COVID-19 and the Healthcare Industry
The healthcare industry is at the forefront of the ongoing COVID-19 crisis, as doctors, nurses, and other essential personnel scramble to treat a staggering number of symptomatic patients despite limited resources. But while hospital systems in critical areas have witnessed an influx in patient volume, many professional services that are elective in nature have been deemed nonessential and have therefore been postponed. Once the crisis slows down, hospital systems will feel the shock of these delays, including significant back logs and cash burn.
As healthcare providers contend with the near-term disruption to their services, it is becoming increasingly clear that the industry will no longer be the same once the dust has settled. Experts predict a permanent loss of volume, as patients opt for telemedicine services and newly unemployed individuals continue to forego elective procedures. Despite these trends, healthcare providers will likely need to devote a significant amount of resources to caring for a population (regardless of payor source), addressing the backlog of delayed services, and purchasing higher-priced Personal Protective Equipment (PPE).
Key focus areas
- Adopt cash conservation and management measures to maintain healthy vendor relationships and avoid the inability to operate
- Examine real estate portfolios and look for potential lease concessions or other ways to renegotiate through a lease extension
- Assess capital projects and determine the ramifications of delays and deferments
- Lobby for state and federal disaster relief given the patient population and the inability to pay
- Determine the appropriate timeline of activities following the “reopen date” (i.e., scheduling canceled and delayed procedures, manage social distancing requirements, determine appropriate staffing levels to support volume)
- Assess supply chain for medical supplies and PPE to manage pricing as supply and demand fluctuates
- Examine both direct and indirect labor and compensation structures across the organization