Guidehouse has released a study, analyzing hospital and health system executives revenues before and after COVID-19, the company reported on Thursday. The survey was conducted by the Healthcare Financial Management Association.
"Healthcare has largely been insulated from previous economic disruptions, with capital spending more acutely affected than operations," said David Burik, partner and payer/provider consulting division leader at Guidehouse. "But this time may be different since the COVID-19 crisis started with a one-time significant impact on operations that is not fully covered by federal funding.“
Guidehouse reported that, compared to pre-COVID-19 levels, 89 percent of hospital and health system executives predict that their organizations' revenues will be lower at the end of 2020. The company also noted that almost two-thirds expect decreases of greater than 15 percent, while one-in-five forecast decreases of more than 30 percent.
Half of executives have predicted that it will take through the end of the year or longer for their organizations' elective procedure volumes to return to pre-COVID levels. 11 percent of all executives and three percent of health system respondents stated that federal funding will be enough to cover COVID-19-related costs.
29 percent of executives say the pandemic has increased the likelihood of their organization participating in M&A activities or seeking new partnerships. The respondents reported reductions in capital expenditures including new and existing construction, labor adjustments such as furloughs, layoffs and hiring freezes.
Additionally, to offset the financial impact of COVID-19, executives noted cancelations and renegotiation of contracts and co-management agreements as areas they'll most likely target for intermediate and long-term cost reductions.
"Providers are facing a long-term decrease in commercial payment, coupled with a need to boost caregiver and consumer-facing digital engagement, all during the highest unemployment rate the U.S. has seen since the Great Depression," Burik said.
The survey reported that executives have prepared for significant changes to their organizations' working arrangements, including telework. The report stated that 20 percent of executives expect their organizations will return to the primarily onsite work arrangements established before the pandemic, while 22 percent have already made the decision to increase work-from-home options and reassess future space-use needs.
"A comprehensive consumer-facing digital strategy built around telehealth will be a requirement for providers. Moreover, shifting hardware and physical assets to the cloud and use of robotic process automation has proven to be successful in improving back-office operations in other industries. Providers will need to follow suit," said Guidehouse Partner Chuck Peck, MD, a former health system CEO.
Digital strategies, including telehealth and contact centers, were the most commonly cited tactics executives have reported to grow future revenues, followed by service line strategies, including growing core businesses and exiting losing businesses.
"Through all the uncertainty COVID-19 has presented, one thing hospitals and health systems can be certain of is their business models will not return to what they were pre-pandemic," added Peck.
Guidehouse is a leading global provider of consulting services to the public and commercial markets with broad capabilities in management, technology, and risk consulting. We help clients address their toughest challenges with a focus on markets and clients facing transformational change, technology-driven innovation, and significant regulatory pressure.
Across a range of advisory, consulting, outsourcing, and technology/analytics services, we help clients create scalable, innovative solutions that prepare them for future growth and success. Headquartered in Washington, D.C., the company has more than 7,000 professionals in more than 50 locations. Guidehouse is a Veritas Capital portfolio company, led by seasoned professionals with proven and diverse expertise in traditional and emerging technologies, markets, and agenda-setting issues driving national and global economies.