Three-fourths of hospital executives concerned about financial viability without effective COVID-19 treatment or vaccine

Oct. 21, 2020

Nearly three-quarters of hospital leaders are either moderately (52 percent) or extremely (22 percent) concerned about the financial viability of their organizations without an effective treatment or vaccine for COVID-19, according to a new report from Kaufman Hall.

One-third of respondents (33 percent) saw operating margin declines in excess of 100 percent in the second quarter of 2020 compared with the same period of 2019.

“2020 State of Healthcare Performance Improvement Report: The Impact of COVID-19” is Kaufman Hall’s fourth annual survey of hospitals and health systems on their performance improvement and cost transformation efforts.

“The challenges brought on by the COVID-19 pandemic have affected nearly every aspect of hospital financial and clinical operations,” said Lance Robinson, managing director, Kaufman Hall. “Organizations have responded to the challenge by adjusting their operations and strengthening important community relationships.”

A substantial drop in volumes, especially in the early months of the pandemic, turned the operating margin of many organizations from positive to negative. Volumes began to recover over the summer, particularly for services where it is difficult to delay care, such as oncology and cardiology. Oncology is the only area where more than one-half of respondents (60 percent) have seen volumes recover to more than 90 percent of pre-pandemic levels.

·        More than one-in-five respondents (22 percent) reported expense increases of more than 50 percent.

·         Respondents have seen the greatest percentage increase in expenses for personal protective equipment (PPE) (52 percent of respondents) and nursing staff labor (34 percent of respondents).

·         Almost all respondents (95 percent) worked to minimize exposure to other patients in waiting rooms, while most (73 percent) have established “clean” facilities for non-COVID patients. In an indication of the pandemic’s toll on healthcare workers, 75 percent of respondents increased monitoring and resources to mitigate staff burnout and address issues of mental health.

·         Fifty-six percent of respondents said their organizations experienced 100percent growth in the number of telehealth visits that their organizations provided, particularly in the pandemic’s early months. While telehealth utilization has dropped somewhat as health systems have reopened, it remains well above pre-pandemic levels.

·         Looking forward, hospital executives report that digital and ambulatory strategies will play an even more significant role at most organizations. For instance, 31 percent of respondents said that competitive dynamics in their market had been affected as more consumers sought out care from retail-based clinics, such as CVS or Walgreen’s.

Although the COVID-19 pandemic has created significant hardships for hospitals and health systems, it has also delivered positive impacts. Interviewees reported that the pandemic has generated new levels of collaboration among different parts of health systems, yielded returns on pre-pandemic investments in data and analytics, and strengthened hospitals’ relationships with schools, local and state governments, and community organizations.

The report’s findings were based on responses to a nationwide survey that Kaufman Hall fielded in August 2020. Almost all the respondents to the survey (96 percent) were from hospitals or health systems, with the majority of respondents in executive leadership (55 percent) or finance roles (39 percent).

Kaufman Hall has the report.

Kaufman Hall has the release.

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