WASHINGTON, May 21, 2020 /PRNewswire/ -- Compared to pre-COVID-19 levels, 89% of hospital and health system executives predict their organizations' revenues will be lower at the end of 2020, according to a Guidehouse analysis of a survey conducted by the Healthcare Financial Management Association (HFMA). Among respondents, almost two-thirds expect decreases of greater than 15%, while one-in-five forecast decreases of more than 30%.
The survey of 174 hospital and health system executives conducted May 4 – May 8, 2020, also shows:
Half of executives anticipate it will take through the end of the year or longer for their organizations' elective procedure volumes to return to pre-COVID levels.
Just 11% of all executives — and only 3% of health system respondents — believe federal funding will be enough to cover COVID-19-related costs.
Twenty-nine percent of executives say the pandemic has increased the likelihood of their organization participating in M&A activities (15%) or seeking new partnerships (14%).
To offset COVID-19's financial impact, executives cited reductions in capital expenditures including new and existing construction (76%), labor adjustments such as furloughs, layoffs, and hiring freezes (76%), and canceling or renegotiating contracts and co-management agreements (69%) as areas they'll most likely target for intermediate and long-term cost reductions.
"Healthcare has largely been insulated from previous economic disruptions, with capital spending more acutely affected than operations," said David Burik, partner and payer/provider consulting division leader at Guidehouse. "But this time may be different since the COVID-19 crisis started with a one-time significant impact on operations that is not fully covered by federal funding.
"Providers are facing a long-term decrease in commercial payment, coupled with a need to boost caregiver and consumer-facing digital engagement, all during the highest unemployment rate the U.S. has seen since the Great Depression," Burik said. "For organizations in certain locations, it may seem like business as usual. For many others, these issues and greater competition will demand more significant, material change."
Acceleration of Telehealth, New Working Arrangements Removal of regulatory barriers, more lucrative reimbursement models, increased startup funding, and rapid shifts in access have catalyzed telehealth adoption. While 67% of provider executives predict their organizations will use telehealth at least five times more than they did pre-pandemic, only one-third of them believe their organizations have all needed telehealth capabilities.
Executives are also preparing for significant changes to their organizations' working arrangements. According to survey results, just one-in-five executives expect their organizations will return to the primarily onsite work arrangements established before the pandemic. Moreover, 22% have already made the decision to increase work-from-home options and reassess future space-use needs.
"Through all the uncertainty COVID-19 has presented, one thing hospitals and health systems can be certain of is their business models will not return to what they were pre-pandemic," said Guidehouse Partner Chuck Peck, MD, a former health system CEO. "A comprehensive consumer-facing digital strategy built around telehealth will be a requirement for providers. Moreover, shifting hardware and physical assets to the cloud and use of robotic process automation has proven to be successful in improving back-office operations in other industries. Providers will need to follow suit."
Looking forward, digital strategies, including telehealth and contact centers, are the most often cited tactics executives say their organizations will implement or enhance to grow future revenues, followed by such service line strategies as growing core businesses and exiting losing businesses, and revenue cycle improvements (57%) including enhancing accounts receivable and collections.
About Guidehouse Guidehouse is a leading global provider of consulting services to the public and commercial markets with broad capabilities in management, technology, and risk consulting. We help clients address their toughest challenges with a focus on markets and clients facing transformational change, technology-driven innovation, and significant regulatory pressure. Across a range of advisory, consulting, outsourcing, and technology/analytics services, we help clients create scalable, innovative solutions that prepare them for future growth and success. Headquartered in Washington, D.C., the company has more than 7,000 professionals in more than 50 locations. Guidehouse is a Veritas Capital portfolio company, led by seasoned professionals with proven and diverse expertise in traditional and emerging technologies, markets, and agenda-setting issues driving national and global economies. For more information, please visit: www.guidehouse.com.
For more information, contact: Alven Weil Guidehouse +1.704.995.5607 [email protected]