What COVID-19 Means for Long-Term Hospital Financial Health
As the pandemic continues, COVID-19 is having an adverse effect on hospital financial health throughout the U.S.
When the COVID-19 pandemic emerged, hospitals had to stop all but the most urgent surgeries. The result was a dramatic slowdown in volume of patients and in-hospital revenue – while expenses remained high. No one knows when or to what degree patients will return, causing a major financial impact and an uncertain future about the ability of hospitals and clinics to serve their communities and remain financially viable.
The Short-Term Financial Effects of COVID-19 on Hospitals and Health Systems
In the short term, today’s hospitals, clinics and health systems face tremendous operating disruptions related to the pandemic. These include:
- Capacity Shortages
Many lack sufficient Urgent Care, ER, and ICU capacity to address the surge in COVID-19 volume.
- Workforce Disruption
Health systems need more staff to deal with the emerging crisis but face the same workforce shortages as employers nationwide.
- Supply Chain Disruption
The convergence of high demand with significant supply shortages and supply chain disruption could result in extraordinary inventory and increased supply costs for hospitals in the near term.
- Service Mix Shifts
Healthcare providers have been reporting declines in elective procedures as patients cancel due to social distancing and other factors. Many health systems have postponed procedures to free up capacity for COVID-19 patients.
- Balance Sheet Challenges
As the value of invested assets continues to decline, health systems are closely monitoring their liquidity needs and investment losses, whether realized or not.
Longer-Term Implications on Hospital Revenue
If the pandemic continues and the economy stagnates, hospitals and clinics will experience meaningful operating impacts including a decline in revenue well beyond the current crisis. Hospitals and health organizations will need to gauge longer-term strategic and financial implications and use scenario planning to quantify the potential impacts of the virus – as well as the longer-term effects of a recession. Key points to consider include:
• How should the organization’s strategic plan be adjusted in light of the clinical crisis and its impact on organizational bandwidth?
• What are realistic revised financial performance targets for 2020 and beyond?
• Which capital projects are essential, and which could be adjusted or put off?
• What are the near-term borrowing plans and how should those be adjusted?
• Should the hospital evaluate near-term performance improvement opportunities to address budget gaps?
Preparing for the “New Normal”
While these are uncertain times for the global economy, it’s important to note that the healthcare industry adapted to a “new normal” in the years after the last financial crisis. While the short-term effects of the virus are painful, the long-term effects will likely be felt for years. That’s why a structured approach to addressing these effects will be critical for hospitals, clinics, and healthcare organizations to adapt to yet another new normal.
In a healthcare workforce staffing environment challenged by shortages and funding gaps, cost-effective workforce management solutions are more important than ever. That’s why we encourage you to reach out to the highly-skilled healthcare management experts at AMN Healthcare Revenue Cycle Solutions. AMN helps clinical facilities achieve their financial goals, reduce administrative complexity and increase efficiency by assisting in streamlining staffing management functions, and automating back-office processes. Learn more below.
Is your hospital or healthcare clinic in need of optimizing revenue during the COVID-19 pandemic? Find out how a partnership with AMN Healthcare RCS can provide the cost-effective workforce management solutions you need to ensure a healthy bottom line.