Introduction
In recent weeks, the United States has experienced a health crisis the likes of which most of us have never known. The coronavirus disease (COVID-19) is changing our way of life, jarring our economy and creating high levels of clinical stress. While every household and business industry feel the effects, the healthcare industry is taking extremely hard hits. While clearly the number one concern of healthcare providers and leadership today is to ensure the best care possible for the communities they serve, health executives are also mindful of the current and future financial struggles brought on by the global pandemic.
Growing Challenges
Recent reports from the Centers for Disease Control and Prevention (CDC) put the number of COVID-19 cases in the United States at more than 7,000. Fears over the rapid spread of the disease and uncertainty about the future has created market volatility across the board; interest rates are increasing and pricing bond offerings is more complex than ever. Healthcare executives for a number of not-for-profit systems have even made the difficult decision to postpone large new bond issuances due to the uncertainty of the market. As concerns grow regarding the financial impact of the disease, industry leaders are paying close attention to the following:
Financial stability.
In order to try to slow the spread of COVID-19, hospitals across the country are canceling elective procedures. These procedures are often the most profitable for the hospital; now, the hospital’s time and resources are dedicated to treating patients with COVID-19. With this shift, healthcare executives are now questioning whether their hospitals will see adequate reimbursement from treating COVID patients; many patients suffering from coronavirus are unable to self-isolate, uninsured or may be homeless. This has created a shortage of cash on hand for many facilities and created a struggle where the long-term ramifications could be far-reaching. Executives now must consider what the financial picture for the industry looks like post-COVID-19 and where they have potential to add new sources of revenue.
Workforce implications.
Hospitals and health systems are concerned about having enough allied health professionals to meet the needs of their patient population as COVID-19 continues to spread. Both trained medical personnel and care resources, such as masks, gloves and ventilators, are in short supply. While the front-line healthcare works are already stretched thin, hospitals continue to fill up with COVID patients, adding greater risk of providers becoming ill. Some states are putting out requests for retired or non-practicing clinicians to return to the workforce. Other states, such as New Hampshire and Hawaii have loosened their licensing rules, such as allowing out-of-state physicians to practice right away, in order to add to their clinical ranks. With many nursing education programs on-hold because they are unable to provide students with clinical experience in our current climate, healthcare leaders fear workforce shortages could impact the industry for years to come.
Shortage of Experience.
Healthcare financial executives today are struggling with operational design, sustainable financing and internal communication because of the coronavirus. While some large health systems have command centers already established to handle emergency management response at this level, many others do not have the capabilities, the resources or the specific expertise. In the face of this unprecedented health emergency, this could have tremendous impact as the industry works to keep up high levels of care while battling a costly virus and gaining very little income from profitable elective procedures. This situation also presents an opportunity to identify best practices in emergency management protocol, to shore up executive training and put on-going education and recruitment practices to keep their organization ready should another global health crisis occur.
Concerns for the Future.
Because there is a lot of concern about what the future of healthcare looks like, both in regards to potential lasting impacts of COVID-19 and the political debate about our country’s system of care, it is important right now for healthcare financial leaders to make educated, strategic decisions. However, in turbulent times such as these, making quick, smart decisions is complicated; information is constantly evolving and it is hard to keep up. This struggle also highlights the opportunity for improved education and training for healthcare leadership in the development of their soft skills, as well as the areas of strategic planning and emergency response planning.
Rural and Safety Net Hospital Worries
These challenges impact the entire healthcare industry, but rural and safety net hospitals are uniquely impacted. Prior to the COVID-19 outbreak, rural hospitals faced financial struggles, leading to more than 125 rural hospitals closing in the last 10 years. On March 20th, the Washington State Hospital Association requested $40 million in grants for hospitals in financial distress, including the at least 13 rural facilities in Washington with less than 45 days of cash on hand. Cash on hand is also a concern for safety net hospitals, which serve large numbers of uninsured, Medicaid and Medicare patients.
Looking Forward
On March 25th, the US Senate approved a $2.2 trillion economic stimulus package that includes a $117 billion bailout for hospitals. While this is welcome news for all the struggling families and industries impacted by the virus, there are still many concerns about what the US will look like after the pandemic. For healthcare specifically, there will be new questions to answer; we will need to take the lessons learned and improve the emergency readiness of our entire healthcare system.
