Pre-pandemic ‘normal’ not expected until 2022, hospital execs say

All of the health systems that responded to a recent survey expect it will be at least 2022 before their operations return to anything resembling a pre-pandemic “normal.”

Kaufman Hall’s survey included 64 mostly hospital and health system respondents. Nearly three-quarters of respondents said they were moderately or extremely concerned about the financial viability of their organizations in the absence of an effective COVID-19 vaccine or treatment.

One-third of respondents said they experienced year-over-year operating margin declines in excess of 100% between the second quarter of 2019 and the second quarter of 2020. The survey, which did not ask about the impact of federal relief grants, was conducted in August.

“Having that change from one quarter to the next, it’s unheard of,” said Lance Robinson, a managing director with Kaufman Hall and leader of its Performance Improvement practice. “It’s huge.”

Almost half of respondents said they had encountered significant issues with length of stay or patient throughput and have had to cancel non-emergent procedures. Just one in five respondents said the opposite, that they had not had length of stay issues and did not have to adjust procedures.

Patient stays tended to be longer at the beginning of the pandemic and shortened as treatment improved, Robinson said. From a reimbursement perspective, a longer length of stay means the hospital is less likely to be adequately compensated for its work, Robinson said. Even pre-COVID, hospitals had been working to lower their lengths of stay.

Medicare’s 20% add-on payment for COVID patients could push their COVID margins into the black, experts told Modern Healthcare in September, although length of stay will be a big determinant of margin on those patients.

As of August, some specialties had seen more volume improvement than others. Sixty percent of respondents said oncology was back to more than 90% of pre-pandemic levels, and 44% said cardiology had rebounded to the same extent. Volumes were somewhat improved but still soft in pediatrics and radiology. Most respondents said they expect emergency department volume to stay down longterm.

More than 40% of survey respondents reported seeing an increase in bad debt and 41% said they were seeing more Medicaid patients. Another 38% said their ratio of commercially insured patients had declined.

The biggest cost spike respondents cited was personal protective equipment, with 52% citing PPE as the biggest percentage increase in expenses. Second was labor expenses and nursing staff, at 34%. One interviewee told Kaufman Hall that the price of N-95 masks had gone from 50 cents to $7.

Rick Gundling, vice president of the Healthcare Financial Management Association, said he wasn’t surprised to learn that health systems don’t expect things to return to normal this year.

“I think they’re probably talking about the psychological barriers or reticence from patients,” he said. “Because we’re still nervous about picking up COVID in healthcare settings.”

To that end, respondents reported taking a number of steps to ensure patient safety. All but 5% said they had minimized exposure to other patients in waiting rooms, and 73% had designated COVID-free zones. Three-quarters had increased monitoring and resources for staff burnout and mental health.

The survey also asked respondents about their efforts to cut costs during the crisis. The most common cost reduction measure cited was supply reprocessing, with 63% of respondents noting they have implemented the measure and another 9% said they were considering it.

Hospitals have repurposed and reused supplies for years, but the practice has gained renewed popularity during the pandemic because it’s an easy way to save money, Robinson said. Providers send used devices like ablation catheters and pulse oximeter probes to companies like Steris Instrument Management Services and Stryker Sustainability Solutions who reprocess them so they can be reused.

Furloughs was the second most popular cost-cutting measure, with 59% of respondents using the practice, followed by salary reductions or freezes, at 56%.


Tags: covid-19, pandemic

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