The lost art of compromise

In nearly every facet of our lives, all of us are routinely put in the position of trying to settle disputes or disagreements, whether it be with our spouses or significant others, our children, our siblings, co-workers, neighbors, contractors — you name it. It’s part of everyday life. Conflicts arise and we figure out how to resolve them.

Unfortunately, in the politically toxic environment in which we now live, compromise is now perceived as a sign of weakness. Elected leaders are routinely criticized and attacked by fellow party members and their constituents for trying to find middle ground on any issue, particularly those rooted in ideology. The bipartisan agreement reached in Congress last week on gun safety was a rare and welcome exception. 

While they hold starkly different positions and come from states that are thousands of miles apart geographically and politically, Senators Chris Murphy, D-Conn., an outspoken proponent of stronger gun safety laws, and John Cornyn, R-Texas, a staunch Second Amendment advocate, found a way to set aside their differences and reach compromise on the so-called Bipartisan Safer Communities Act that was approved by the Senate 65-33 and the House by a margin of 234-193. President Joe Biden signed the legislation into law June 25. 

While the new law does not go nearly as far as Senator Murphy and most of his fellow Democrats wanted by, for instance, banning the sale of assault rifles or at least increasing the age to buy them, the willingness to finally get something done after 30 years of Congressional gridlock was a long-overdue victory for common sense

Bipartisanship has also been evident in Congressional support for military funding for Ukraine and the 2021 Infrastructure Investment and Jobs Act, but little else.

Despite the glimmer of progress in our nation’s legislative branch of government, it appears that polarization now has a firm grip on our nation’s top court. In trying to find middle ground in deliberations on Roe v. Wade, U.S. Supreme Court Chief Justice John Roberts sought this compromise with his five fellow conservatives and three liberals on the bench: support Mississippi’s prohibition against abortion after 15 weeks, but preserve some semblance of reproductive rights for women by not overturning Roe v. Wade or the court’s 1992 ruling in Planned Parenthood v. Casey

“The Court’s decision to overrule Roe and Casey is a serious jolt to the legal system — regardless of how you view those cases,” Roberts wrote. His incremental approach found no takers among his entrenched colleagues on either the right or the left. Hence, constitutional protections for abortions that had stood for nearly 50 years — and are supported by the vast majority of Americans — were stripped away in a 5-4 vote, leaving the power to individual states.

Unfortunately, bipartisanship can be equally elusive in state capitals around the country, which does not bode well for reproductive rights advocates in 21 states where abortion is now illegal or have “trigger bans” that will take effect within 30 days of the Supreme Court’s June 24 ruling.

Regardless of whether the issue is abortion or other divisive topics such as immigration, gun safety, voting rights, bail reform or LGBTQ rights, governors and state legislators of one controlling party or another routinely dig in and take intractable positions, leaving little or no room for negotiation. 

We would all be well served to reintroduce ourselves to the art of compromise, for the good of our family relationships, for the good of our respective professions, for the good of our country and society in general, and even for the good of our own personal health as we consider whether to consume that extra helping of food or another cocktail.

Moderation is key in our lifestyle choices and it could also go a long way in trying to find middle ground with those who have differing opinions. If adversaries are truly motivated to do the right thing, not political gamesmanship, they should always choose their words carefully, listen with an open mind and always be open to making concessions. In short, we should all start by embracing civility.

Patton’s Principles of Leadership

https://mailchi.mp/8ae5c9ccdfaf/leading-blog-unsafe-thinking-how-to-get-out-of-your-rut-13659212?e=89386aa055

BORN in San Gabriel, California, in 1885, George S. Patton, Jr. was the general deemed most dangerous by the German High Command in World War II. Known for his bombastic style, it was mostly done to show confidence in himself and his troops, says author Owen Connelly.

On December 21, 1945, Patton died in Heidelberg, Germany. The following day the New York Times wrote the following editorial:

History has reached out and embraced General George Patton. His place is secure. He will be ranked in the forefront of America’s great military leaders.

Long before the war ended, Patton was a legend. Spectacular, swaggering, pistol-packing, deeply religious, and violently profane, easily moved to anger because he was first of all a fighting man, easily moved to tears because, underneath all his mannered irascibility, he had a kind heart, he was a strange combination of fire and ice. Hot in battle and ruthless, too. He was icy in his inflexibility of purpose. He was no mere hell-for-leather tank commander but a profound and thoughtful military student.

star   Everyone is to lead in person.

star   Commanders and staff members are to visit the front daily to observe, not to meddle. Praise is more valuable than blame. Your primary mission as a leader is to see with your own eyes and be seen by your troops while engaged in personal reconnaissance.

star   Issuing an order is worth only about 10 percent. The remaining 90 percent consists in assuring proper and vigorous execution of the order.

star   Plans should be simple and flexible. They should be made by the people who are going to execute them.

star   Information is like eggs. The fresher the better.

star   Every means must be used before and after combats to tell the troops what they are going to do and what they have done.

star   Fatigue makes cowards of us all. Men in condition do not tire.

star   Courage. Do not take counsel of your fears.

star   A diffident manner will never inspire confidence. A cold reserve cannot beget enthusiasm. There must be an outward and visible sign of the inward and spiritual grace.

star   Discipline is based on pride in the profession of arms, on meticulous attention to details, and on mutual respect and confidence. Discipline must be a habit so ingrained that it is stronger than the excitement of battle or the fear of death.

star   A good solution applied with vigor now is better than a perfect solution ten minutes later.

Can we take the long view on physician strategy? 

https://mailchi.mp/d57e5f7ea9f1/the-weekly-gist-january-21-2022?e=d1e747d2d8

Editor's note: Taking the long view | Campaign US

It feels like a precarious moment in health systems’ relationships with their doctors. The pandemic has accelerated market forces already at play: mounting burnout, the retirement of Baby Boomer doctors, pressure to grow virtual care, and competition from well-funded insurers, investors and disruptors looking to build their own clinical workforces.

Many health systems have focused system strategy around deepening consumer relationships and loyalty, and quite often we’re told that physicians are roadblocks to consumer-centric offerings (problematic since doctors hold the deepest relationships with a health system’s patients).

When debriefing with a CEO after a health system board meeting, we pointed out the contrast between the strategic level of discussion of most of the meeting with the more granular dialogue around physicians, which focused on the response to a private equity overture to a local, nine-doctor orthopedics practice. It struck us that if this level of scrutiny was applied to other areas, the board would be weighing in on menu changes in food services or selecting throughput metrics for hospital operating rooms. 
 
The CEO acknowledged that while he and a small group of physician leaders have tried to focus on a long-term physician network strategy, “it has been impossible to move beyond putting out the ‘fire of the week’—when it comes to doctors, things that should be small decisions rise to crisis level, and that makes it impossible to play the long game.”

It’s obvious why this happens: decisions involving a small number of doctors can have big implications for short-term, fee-for-service profits, and for the personal incomes of the physicians involved. But if health systems are to achieve ambitious goals, they must find a way to play the long game with their doctors, enfranchising them as partners in creating strategy, and making (and following through on) tough decisions. If physician and system leaders don’t have the fortitude to do this, they’ll continue to find that doctors are a roadblock to transformation.

Healthcare executives fear for their organizations’ viability without a COVID-19 vaccine

https://www.healthcarefinancenews.com/news/healthcare-executives-fear-their-organizations-viability-without-covid-19-vaccine

A complete financial recovery for many organizations is still far away, findings from Kaufman Hall indicate.

For the past three years, Kaufman Hall has released annual healthcare performance reports illustrating how hospitals and health systems are managing, both financially and operationally.

This year, however, with the pandemic altering the industry so broadly, the report took a different approach: to see how COVID-19 impacted hospitals and health systems across the country. The report’s findings deal with finances, patient volumes and recovery.

The report includes survey answers from respondents almost entirely (96%) from hospitals or health systems. Most of the respondents were in executive leadership (55%) or financial roles (39%). Survey responses were collected in August 2020.

FINANCIAL IMPACT

Findings from the report indicate that a complete financial recovery for many organizations is still far away. Almost three-quarters of the respondents said they were either moderately or extremely concerned about their organization’s financial viability in 2021 without an effective vaccine or treatment.

Looking back on the operating margins for the second quarter of the year, 33% of respondents saw their operating margins decline by more than 100% compared to the same time last year.

Revenue cycles have taken a hit from COVID-19, according to the report. Survey respondents said they are seeing increases in bad debt and uncompensated care (48%), higher percentages of uninsured or self-pay patients (44%), more Medicaid patients (41%) and lower percentages of commercially insured patients (38%).

Organizations also noted that increases in expenses, especially for personal protective equipment and labor, have impacted their finances. For 22% of respondents, their expenses increased by more than 50%.

IMPACT ON PATIENT VOLUMES

Although volumes did increase over the summer, most of the improvement occurred in areas where it is difficult to delay care, such as oncology and cardiology. For example, oncology was the only field where more than half of respondents (60%) saw their volumes recover to more than 90% of pre-pandemic levels.

More than 40% of respondents said that cardiology volumes are operating at more than 90% of pre-pandemic levels. Only 37% of respondents can say the same for orthopedics, neurology and radiology, and 22% for pediatrics.

Emergency department usage is also down as a result of the pandemic, according to the report. The respondents expect that this trend will persist beyond COVID-19 and that systems may need to reshape their business model to account for a drop in emergency department utilization.

Most respondents also said they expect to see overall volumes remain low through the summer of 2021, with some planning for suppressed volumes for the next three years.

RECOVERY MEASURES

Hospitals and health systems have taken a number of approaches to reduce costs and mitigate future revenue declines. The most common practices implemented are supply reprocessing, furloughs and salary reductions, according to the report.

Executives are considering other tactics such as restructuring physician contracts, making permanent labor reductions, changing employee health plan benefits and retirement plan contributions, or merging with another health system as additional cost reduction measures.

THE LARGER TREND

Kaufman Hall has been documenting the impact of COVID-19 hospitals since the beginning of the pandemic. In its July report, hospital operating margins were down 96% since the start of the year.

As a result of these losses, hospitals, health systems and advocacy groups continue to push Congress to deliver another round of relief measures.

Earlier this month, the House passed a $2.2 trillion stimulus bill called the HEROES Act, 2.0. The bill has yet to pass the Senate, and the chances of that happening are slim, with Republicans in favor of a much smaller, $500 billion package. Nothing is expected to happen prior to the presidential election.

The Department of Health and Human Services also recently announced the third phase of general distribution for the Provider Relief Fund. Applications are currently open and will close on Friday, November 6.

Cartoon – Importance of Change

How a Results Oriented Outlook Conquers Negative Thinking | Neways Center

U.S. says it won’t join WHO-linked effort to develop, distribute coronavirus vaccine

https://www.washingtonpost.com/world/coronavirus-vaccine-trump/2020/09/01/b44b42be-e965-11ea-bf44-0d31c85838a5_story.html?utm_campaign=wp_main&utm_medium=social&utm_source=facebook&fbclid=IwAR31G0QRSO-t6-OnkJxpPFGyIv5d9EW7Zmq4nLVs63OzYf2yR5v1RJ5MtNA

The Trump administration said it will not join a global effort to develop, manufacture and equitably distribute a coronavirus vaccine, in part because the World Health Organization is involved, a decision that could shape the course of the pandemic and the country’s role in health diplomacy.

More than 170 countries are in talks to participate in the Covid-19 Vaccines Global Access (Covax) Facility, which aims to speed vaccine development and secure doses for all countries and distribute them to the most high-risk segment of each population.

The plan, which is co-led by the WHO, the Coalition for Epidemic Preparedness Innovations and Gavi, the vaccine alliance, was of interest to some members of the Trump administration and is backed by traditional U.S. allies, including Japan, Germany and the European Commission, the executive arm of the European Union.

But the United States will not participate, in part because the White House does not want to work with the WHO, which President Trump has criticized over what he characterized as its “China-centric” response to the pandemic.

“The United States will continue to engage our international partners to ensure we defeat this virus, but we will not be constrained by multilateral organizations influenced by the corrupt World Health Organization and China,” said Judd Deere, a spokesman for the White House.

The Covax decision, which has not been previously reported, is effectively a doubling down by the administration on its bet that the United States will win the vaccine race. It eliminates the chance to secure doses from a pool of promising vaccine candidates — a potentially risky strategy.

“America is taking a huge gamble by taking a go-it-alone strategy,” said Lawrence Gostin, a professor of global health law at Georgetown University.

Kendall Hoyt, an assistant professor at Dartmouth’s Geisel School of Medicine, said it was akin to opting out of an insurance policy.

The United States could be pursuing bilateral deals with drug companies and simultaneously participating in Covax, she said, increasing its odds of getting some doses of the first safe vaccine. “Just from a simple risk management perspective, this [Covax decision] is shortsighted, she said.

The U.S. move will also shape what happens elsewhere. The idea behind Covax is to discourage hoarding and focus on vaccinating high-risk people in every country first, a strategy that could lead to better health outcomes and lower costs, experts said.

U.S. nonparticipation makes that harder. “When the U.S. says it is not going to participate in any sort of multilateral effort to secure vaccines, it’s a real blow,” said Suerie Moon, co-director of the Global Health Center at the Graduate Institute of International and Development Studies in Geneva.

“The behavior of countries when it comes to vaccines in this pandemic will have political repercussions beyond public health,” she added. “It’s about, are you a reliable partner, or, at the end of the day, are you going to keep all your toys for yourself?”

Some members of the Trump administration were interested in a more cooperative approach but were ultimately overruled.

Health and Human Services Secretary Alex Azar and Deputy Secretary of State Stephen Biegun had interest in exploring some type of role in Covax, a senior administration official said, speaking on the condition of anonymity because they were not authorized to discuss the decision-making.

But there was resistance in some corners of the government and a belief that the United States has enough coronavirus vaccine candidates in advanced clinical trials that it can go it alone, according to the official and a former senior administration official who learned about it in private discussions.

The question of who wins the race for a safe vaccine will largely influence how the administration’s “America first” approach to the issue plays out.

An unlikely worst-case scenario, experts said, is that none of the U.S. vaccine candidates are viable, leaving the United States with no option since it has shunned the Covax effort.

Another possibility is that a U.S. vaccine does pan out, but the country hoards doses, vaccinating a large number of Americans, including those at low risk, while leaving other countries without.

Experts in health security see at least two problems with this strategy: The first is that a new vaccine is unlikely to offer complete protection to all people, meaning that a portion of the U.S. population will still be vulnerable to imported cases — especially as tourism and trade resume.

The second, related problem is that a U.S. recovery depends on economic recovery elsewhere. If large parts of the world are still in lockdown, the global economy is smarting and supply chains are disrupted, the United States will not be able to bounce back.

“We will continue to suffer the economic consequences — lost U.S. jobs — if the pandemic rages unabated in allies and trading partners,” said Thomas J. Bollyky, a senior fellow at the Council on Foreign Relations and the director of its global health program.

Proponents of a multilateral approach to global public health would like to see all countries coordinate through Covax. Perhaps unsurprisingly, interest is strongest from poor countries, while some larger economies are cutting deals directly with drugmakers.

WHO officials have argued that countries need not choose — they can pursue both strategies by signing bilateral deals and also joining Covax.

“By joining the facility at the same time that you do bilateral deals, you’re actually betting on a larger number of vaccine candidates,” Mariângela Simao, a WHO assistant director for drug and vaccine access, said at an Aug. 17 briefing.

If nothing else, the United States could pledge surplus vaccine doses to Covax to ensure they are distributed in a rational and equitable way, experts said.

Some cautioned against a focus on “winning” the race. Given the complexity of supply chains, vaccine development will necessarily be a global effort, regardless of whether countries want to cooperate.

The decision to steer clear of Covax comes at a time of tremendous change for health diplomacy.

The United States has long been the biggest donor to the WHO and a major funder of vaccine initiatives.

In the early days of the coronavirus pandemic, Trump praised both China and the WHO for their handling of the outbreak. But as the crisis intensified in the United States, he turned on the U.N. health agency.

In April, he announced a freeze on new U.S. funding. Not long after, the State Department started stripping references to the WHO from fact sheets and rerouting funds to other programs.

By July, the administration had sent a letter signaling its intent to withdraw from the WHO.

But untangling the United States from the agency it helped found and shape is not simple — and the terms of the separation are still being assessed.

It is not yet clear, for instance, whether a U.S. withdrawal means the United States will just stop its contributions to the WHO or whether it will stop funding any initiative linked to the agency in any way.

For instance, the White House no longer wants to work with the WHO, but the United States is a major supporter of Gavi, which co-leads the Covax project.

Asked to comment on the Covax decision, a State Department spokeswoman pointed to U.S. funding for Gavi, as well as money for such programs as UNICEF and the Global Fund to Fight AIDS, Tuberculosis and Malaria.

J. Stephen Morrison, director of the Global Health Policy Center at the Center for Strategic and International Studies, said the White House could still reverse course and join Covax, or at least let the Senate fund through Gavi — a political workaround.

“This just shows how awkward, contradictory and self-defeating all of this,” he said. “For the U.S. to terminate its relationship with the WHO in the middle of a pandemic is going to create an endless stream of self-defeating moments.”

 

 

 

 

Healthcare CFOs weigh-in on the challenges ahead

https://www.pwc.com/us/en/library/covid-19/pwc-covid-19-cfo-pulse-survey.html

What CFOs think about the economic impact of COVID-19

How finance leaders see a return to work

Business perspectives on what it will take to shift from crisis mode are solidifying. US finance leaders are focused on shoring up financial positions, as US businesses head into a period of even more operational complexity while they orchestrate a safe return to the workplace. Back-to-work playbooks put workforce health first, as companies set course for a phased-in return to the workplace that will not be uniform across the US or internationally, findings from the survey show. Returning employees and customers are going to experience a work environment that will differ in marked ways as a result. Another change likely to endure post-crisis is the strong role corporate leaders have taken within their communities, placing a renewed emphasis on environmental, social and governance (ESG) efforts going forward.

The actions CFOs are taking show how US businesses continue to adjust to very difficult current conditions with an eye toward an evolving post-COVID world. The level of concern related to the crisis is holding steady. It is high but stabilizing, with 72% of respondents reporting that COVID-19 has the potential for “significant impact” to their business operations vs. 74% two weeks ago.

Key findings

Back-to-work playbooks reshape how jobs performed
49% say remote work is here to stay for some roles, as companies plan to alternate crews and reconfigure worksites.

Protecting people top of mind
77% plan to change safety measures like testing, while 50% expect higher demand for enhanced sick leave and other policy protections.

Substantive impacts expected in 2020 results
Half of all respondents (53%) are projecting a decline of at least 10% in company revenue and/or profit this year.

Cost pressures intensify
A third (32%) expect layoffs to occur, as CFOs continue to target costs, while 70% consider deferring or canceling planned investments.

Economic events shaping CFO response last week

This survey, our fourth since emergency lockdowns took effect in the US, reflects the views of 305 US finance leaders during the week of April 20. It was a week when oil futures traded below $0 as energy markets confronted downshifting global demand, Congress replenished emergency funding of $480 billion for small firms and healthcare systems, and everyone heard the call to get ready to go back to work as the US and Europe firmed up plans to ease quarantines.

Post-crisis world taking shape in plans to reboot the workplace

Health and safety are top priorities for leaders as they prepare to bring people back to on-site work. More than three-quarters (77%) are putting new safety measures in place, while others are taking steps to promote physical distancing, such as reconfiguring workspaces (65%). Findings also show where the virus may have longer-lasting impact on ways of working. Half (49%) of companies say they’re planning to make remote work a permanent option for roles that allow. That’s even higher (60%) among financial services organizations.

Takeaways

Among the small percentage of companies that are beginning to bring people back, returning to work will not mean a return to normal. Companies should consider how to help frontline managers lead with empathy, to communicate transparently and make decisions quickly so employees understand where they stand, have access to the resources available to them, and can share feedback to ensure they feel safe and get what they need. Tools such as workforce location tracking and contact tracing can help support employees with suspected or confirmed infections, while also helping to identify the level of risk exposure. Companies looking to make remote work a permanent option will need to enable leaders to manage a blended workforce of on-site and remote workers during the next 12 to 18 months.

Given that many people may be wary of returning to on-site work, there’s an opportunity for companies to create more targeted benefits to help make the transition easier. Paid sick leaves and worker protections, help with childcare, private transportation to and from work, or other benefits could help employees who may need extra flexibility or who want additional support as they prepare to come back.

Forecasting substantive impacts on 2020 performance

A majority of respondents (80%) continue to expect a decline in revenues and/or profits in 2020. Projections by sector vary, with consumer markets likely the hardest hit: one-third (32%) of CFOs expect a 25% or greater decline in revenues and/or profits this year, compared to 24% of respondents in all sectors.

Takeaways

Outlooks for financial results have held relatively steady in the survey over the last month, and are probably indicative of actual impact. Companies have had the time to evaluate the effects. CFO projections for declining revenue and profits coincide with a widening realization that the US economy is in recession. Since mid-March, jobless claims have soared past 26 million, and Congress passed relief packages of $2.5 trillion. CFOs are evaluating a wide range of scenarios that cover the health situation, the shape of the economic recovery, the spillover into the financial markets, and the resulting impacts on their business. This crisis is setting a new benchmark standard for “unknowable.”

Cost pressures intensifying

CFOs are considering additional ways to scale back on planned investment and/or other fixed costs amid volatility in demand. A third (32%) expect layoffs to occur in the next month, up from 26% two weeks ago. Protecting cash and liquidity positions is paramount. Financial impacts of COVID-19, including effects on liquidity and capital resources, remain the top concern of CFOs (71%). Over half (56%) say they are changing company financing plans, up from 46% two weeks ago.

Among other actions, 43% plan to adjust guidance, which is consistent with responses two weeks ago. This figure will likely increase as companies go through the earnings season over the next two to three weeks. Separately, 91% of respondents are planning to include a discussion of COVID-19 in external reporting. Depending on the type of company, this can mean inclusion in financial statements and/or in risk factors and MD&A results of operations, earnings release or MD&A liquidity sections.

Takeaways

Many CFOs have focused on how they can manage their cash pressures to ride out the crisis. Common approaches have included stop-gap measures, such as hiring freezes and tightening controls on discretionary costs to put an end to travel and events, or the use of contractors. Findings show that these types of cost actions are likely to continue, and they remain at the top of the CFO agenda.

Of those who say they’re considering deferring or canceling planned investments, 80% are considering facilities and general capital expenditures. At the same time, investment programs in areas that are considered important to future growth — including digital transformations, customer experience, or cybersecurity and privacy — are less likely to be targeted. CFOs will increasingly look for ways to prioritize costs in these areas, as businesses grow more confident in recovery prospects — even though current demand is subdued.

Priorities to de-risk supply chains

As companies continue to wade through mitigation efforts and start to think about recovery, many are planning changes to make their supply chains more resilient. Findings show CFOs prioritizing specific actions: 56% cite developing alternate options for sourcing, and 54% say better understanding the financial and operational health of their suppliers.

Takeaways

Findings confirm an emphasis on de-risking supply chains, as companies prioritize the health and reliability of their supplier base among changes they’re planning as a result of COVID-19. In particular, there is a focus on managing risk around supply elements, such as reducing structural vulnerability with other sourcing options.

Some companies are starting to invest in creating data-backed profiles of their supplier base so they know where and when to look for second sources. Others are increasing communication with suppliers to better understand financial health. For many, conducting deeper financial and health reviews of suppliers will become a regular part of their business reviews. Physical supply chain relocations will likely happen only as a last resort, given the costs involved. However, automation of certain elements of the supply chain — to eliminate time-consuming manual tracking efforts and check tariff structures, for example — will likely become more common as companies seek better data to make more informed decisions.

Strategies yet to change, but tech likely to drive M&A

The impact of the outbreak on mergers and acquisitions (M&A) strategies remains mixed. While 40% of respondents say their company’s M&A strategy is not being affected by COVID-19, compared with 34% two weeks ago, one in five say it’s too difficult to assess what changes, if any, will need to be made to strategy. CFOs within the technology, media and telecommunications industry stand out in particular. They are less likely to report decreasing appetite for M&A due to COVID-19, compared with peers in other sectors, and 55% say the crisis hasn’t changed their M&A strategy.

Takeaways

These findings highlight the fundamental strengths of the tech sector and suggest it will be among those driving M&A in the months ahead.  Tech giants, in particular, have large cash reserves. Moreover, demand for some tech products and services is strong as businesses return to work — 40% of CFOs say they will accelerate automation and new ways of working as they transition back. Additionally, technologies such as drones, artificial intelligence and robotics, will likely enjoy wider adoption in the post-COVID-19 environment. This leaves tech better-positioned to weather the pandemic’s economic fallout and to execute on inorganic growth strategies. M&A is likely to recover faster than the US economy, with tech among the cash and capital-rich sectors leading the charge. PwC studies show that a combination of factors has been driving a decoupling of deals from the broader economy.

Business recovery timeframes have extended

Organizations are realizing the business recovery from the impacts of the virus will take longer. The March measures of manufacturing and services activities show sharp drops. Demand is not only declining, it’s shifting. Moreover, even as some US states start to reopen, difficulties in setting up testing could keep some states in a holding pattern. As a result, for CFOs, the time required to return to “business as usual” the moment that COVID-19 ends continues to lengthen. Currently, 48% believe it will take at least three months to return to normal, up from 39% two weeks ago.

Takeaways

As reality sets in and companies understand the true impacts to their operations, CFO perceptions of the length of time to business recovery has extended. According to our analysis of how companies gauge their response to the crisis in PwC’s COVID-19 Navigator diagnostic tool, the expected impact of COVID-19 on businesses globally remains high, with consumer markets and manufacturing the most susceptible among industries. Put another way, businesses that are less reliant on a large, complex supply chain to deliver products, or are able to work relatively effectively while remote, are also likely to be among the least exposed.

Consumer-facing companies reconfigure physical sites as shutdowns start to lift

Companies in consumer-facing sectors continue to contend with both sides of the demand equation, as consumers sheltering in place focus single-mindedly on essential products to the exclusion of other offerings. Consumer markets (CM) CFOs are more likely to list a decrease in consumer confidence and spending as a top-three concern than they were two weeks ago (66% vs. 50%). For CM CFOs, consumer confidence trends translate almost directly to revenues, with 32% projecting an adverse impact on revenue and/or profit of at least 25% in 2020, compared with 24% of respondents across all industries.

In response, almost three-quarters of CM CFOs (73%) are considering deferring or canceling planned investments, targeting mostly general capital expenses, such as facilities. They also say technologies that can improve their understanding of changes in customer demand are a top-three priority as they plan changes to their supply chain strategies (41% vs. 30% for all sectors).

CM CFOs are planning workplace safety measures (86% vs. 77% for all sectors) and reconfiguring work sites to promote physical distancing as part of their transition back to on-site work (77% vs. 65% for all sectors). They recognize that consumers want the assurance of a safe physical environment above all else, especially because the majority of CM products and services require a physical component, despite the continuing shift to online.

Takeaways

Consumer-facing companies continue to be among the hardest hit, as the public health crisis keeps the majority of consumers confined to their homes for now. As they grapple with immediate challenges, CM companies are pulling back on capital investments. However, most are still planning to shore up their digital presence in response to accelerated online demand that could last well beyond the recovery period.

Health system pivots to new ways of working

What’s on the mind of financial leaders in the health industry? As they plan to bring more of their workforce back on-site, they are more likely than leaders in other industries to be leaning on technology to help them manage staffing uncertainties. Fifty-four percent of healthcare CFO respondents said they plan to accelerate automation and new ways of working, compared with an average of 40% across all industries.

Healthcare organizations are simultaneously solving two critical issues: uncertainty about demand and protecting their workforce. Health organization CFOs (70%) were more likely than executives from other industries (an average of 50%) to report that they expect higher demand for employee protections in the next month. Meanwhile, consumer anxiety over their own safety is driving up uncertainty about demand for healthcare and medical products. Forty-one percent of healthcare finance leaders listed tools to better understand customer demand as a top-three priority area when considering changes to their supply chain strategies, compared to 30% of financial leaders in all sectors. Fifty-one percent of healthcare finance leaders said they are making staffing changes as a result of slowed demand.

Takeaways

survey conducted by PwC’s Health Research Institute in early April found that some consumers are delaying care and medications amid the pandemic. In this latest PwC survey of CFOs, healthcare leaders report uncertainty about how much of their business will return as the threat of the pandemic ebbs, making staffing decisions difficult.

As the nation continues to grapple with the pandemic, getting back to work is top of mind for US financial leaders overall, but this is an especially pressing issue for health leaders. They must plan for their own workforces, while dealing with an unfolding financial calamity — 81% expect their company’s revenue and/or profits to decline this year as a result of COVID-19. On par with other industries, they expect this decline, even though their organizations play central roles in addressing the human toll of the pandemic. One strategy is to use telehealth technology to virtually care for patients, thereby protecting patients and caregivers during the pandemic.

Financial firms see fewer layoffs, but slower recovery

Financial services (FS) CFOs are bracing for a longer road back to normal. About a third (35%) now think it could take six months to get back to business as usual, up sharply from 15% just two weeks ago. They’re also more optimistic about the bottom line. More than a quarter (27%) of FS survey respondents expect revenue and/or profits to fall by 10% or less. Across all industries, only 18% felt as confident.

Takeaways

Banks are playing a critical role in helping stabilize the economy, as they work on the front lines to distribute CARES Act provisions. Along with insurers and asset managers, they also rely heavily on workers with specialized technical and institutional knowledge. This may explain why FS CFOs expect fewer layoffs (15% vs. 32% overall) or furloughs (17% vs. 44% overall) over the next month. Now, they’re trying to focus on keeping workers healthy and safe.

Conversations are starting to shift toward when and how to transition back to physical offices. For some employees, work may look very different: More FS CFOs are considering making remote work a permanent option for roles that allow it (60% vs. 49% overall). To better protect their employees, they’re also looking to evaluate new tools to support workforce tracking and contact tracing (32% vs. 22% overall) as part of the return-to-work process.

Deeper insight into health of suppliers is top priority for industrial products

The industrial products (IP) sector is in full-throttle cost-cutting mode. Nearly all IP CFOs (96%) report considering cost containment measures, compared with 87% two weeks ago. Some of this comes in the form of layoffs: 49% of IP CFOs expect layoffs to occur vs. 36% two weeks ago. The longer the crisis lasts, the longer the impact on recovery times for their business. When asked how long it would take for their business to return to business as usual if the COVID-19 crisis were to end today, 15% of IP CFOs said less than one month, down from 25% two weeks ago.

Meanwhile, they’re closely examining challenged supply chains. When asked to list their top-three priority areas when planning changes to supply-chain strategies, 66% of IP CFOs identified understanding the financial and operational health of their suppliers, compared to 54% of CFOs across all industries. A majority (56%) also cited developing additional and alternate sourcing options as a priority. And the extent of the financial damage is sinking in: 65% of IP CFOs estimate 2020 revenues and/or profits will drop at least 10%.

Takeaways

IP CFOs are signaling they’re in the thick of the crisis, as they absorb historical lows in production, with March US industrial output plunging to levels not seen since the end of WWII. Continued cost actions are still in the cards.

IP finance leaders are looking ahead to get back to business, with some already bringing workers back on-site. Some are expecting changes to the workplace. Thirty-nine percent of IP CFOs are considering making remote work a permanent option for roles that allow, and 31% are considering accelerating automation and new ways of working. While these are still early days for US producers in returning to work, bringing millions of workers back into the fold may well usher in more change management than the industry now expects.

Tech, media and telecom well-positioned to power the recovery

Technology, media and telecommunications (TMT) companies are well-positioned for recovery from the initial blow of COVID-19. As they stabilize operations in response to the crisis, the percentage of TMT CFOs anticipating revenue and/or profit declines is down 19 percentage points from two weeks ago to 65%. The data suggest that TMT companies are preparing for a future in which virtual work options gain greater acceptance over traditional office settings. TMT companies are more likely to reduce their real estate footprint as they transition back to on-site work (38% compared to 26% for all sectors), and 55% say they’re planning to make remote work permanent for positions that allow.

Of those who said they’re considering deferring or canceling planned investments, TMT companies are less likely to reduce digital transformation investments (13%) than all sectors (22%). Their increased optimism about digital investment as they strategize for the future is further borne out by the data: Two weeks ago, of those who said they were deferring or canceling planned investment, TMT was on track to reduce digital investments at the same rate as other sectors (25%).

Takeaways

The resilience of TMT companies is evident in their approach to this crisis. Bolstered by robust liquidity, the majority of companies in the sector are looking ahead to a recovery they will power by using both organic growth and M&A. In the wake of a crisis that has accelerated more widespread virtual connectivity, look for new emerging-tech-enabled business models to take shape.

Where to focus next

COVID-19 has put businesses under enormous strain to drive new ways of working. When the pandemic began, many companies put their people’s health and safety at the center of their decision-making, and they appear to be doing the same as they prepare to ramp up business. With most firms expecting to bring people back on-site in phases, leaders will need to help employees adjust to a changed environment while still managing the well-being, engagement and productivity of all workers. Purpose-led communication will continue to be critical to keep people informed, and leaders should demonstrate empathy while helping employees adjust to what will likely be an extended transition period.