Blog | Strategic Planning

Health systems may require a smaller real estate footprint post-pandemic

Blog | Strategic Planning

Health systems may require a smaller real estate footprint post-pandemic

  • Many staff who are working remote to social distance will continue working from home post-pandemic creating opportunities for savings related to office space.
  • The pandemic also caused an explosion in telehealth volumes as stay-at-home orders and physician office closures were in place, making it unlikely that all patients would revert to the doctor’s office for low-acuity care when the pandemic is over.
  • As more care moves into the home through virtual delivery, it will require less medical office building space and potentially fewer clinical and support staff.

Health system demands for real estate are anticipated to decrease post pandemic. In response to the need to practice social distancing, key back-office functions like general accounting and revenue cycle have seen large portions of their teams move to working remotely overnight.

According to a recent Modern Healthcare article, “Nearly three-quarters of 317 chief financial officers across all industries surveyed March 30 expect at least 5% of their workforce who previously worked in company offices to permanently work remotely, according to a poll from the research firm Gartner.”

I would think that percentage is probably larger in revenue cycle functions given the nature of the work.

Additionally, as has been widely reported, the pandemic has driven an explosion in telehealth volumes. Few expect the way patients experience low-acuity care to revert to the doctor’s office when the pandemic is over, given the experience of care is comparable with in-person and more convenient. According to a University of Chicago NORC nationwide survey of 1,039 adults over the age of 70, 20%  have had a virtual visit or appointment via phone since the start of the pandemic. Of those, 49% said the experience was roughly the same as an in-person visit.

Takeaway

There’s an opportunity to reduce facility costs, and in some instances, generate revenue by selling idle real estate as a result of telework and virtual care delivery that could become commonplace. However, the transition to virtual visits will likely have a negative impact on provider revenue that could exceed the savings.

First, many health systems were experimenting with allowing staff to work remotely pre-COVID-19. These experiments ranged from allowing select groups to work from home (e.g. virtual coding departments to access skilled staff that are hard to find in some markets) to allowing some staff to work from home a limited number of days a week. COVID-19 simply accelerated the trend. Not only will more workers come to expect it, but practice presents a significant opportunity for cost savings at a time when health systems need to reduce expenses to rebuild balance sheets.

To take advantage of this, health systems will need to accelerate their efforts to put infrastructure in place to allow staff to continue working from home successfully. Among other things, this infrastructure includes:

  • Vehicles to maintain and enhance the organization’s culture, facilitate team building and knowledge sharing (e.g. replacing the water cooler conversation)
  • New productivity standards for some functions (and the tools to monitor them). Some roles may even need to be redesigned for them to be effective in the home.

Otherwise, they risk alienating their workforce and seeing increased labor costs through low engagement/productivity.

Second, as more care moves into the home through virtual delivery, it will require less medical office building space and, potentially fewer clinical and support staff. CMS, as discussed above, has agreed to pay facility fees for virtual services provided in HOPDs during the national health emergency. However, that’s no guarantee that other payers will follow suit. And CMS and those that do, will likely attempt to roll back this trend once the pandemic is over to try to control healthcare spending.

Additionally, it’s not hard to imagine that virtual visits will reduce the volume of billable ancillary service referrals that are completed if the patient has to leave his or her home to receive them. Beyond provider bottom lines, this trend to virtual work and telehealth will have a long-term impact on the economy.

About the Author

Chad Mulvany, FHFMA,

is director, healthcare finance policy, strategy and development, HFMA’s Washington, D.C., office.

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