As the spread of the coronavirus continues, everyone from the medical community to government officials is talking about "flattening the curve." What does it mean, exactly? The "curve" here refers to the line on a graph that rises as the number of cases of a particular infectious disease increase, then falls as that number goes down. Flattening that line means slowing transmission of COVID-19, the illness caused by the new coronavirus, so a community or society doesn't end up with an overwhelming number of cases all at the same time.

Graphically, we see this as a line that rises slightly and stabilizes over time at a certain level, then declines at the same measured pace. Considered the best way to stop the pandemic, this flattening of the curve can save lives by allowing hospitals the time and resources to treat everyone who needs services.

So far, the U.S. has reported more than 1,600 cases of COVID-19, while global cases have topped 164,800. If a large group of people become infected all at once, the number of cases in a geographic area will overwhelm the healthcare system, indicated by the capacity line, which is somewhat arbitrary in the below image but is useful for illustrative purposes.

What is social distancing?

First and most importantly, how do we avoid a sudden sharp spike in coronavirus cases? Governments such as those in China and Italy, among the hardest-hit by the crisis, have tried quarantines, ordered "social distancing," and shuttered shops and restaurants. Mathematical models show that quarantining the sick and those who have been exposed to them can help, but there are still people who have to go to work or take public transportation, and they might come in close contact with others and not follow recommended precautionary measures like frequent hand washing, so the virus continues to spread.

Doctors treat a COVID-19 patient in isolation.

Image source: Getty Images.

The stronger option is for some of the population to practice social distancing. By avoiding gatherings of large groups, the virus doesn't spread to as many people in a short time.

But the strategy that flattens the curve the most is for almost everyone to practice social distancing. In that scenario, most public gathering places are closed, and people isolate themselves as much as possible.

This flatter curve is important to hospitals -- and eventually to all of us -- for one simple reason: resources. A recent report from Johns Hopkins Bloomberg School of Public Health offers some interesting insight. There are currently 46,500 medical intensive-care beds in U.S. hospitals, and in a moderate outbreak of coronavirus, about 200,000 would be needed. The impact on U.S. hospitals would be "severe" at best -- especially since most hospitals are operating at or near full capacity even without the problem of coronavirus.

Another paper from Johns Hopkins Bloomberg School of Public Health reports the current number of ventilators -- essential in a coronavirus outbreak where people develop life-threatening respiratory disease -- in acute care hospitals is 160,000. While in normal times that seems fine, this could be inadequate if many COVID-19 patients need treatment at the same time.

Which patients to save?

And we can't forget about patients with other illnesses. If a hospital is faced with an influx of COVID-19 patients, it's unlikely there will be enough beds, ventilators, and other resources for all who need them. Doctors may have to ration care and make difficult decisions about whom to save. That is already happening in Italy, where coronavirus cases now number more than 24,700.

The number of hospitals in the U.S. is on the decline, with 64 lost over the course of 2018 to leave a total of 6,146 at the end of that year, according to the American Hospital Association. The increase in outpatient services is one of the factors weighing on smaller hospitals, which don't have the resources to set up outpatient centers and benefit from the trend. Bigger entities, leveraging growth in many areas, are faring better. For instance, HCA Healthcare (HCA 0.09%) and Universal Health Services (UHS 2.43%) both have seen annual revenue growth for at least the past three years.

That said, shares of both companies have taken a hit from the coronavirus outbreak, down more than 40% year to date. But Wall Street predicts 62% upside for HCA and 47% upside for Universal Health from these levels. Can we expect these sorts of gains to materialize? It's too early to know.

Eyes on the curve

Not only will the potential transfer of resources to COVID-19 patients stretch hospitals' resources, but it will also weigh on major revenue sources. Hospitals have already started postponing elective surgeries in order to accommodate coronavirus patients, according to press reports, and in some cases, patients themselves may cancel surgery to reduce their contact with others during the outbreak.

If investors want to know how hospitals will emerge from this crisis, they should keep their eyes on the curve. Will it flatten? For our health and the health of hospitals, it's more and more important that it does and that we are doing all we can to contribute by practicing social distancing and good hygiene.