MIAMI, April 30, 2020 /PRNewswire/ -- BDC Advisors, a healthcare strategy consulting firm, today issued a new Insights Paper: "Dealing with Disruption: COVID-19 Strategic Reopening & Recovery Planning." The paper provides an overview of four priority areas that health systems need to address as they plan for their reopening and recovery. BDC's recommendations include immediate short-term actions over the next 1-3 months to prepare for reopening, and intermediate actions over the next 3-9 months that will drive longer term recovery.
With COVID-19 already taking a significant short-term toll on health system finances, organizations are evaluating how it will impact their financial performance over the longer term and what they can do to mitigate these impacts. BDC Advisors projects that health systems could experience as much as a 35-point decline in operating margin this year under "moderate" assumptions about the severity and length of the pandemic (i.e., an operating margin of 5% could decline to -30%). The financial impact of the pandemic is highly sensitive to how quickly health systems reopen key services and recover lost revenue streams. BDC's financial projections indicate that by taking appropriate steps, a 35-point loss in operating margin could be cut to a 20-point loss.
The paper recommends that health systems pursue steps in four priority areas to mitigate financial impacts:
Develop a "SMART" Reopening Plan,
Engage Payer Partners and Adapt Contracting Approach,
Rebuild Physician Partnerships, and
Evaluate Partnership and Acquisition Opportunities.
All four priorities can play an important role in a swift recovery but the impact of each will depend on a health system's local market environment and position. For all health systems, a swift recovery will require a Service Mix And Recovery Timeline ("SMART") reopening plan which focuses on the goal of restoring revenue and margin, by assessing new ways of distributing services across clinical assets to attract patients back quickly. A SMART plan includes a service migration plan, identification of new revenue streams, and planning for the restructuring of core infrastructure services. The paper concludes that to succeed in the current crisis "health system leaders must always have one eye on the present and one eye on the horizon."