising for folks especially when we think about the economy. So what makes the economic fallout between the pandemic different than the global financial crisis?

Egan: I think one of the clearest things we've seen is related to unemployment. So, unemployment obviously skyrocketed at the beginning of the pandemic. In fact we actually reached the highest rate of unemployment recorded since the federal government started recording those numbers in the 1940s.

But that spike turned out to be temporary in nature, so if we look at the latest data that we have as of February of this year it's actually dropped back down to about 6.2%, which is a much, much faster recovery than we saw after the '08, '09 recession. 

Woods: How long did it take us to get back to a similar number in the financial crisis?

Egan: I was just looking at these numbers, it took about five years.

Woods: So five years versus one basically?

Egan: Yep.

Woods: So unemployment fared better than expected because it was so temporary, but what else really set this crisis apart?

Kerns: Well the economy in early 2020 wasn't just healthy, it was actually thriving, I think it's fair to say. And as a result we've been seeing a better snap back from that, this recession wasn't caused by an overpriced asset bubble or excessive leverage. It wasn't a financial crisis that precipitated this, this was caused by government responses to a major health crisis.

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So when you're starting from a position of strength you can understand how a number of different factors in the economy would snap back once a lot of those restrictions are lifted.

Egan: And I think we've seen that concretely in a few ways, a lot of sectors of the U.S. economy actually proved to be surprisingly resilient. We've seen a pretty strong stock market. I've been house hunting, I can tell you that the housing market here in California has completely exploded.

Woods: Same here in D.C.

Egan: Even the retail market recovered more quickly than I think most were expecting as well down the back half of 2020. And all of that has meant that tax revenues didn't take quite as big a hit as they did after the last recession. 

Woods: So all of this should be really good news, especially to providers. Because if I think about the effects of job loss specifically, it tends to come with financial insecurity, insurance loss, and ultimately has a big impact on health care utilization. That's one of the big things that we saw in the last recession.

So does that mean that we're out of the woods when it comes to volumes?

Egan: I wouldn't say that we're out of the woods, but I do think volume recovery is going to look very different this time around. I wouldn't be shocked if we see a quicker rebound—but that rebound's also likely to be much more uneven. And I think financial insecurity is likely to play a smaller role, but there's still plenty of forces at play that are going to suppress volumes across the long-term.

Kerns: There were lot of volumes that were suppressed for a while, and as a result you're working through a backlog right now. So for a lot of procedural cases, a lot of diagnostic cases, they are snapping back a lot faster than I think a lot of people would have even expected. But when we look at surveys of planners for example, most don't expect ED volumes to get back to baseline maybe ever.

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Woods: But let's talk about that, those deferred volumes. I will admit I got this question just a couple of days ago from an organization whose volumes were trickling back up, getting closer to 2019 levels, and they wanted to know, could we actually see a volume boom if everybody comes flooding back into the health system? I think they actually likened it to the roaring '20's, but for health care services. Do you actually think something like that would happen? 

Kerns: Potentially, but it's going to be time limited. When we look at the surveys of hospital and health system leaders they generally expect that they'll be working through that backlog by August to November.

Woods: And to your point, not everything is coming back. Procedural volumes is one thing if you're working through the backlog, but if ED volumes are not coming back, that has implications on future volumes.

Kerns: Right, it just means that providers are going to have to look to alternative sources to be able to get the right cases to come to them, to get better referrals. They're going to have to use a variety of channels, not just their primary care physicians and specialists and EDs but also using their virtual channels that they have built out over the last year.

Egan: I also don't think we can assume that the volumes are going to come back to the same players. I don't know that the distribution is going to look exactly the same as it would have pre-epidemic.

And in particular those organizations that can actually really streamline their operating procedures and potentially extend hours to do surgeries on nights and weekends might be able to capture some market share in the short-term, because patients might be willing to switch providers if it means they can get something done quicker.

Kerns: Yeah, there are a lot of lingering fears around the hospital settings so I think they could really position free-standing providers such as ambulatory surgery centers that can attract patients that otherwise might historically have gone to the hospital setting.