As COVID-19 Cases Increase, Hospital Leaders Should Consider Focusing on Three Core Functions | Deloitte US has been saved
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by Steve Burrill, vice chairman, US Health Care Leader, Deloitte LLP
Hospitals and health systems around the country have implemented emergency procedures and protocols in response to—or in anticipation of—a surge in COVID-19 cases. In hotspot areas, many of these organizations are dealing with extraordinarily high call volumes, significant appointment backlogs, limited telehealth/virtual health capabilities, challenged triage systems, supply shortages, and a limited ability to quickly test patients for the virus. Meanwhile, cases not involving COVID-19 and elective cases have decreased significantly, which is disrupting the flow of revenue and creating staffing challenges.
As the pandemic continues to unfold, some hospitals and health systems are facing critical care capacity issues, shortages of personal protective equipment (PPE), ventilators, and other medical equipment. There are also staff shortages in emergency rooms and critical care areas—and a growing acknowledgement that clinicians might need to leave the front lines if they contract the virus or have to be quarantined.
Along with ensuring the safety of staff and patients, we are encouraging hospital and health system executives to pay close attention to the following core functions:
1. Workforce planning: The shortage of clinicians in some regions is compounded when those employees either contract COVID-19 or have to be quarantined due to exposure. In the Lombardy region of Italy—where about half of the country’s COVID-19 patients reside—10 percent of doctors and nurses are in quarantine. Some hospitals have had to temporarily close emergency rooms and send patients elsewhere. Retired doctors are being encouraged to return, and nursing students are being fast-tracked to graduation.1 Along with supplementing the usual complement of inhouse clinical staff to respond to increased demand, hospital leaders should ensure their employees are protected from the virus. They also should identify ways to keep clinicians involved in patient care in the event they have to be quarantined. A large health system in Louisiana recently said about 60 employees had tested positive for the virus and 300 more had to be quarantined. Even for a large health system, removing 360 employees can have a significant impact on patient care. Consider these strategies:
2. Supply chain integrity: For hospitals that are now dealing with a surge of COVID-19 patients (or preparing for one), ensuring they have the appropriate levels of masks, gowns, gloves, and other types of personal protective equipment (PPE) is top of mind. To stretch scarce resources, some health systems have moved all non-COVID-19 patients to alternate sites of care and are keeping COVID-19 patients in facilities equipped with ICUs, ventilators, and experienced clinicians. Other strategies include:
3. Cashflow and working capital: The cost of care for COVID-19 patients is largely unknown, which creates more financial uncertainty for health systems. Cashflow is critical for ensuring that payroll continues to be met. Despite the increased patient volumes, some hospitals and health systems are trying to keep revenue flowing. Many hospitals have encouraged patients to delay non-life-threatening procedures so that staff and resources can meet the more immediate needs of COVID-19 patients. As my colleagues Glenn Snyder and Bill Murray noted in their blog last week, procedures, such as joint replacements and other implantable devices, have been delayed or are being done elsewhere. But in a fee-for-service model, those day-to-day procedures generate much of a hospital’s revenue.
We suggest that finance teams analyze the effects of COVID-19 on working capital, cash flow projections, and other financial statement balances and related footnote disclosures. They should also look into recently approved federal funding. On March 27, the White House enacted the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. While the new law earmarks $100 billion for the Public Health and Social Services Emergency Fund (about $108,000 per hospital bed in the US), the funding is meant to provide a cash infusion to hospitals and health care organizations that are caring for COVID-19 patients.2 Hospitals can use the funds for a broad range of expenses related to the virus (e.g., medical supplies, construction of temporary facilities). However, the process for requesting funds adds to an already heavy workload for chief financial officers and their staff. Moreover, there are many questions about the criteria that will be used to award funds. The US Department of Health and Human Services (HHS) will determine how the funds are distributed but has not yet released details. Health system leaders should analyze the impact of other tax-relief packages and market stimuli (e.g., paid leave, government loans, tax cuts, etc.).
Our health system clients are facing the challenge posed by the virus with resourcefulness and commitment. I look forward to the day that recovery begins and we can reflect on how to rebuild capabilities and resilience into the future. Digital transformation, new ways of working, and new ways to get care will likely be a part of that picture.
1. COVID-19 draws retired doctors back to work, PBS.org, March 30, 2020
2. A look at the $100 billion for hospitals in the CARES Act, Kaiser Family Foundation, March 31, 2020
Steve, a partner with Deloitte LLP, is the vice chairman and national sector leader for Deloitte’s Health Care practice. He leads a multi-disciplinary team who serves clients through consulting, advisory, audit, and tax services. Steve also leads the overall strategic direction and market eminence of the health care sector, including client-facing leaders’ development and succession, business development efforts, and cross-functional go-to-market strategies. With more than 33 years of experience, Steve has served clients across the health care spectrum–complex large systems, academic medical centers, children’s hospitals, and single location entities–and has led large transformational projects involving acute care hospitals, ambulatory operations, clinics, and physician practices.