With the Delta variant now accounting for more than 83 percent of all new COVID cases in the US, daily new case counts more than quadrupling across the month of July, and hospitalizations—particularly in states with low vaccination rates—beginning to climb significantly, we appear to have entered a new and uncertain phase of the pandemic, now being dubbed a “pandemic of the unvaccinated”.
Welcome news, then, that this week the American Hospital Association (AHA) publicly encouraged its members to put in place vaccine mandates for their employees. While several large health systems have taken the lead in implementing vaccine mandates, including Trinity Health, the Livonia, MI-based Catholic system that operates hospitals across 22 states, Phoenix, AZ-based Banner Health, Houston Methodist in Texas, and the academic giant NewYork-Presbyterian, others have been more reticent to compel employees to get vaccinated, citing concerns over employee privacy and the potential for workforce backlash.
The New York Times reports that a quarter of all hospital employees remain unvaccinated nationwide, with many facilities reporting that more than half of their healthcare workers have not gotten the COVID vaccine. In our discussions with health system executives, one consideration frequently cited is the desire for full Food and Drug Administration (FDA) approval of the new vaccines before mandates are put in place.
In a CNN town hall meeting this week, President Biden suggested that approval could come as soon as the end of August, although other reports point to likely approval much later, potentially not until January of next year. Facing a new variant of the virus that is much more transmissible and possibly more virulent than earlier strains, hospitals—and their patients—can’t afford to wait that long.
For safety’s sake, hospitals should quickly put in place vaccine mandates, with appropriate exceptions.
We spend a lot of our time helping health system executives craft and communicate enterprise-level strategy: entering new markets or businesses, developing new services, responding to competitive threats, exploring partnership opportunities. Strategy is about the “what” and “when”—what moves are we going to make, and when is the right time to make them? Answering those questions requires an understanding of industry and market forces, organizational capabilities, and consumer needs. But there’s another important component that often goes missing in the rush to get to the “how” of strategy execution: the “why”.
Yet understanding why we’re pursuing one path and not another is critical for aligning stakeholders: physicians, operators, and (importantly) the board. Joan Didion famously wrote that “we tell ourselves stories in order to live”, and we’d agree; the “why” is about storytelling. What’s the strategic narrative, or story, that frames our intended actions? Making sure that everyone involved—including our patients and consumers—has a clear understanding of why we’re opening a new facility, or launching a new service, or entering into a new partnership, is a key to success.
It’s about sharing the vision of our desired role as a system, and the part we see ourselves playing in improving healthcare. We’re sometimes criticized for spending so much time on “framing” and drawing “pretty graphics”, but we’ve come to believe that the ability to succinctly and compellingly describe the “why” of strategy is as important as coming up with the vision in the first place. And then, of course, delivering on the “why”—a job made easier if all involved are clear on just what it is.
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.
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.
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.
This week we hosted a member webinar on an application of artificial intelligence (AI) that’s generating a lot of buzz these days in healthcare—robotic process automation (RPA).
That bit of tech jargon translates to finding repetitive, often error-prone tasks performed by human staff, and implementing “bots” to perform them instead. The benefit? Fewer mistakes, the ability to redeploy talent to less “mindless” work (often with the unexpected benefit of improving employee engagement), and the potential to capture substantial efficiencies. That last feature makes RPA especially attractive in the current environment, in which systems are looking for any assistance in lowering operating expenses.
Typical processes where RPA can be used to augment human staff include revenue cycle tasks like managing prior authorization, simplifying claims processing, and coordinating patient scheduling. Indeed, the health insurance industry is far ahead of the provider community in implementing these machine-driven approaches to productivity improvement.
We heard early “lessons learned” from one member system, Fountain Valley, CA-based MemorialCare, who’s been working with Columbus, OH-based Olive.ai, which bills itself as the only “AI as a service” platform built exclusively for healthcare.
Listening to their story, we were particularly struck by the fact that RPA is far more than “just” another IT project with an established start and finish, but rather an ongoing strategic effort. MemorialCare has been particularly thoughtful about involving senior leaders in finance, operations, and HR in identifying and implementing their RPA strategy, making sure that cross-functional leaders are “joined at the hip” to manage what could prove to be a truly revolutionary technology.
Having identified scores of potential applications for RPA, they’re taking a deliberate approach to rollout for the first dozen or so applications. One critical step: ensuring that processes are “optimized” (via lean or other process improvement approaches) before they are “automated”. MemorialCare views RPA implementation as an opportunity to catalyze the organization for change—“It’s not often that one solution can help push the entire system forward,” in the words of one senior system executive.
We’ll be keeping an eye on this burgeoning space for interesting applications, as health systems identify new ways to deploy “the bots” across the enterprise.