Vaccine impact on US Hospitalizations
Hospital utilization has been a key factor driving reopening sentiment.COVID-19has proven to be most deadly to vulnerable populations when adequate medical care is not available. Campaigns to “flatten the curve” in March/April had the stated goal of reducing the potential for the pandemic to overwhelm the hospital system. The rise in hospitalizations in recent weeks has increased discussions of whether additional restrictions/closures are appropriate and has coincided with sideways trading in stocks levered to the reopening of the economy over the past nine trading days. In the next few weeks, we believe a rapid decline in hospitalizations driven by the first phase of the vaccine distribution has the potential to be a key inflection point in investor sentiment on the reopening of the economy. Reduced hospitalizations are likely to lead to reduced COVID-19 deaths, which will boost sentiment even more broadly.
Long-term Care Facilities (LTCFs) are among the first to receive vaccinations: On Sunday, the United States Secretary of Health and Human Services, Alex Azar, noted that he expects “all” residents and staff of LTCFs to be vaccinated “before Christmas”.While the 2-3 million residents and staff in LTCFs are only a small fraction of the 20million vaccines expected to be administered before year-end, our analysis suggeststhey have the potential to huge impact on overall hospitalizations.
LTCFs represent a high proportion of the most vulnerable population and hospitalizations: Early in the pandemic, residents of LTCFs represented 18% of all COVID-19 casesdespite being less than 1% of the population. To date,LTCFs account for about 40% of COVID-19 related deaths. Over time, the development of strict controls and frequent testing has reduced the proportion of cases from LTCFs, but the frequency of hospitalization remains high. We believe around 25% of all US hospitalizations are still attributable to LTCFs, down from 30-40% earlier in the pandemic. While our model considers a variety of other factors to estimate the timing of the impact, it is easy to see that eliminating the source of 25% of hospitalizations by vaccinating this group in just a few days can have a profound impact on the burden on the health care system.
Hospitalizations among the general population (non-LTCF individuals): Overall US hospitalizations related to COVID-19 have grown 1.1% per day over the past month to115,000. If we assume that 25% of total hospitalizations are from LTCFs and 75% are from other sources, there is still a large and growing number of hospitalizations that are unrelated to LTCFs. For the purposes of our analysis, we assume that 75% of the total hospitalizations will continue to grow unabated at 1.1% per day. While the broad vaccination of health care professionals and other high risk individuals will likely have an impact on these hospitalizations too, we do not include that benefit in our estimates at this stage.
Vaccine effectiveness 14-days after one dose: Recent studies found thePfizer/BioNTech COVID-19 vaccine was82% effective after the first dose and 95%effective seven or more days after the second dose. For the purposes of modeling hospitalizations, we assume that the vaccine is 82% effective in preventing infectionsstarting14 days after the first dose. We find that our timing estimate is not particularly sensitive to changes in the vaccine effectiveness; hospitalizations decline one day later ifyou assume the vaccine is only 50% effective after the first dose. Our timing estimate is directly related to the number of days before the vaccine provides protection.
Hospitalizations begin to decline around January 9th in our base case scenario: For overall hospitalizations to begin to decline, it would take just a 3.3% reduction in daily net hospitalizations from LTCFs (25% of total) to counteract the 1.1% daily growth in “other net hospitalizations” (75% of total). We estimate this occurs after 14 days after30% of LTCF residents and staff have received one dose of the PFE/BNTX COVID-19vaccine. Assuming that vaccinations of 30% of LTCF residents and staff occurs by26-Dec, we would expect total US hospitalizations to begin to decline around 9-Jan.
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