More than a year and a half into the pandemic, COVID-19 continues to undermine performance improvement efforts at U.S. hospitals and health systems, highlighting a need for transformative operational changes, according to Kaufman Hall’s 2021 Healthcare Performance Improvement Report.
Experts say bold, new thinking is needed in nearly every area of operations, including access to care; supply chain management; patient throughput, or the efficient flow of patients; workforce optimization and engagement; service line enhancement or rationalization; and revenue cycle.
The report found that labor and supply chain challenges are continuing to drive hospital and health system costs higher at the same time revenues are lower due to concerns over patient volume. One hundred percent of respondents said they faced staff burnout, difficulty filling vacancies, wage inflation, and high turnover rates. Ninety-two percent said it is difficult to attract and retain support staff, and almost 90% have increased base salaries. Nearly two-thirds or more are dealing with high turnover among clinical staff (65%) and wage inflation (73%). And 99% of survey respondents experienced challenges in supply procurement, including shortages of key items and significant price increases.
Experts say it is time for hospital leadership to rethink their approach to performance improvement, which will require revisiting the premise that not-for-profit hospitals and health systems can lower their costs while maintaining control over all aspects of operations.
“The pandemic has created a perfect storm of increasing expenses and decreasing revenues,” said Kaufman Hall Managing Director Lance Robinson, who leads the firm’s performance improvement practice. “For most institutions, navigating today’s financial and operational challenges and positioning for future growth requires radical change that is achieved only with new thinking and partnerships. Now more than ever, hospitals need to build relationships with physician groups, insurers, retailers, vendors, and other providers. It’s increasingly apparent that most organizations don’t have the resources they need to evolve on their own.”
Other notable findings include:
- Volumes in many service lines remain well below pre-pandemic levels. While cardiology and cardiovascular services have seen the most significant rebound, just 44% of respondents in these services have seen a return to pre-pandemic levels.
- The pandemic is prompting potentially permanent changes to the workforce. Only 23% of respondents say that the ratio of administrative staff working remotely is likely to return to pre-pandemic levels, while 66% said the ratio will remain at levels reached during the pandemic and 11% said the ratio will continue to increase.
- More than half of respondents (52%) say the pandemic has driven their organization to adopt new processes, positions, or departments that will be continued going forward.
- Seventy-five percent of respondents have experienced adverse revenue cycle impacts during the pandemic, including a higher percentage of Medicaid patients and increased rates of insurance denial.
The Kaufman Hall State of Healthcare Performance Improvement Report is an annual publication that analyzes the performance improvement and cost transformation efforts of hospitals and health systems. Results are based on survey responses from 73 hospital and health system leaders nationwide, including representatives from all regions of the country as well as from urban, suburban, and rural markets.
