- Key issues to watch as the healthcare industry emerges from the pandemic are elective surgery volume, emergency department visits and outpatient surgeries.
- Some organizations will find themselves stronger in their communities and in their market, while others will find themselves weaker.
- How organizations adapt to the new normal will determine how they fare after the pandemic.
A healthcare organization’s financial position prior to the COVID-19 pandemic and how hard its community was hit by the disease may ultimately determine how the organization fares after the pandemic has ended.
David Burik, payer/provider consulting division leader at Guidehouse, anticipates much variation in how well organizations weather COVID-19 and in the types of long-range challenges providers will face in the pandemic’s aftermath. Burik says the top challenges will include how organizations:
- Manage the recovery period
- Adapt to the new normal
- Navigate a period of increased consolidation
COVID-19 has had a wide-ranging and varied impact on the nation’s hospitals, Burik said. Some communities have had few cases and little economic displacement, and providers in those areas already have close to a full elective surgery schedule. But other organizations have seen hundreds of COVID-19 patients while their communities cope with great job loss and widespread public concern about recovery.
Unpredictable recovery period
Burik projected that prior to an expected wave of mergers and acquisitions, the recovery period will vary state-to-state and region-to-region. Key issues to watch, he said, will be:
- Elective surgery volume
- Emergency department (ED) visits
- Outpatient surgeries
Elective surgery volume. Although many organizations have begun posting elective surgery schedules over the past few months, some have reported considerable variation in how quickly those schedules are being populated, Burik said.
“I’ve talked to organizational leaders who have figured out for the first time in their history how to run 18 hours in the OR, how to schedule on Saturday, how to still keep capacity for EDs,” he said.
For many organizations, the recovery process is far more daunting than simply diving into the backlog, Burik said. Aside from some surgical practices, many organizations did not have the resources or capacity to keep track of their surgery cases, communicate with patients about when they could move forward with an elective surgery and determine patient interest in doing so.
The challenge could be compounded by healthcare coverage issues stemming from the ongoing economic turmoil. As the U.S. economy labors post-pandemic, insured patients will struggle to shoulder greater cost sharing through high-deductible health plans and continued high unemployment rates mean the number of commercial enrollees will remain low relative to pre-pandemic levels. Providers thus could face a deterioration in their payer mix and fewer opportunities for cross-subsidization of reimbursement, Burik suggested.
“[A health system or hospital] might have had a case scheduled for April 4, but that patient may have lost their insurance, may have lost their interest in having the elective surgery, may be afraid to come back to the hospital or may have decided to go to an institution that is known not to have a COVID case,” Burik said.
Even healthcare organizations that had patients ready to show up for elective surgery may have lacked the requisite anesthesia coverage, surgical nurse availability and equipment.
“The recovery [process] is probably more protracted and less certain than we all would like it to be,” Burik said. “If you’re thinking about the recovery of a health system , outpatient surgery and inpatient admissions are two key drivers for you, and the ED is a key driver of that. You’re not going to go to the same visit levels you had on Feb. 28.”
ED visits. In many places, the ED plays an important part in the admission and preadmission processes. Many physicians send patients who may need to be admitted or at least need observation directly to the ED. However, Burik pointed to lingering uncertainties about if and when ED visits will return to pre-COVID-19 levels.a
“I think nationally we’re seeing visits in the ED down a lot,” he said, noting that the rates at which visits return to normal are likely to vary considerably.
Outpatient surgery. Burik expects the recovery for outpatient surgery to be like that of elective inpatient surgery.
“Are you going to have a surge in [outpatient surgery] and make it up?” Burik said. “Or are you going to have a gentle increase and, actually at the end of the year, find you did a lot less surgery than you had budgeted?”
Adapting to the new normal
How organizations adapt to the new normal, in which a certain volume of telehealth replaces physician office visits and remote work for back-office staff continues, will determine how well they fare post-pandemic.b
“The adoption rate of telehealth has just had this giant leap forward,” Burik said. Organizations need to project the proportion of telemedicine and digital health they will provide, relative to in-person care. “And that has remarkable impact,” Burik said. “It’s amazing how quickly just about every institution I talk to has been able to pretty flawlessly handle a huge increase in telehealth or digital health — to the point that I think most folks who are being treated for COVID-19 are advised, ‘Just don’t come to hospital; we’ll do everything over the phone.’”
When it comes to digital health, provider competition won’t solely be health system versus health system, Burik pointed out. Instead, providers will also face competition from healthcare disruptors and payers that are already offering digital health solutions across the country, including some that already may be favored by consumers.
Because telehealth is never going back to a pre-COVID-19 scenario, institutions must determine:
- Whether they have adequate infrastructure
- What their normal volume of telehealth
- How to harden and scale up the infrastructure to handle the volume
- Whether payers will support telehealth
- What to do with infrastructure that may no longer be needed for physical visits
“Then it really gets hard,” said Burik. “What do you do with all the capacity you had for physical visits?
“If you’re an operation that had 300,000 visits a year and now it’s 150,000 visits a year, that’s a lot of space and facility and people that just became extraneous assets.”
Institutions cannot just apply the budgetary assumptions they had pre-COVID-19, according to Burik. Just as telehealth is thoroughly scalable, so too are revenue cycle, accounts payable and corporate functions that also went virtual almost overnight, he said.
“I think, once [organizations] work on the revenue part of this — telehealth, surgery and ED — they’re going to look at back-office corporate services that end up being physical and fixed and try to figure out if driving them to be more virtual and more in the cloud will increase efficiency and effectiveness.”
Disparity in financial outlook will spur consolidation
There will be winners and losers among organizations in the emerging new healthcare environment after the pandemic based on disparities in financial stability before the pandemic hit, Burik said.
“There will be organizations that find themselves stronger in their communities and in their markets compared to what competitors they might have. And there will be others that find themselves weaker,” he said. “So in a matter of months we’re going to have a greater bifurcation of organizations that are positioned to grow and succeed and organizations that are really challenged to survive in an era of probably greater consolidation than we’ve seen to date.”
The need for “greater resiliency” to counter another wave of COVID-19 or a different public health emergency gives organizations the impetus to join with stronger organizations, Burik said.
In a given geographic region, Burik said, “We see greater disparity between well-positioned organizations and challenged organizations, which creates a market and a discussion for greater consolidation.”
Moving forward after recovery
Assuming the nation experiences a recovery period during which it can prepare for a possible resurgence of COVID-19, Burik said organizations should strive to communicate to authorities that they can handle emergent COVID-19 cases while maintaining an open ED and a full surgery schedule. That effort could allow them to maintain something approaching normal operations during a future pandemic.
Getting to that point, Burik said, requires organizations to ensure they have sufficient supplies of ventilators and PPE, to work with other health systems in a cooperative effort across both corporate lines and state lines and to put in place optimal protocols and procedures for COVID-19 care.
a. See, for example, Mulvany, C., “Decline in healthcare spending contributing to economic downturn,” HFMA, May 6, 2020.
b. “Hospitals forecast declining revenues and elective procedure volumes, telehealth adoption struggles due to COVID-19,” Guidehouse, May 21, 2020; and Mulvany, C.,“Health systems may require a smaller real estate footprint post-pandemic,” HFMA, May 6, 2020.