Advocate Aurora to make remote work permanent for 12,000 employees

Advocate Aurora keeping 12,000 employees on remote work assignment

Advocate Aurora Health is implementing a new work model that will move 12,000 non-clinical employee positions in finance, consumer experience and more departments to remote-first operations, according to a May 21 BizTimes report. 

Under the new work model, dubbed WorkForward, the 12,000 non-clinical employees who have been working remotely throughout the COVID-19 pandemic will continue to do so permanently; these employees will “no longer have dedicated workspaces” like cubicles or offices at the health system’s Milwaukee and Downers Grove, Ill.-based offices, the publication reports. 

Affected departments include finance and accounting, consumer experience and public affairs, strategy and business development, government relations and administration. Employees will be able to choose to work from home, at a coffee shop or other locations, Advocate Aurora Chief Human Resources Officer Kevin Brady told BizTimes

“For some departments, remote-first may come to mean monthly team meetings in the office, once-a-week collaboration sessions or a trip to an outside-the-box location that inspires the team,” he said. 

Advocate Aurora will “regularly evaluate” its real estate needs with the work model transition; the health system recently vacated non-headquarters office space when its lease ended at the end of 2020. Advocate Aurora is also reconfiguring its remaining facilities to create more “innovative and productive” work areas that employees can use for meetings or temporary office space, according to the report.

San Francisco’s lonely war against Covid-19

https://www.vox.com/future-perfect/2020/7/30/21331369/london-breed-coronavirus-covid-san-francisco-california-trump

On June 25, San Francisco Mayor London Breed was excited the city’s zoo would finally reopen after closing down for months in response to Covid-19. She visited the facilities, posting photos on social media with a mask on and giraffes in the background.

“I know people are eager to get back to some sense of normalcy, especially families and children,” she tweeted. And it looked like her city was taking a step toward it.

The day after the visit, Breed had to announce the sad news: San Francisco’s reopening plan — for the zoo and various other facilities, including hair salons and indoor museums — would have to be put on hold.

“COVID-19 cases are rising throughout CA. We’re now seeing a rise in cases in SF too. Our numbers are still low but rising rapidly,” she tweeted. “As a result, we’re temporarily delaying the re-openings that were scheduled for Monday.”

While state and local leaders nationwide were pushing ahead with reopening, Breed pulled back. “I listened to our public health experts,” she told me. “It’s hard. The last thing I want to do is go out there and say one thing and then have to say something else. But I think it’s important that people understand things can change. This is a fluid situation.”

The decision — taken weeks before California Gov. Gavin Newsom’s move to shut down risky indoor venues statewide in July — was emblematic of San Francisco’s cautious approach throughout the coronavirus crisis. The city joined a regional stay-at-home order in March, before the rest of the state and New York, which became a Covid-19 epicenter, imposed their own orders. It was also slower to reopen: When California started to close down indoor venues again, the order largely didn’t affect San Francisco — because the city never reopened bars and indoor dining, among other high-risk venues, in the first place.

By and large, the approach — aided by regional cooperation, with leadership from Santa Clara County Health Officer Sara Cody, and widespread social distancing and mask-wearing by the public — has kept cases of Covid-19 manageable. In the spring, California and the Bay Area saw some of the first coronavirus cases, but quick action since then has let San Francisco and the surrounding region avoid turning into a major hot spot.

The increase in cases this summer has exceeded the April peak and fallen particularly hard on marginalized groups, especially Latin communities. But that, too, seems to be turning around: New cases started to fall by July 20 — almost a week before the state as a whole began to plateau. San Francisco has maintained less than 60 percent the Covid-19 cases per capita as California, and less than 30 percent the deaths per capita. Its caseload and death toll are lower than other large cities, including Washington, DC, and Columbus, Ohio, and far lower than current hot spots like Arizona and Florida.

“It’s doing as well as it can, given what’s going on around it,” Peter Chin-Hong, an infectious disease expert at the University of California San Francisco, told me.

Experts and local officials say the summer increase in cases doesn’t take away from what San Francisco has done. What it shows, instead, is the limits of what a local government can do — and the risk of relying on a county-by-county, state-by-state approach to a truly national crisis.

“We have to accept that we are all interrelated in a pandemic,” Kirsten Bibbins-Domingo, an epidemiologist at UCSF, told me. “We have to help each other out.”

The city’s leaders agree, pointing to some of the problems that have addled their response to the pandemic as the federal government did little — from a lack of personal protective equipment for health care workers to continued shortfalls in tests for Covid-19.

“We are not isolated; we are interconnected,” Grant Colfax, director of the San Francisco Department of Public Health, told me. “The virus exploits that very interconnectedness of our society. Without a consistent, robust, and sustained federal response that is driven by science … eventually things cannot be sustained.

This is why, experts argue, federal leadership is so key: The federal government is the one entity that could address these problems on a large scale. But President Donald Trump has ceded his role to the states and private actors — what his administration called the “state authority handoff” and the New York Times described as “perhaps one of the greatest failures of presidential leadership in generations.”

That’s left cities and states to fend for themselves. San Francisco has made the best of it, with the kind of model that experts argued could have prevented the current coronavirus resurgence if it had been followed nationally.

“There’s a value to being cautious,” Bibbins-Domingo said. “Any type of reopening is going to come with some increase in cases. That’s what we are learning in the pandemic. That’s what the infectious disease experts told us was going to happen. Places that thought they could just reopen without caution have really paid the price for it.”

San Francisco’s leaders were ahead on Covid-19

Breed started to really worry about the coronavirus in February, when she saw a glimpse of the future.

Stories of overwhelmed hospitals in Wuhan, China, showed that Covid-19 could cripple health care systems. But Breed believed, she said, that San Francisco’s larger, more advanced health care system could handle the blow. Then her advisers and experts told her differently — that a situation like Wuhan’s really could happen in San Francisco if she didn’t act.

“The shock I got,” Breed said. “We have all these hospitals, all these places where we have some of the most incredible doctors and research institutions. So in my mind, I’ve always thought this is where you want to be if something happens. To be told that here’s what our capacity is, here’s what happens if we do nothing, and what we need to prepare for, it really did blow my mind.”

At that point, she concluded, “We need to shut the city down to make sure this doesn’t happen.”

The virus has been the biggest challenge yet for Breed, who first became mayor in 2017 when her predecessor died, before she was elected to the role in 2018, having previously served on the Board of Supervisors.

But Breed, with the guidance of the Bay Area’s public health officials, has consistently kept the city ahead on Covid-19. The day before Trump claimed, falsely, that coronavirus cases would go from 15 to nearly zero in the US, Breed on February 25 declared a local state of emergency over the virus. Three days before California imposed a stay-at-home order and nearly a week before New York state did, San Francisco County, with Breed’s full backing, on March 16 joined the five other Bay Area counties in issuing the country’s first regional stay-at-home order.

Breed was ahead of not just much of the nation, but her progressive peers as well. On March 2, she warned on Twitter that the public should “prepare for possible disruption from an outbreak,” advising people to stock up on essential medications, make a child care plan in case a caregiver gets sick, and plan for school closures. The same day, New York City Mayor Bill de Blasio, a fellow Democrat, tweeted that he was “encouraging New Yorkers to go on with your lives + get out on the town despite Coronavirus.”

New York City would go on to suffer one of the worst coronavirus outbreaks in the world, with its total death rate standing, as of July 29, at 272 per 100,000 people — more than 45 times as high as San Francisco’s rate of 6 per 100,000. (De Blasio’s office didn’t respond to a request for comment.)

San Francisco’s death toll is also fairly low compared to that of some other areas in California — a fraction of Los Angeles County’s 45 per 100,000 and Imperial County’s 103. San Mateo County, a Bay Area county that reopened more aggressively, has more than double the death rate, at 15 per 100,000. San Francisco looks even better compared to cities and counties beyond California — with less than a tenth the deaths per capita as Washington, DC, and about a sixth as many as Franklin County, Ohio, where Columbus is, and Fulton County, Georgia, where most of Atlanta is.

At the time of the initial stay-at-home order, Chin-Hong said, people wondered if Breed was overreacting. “Of course, in hindsight, she was very prescient. She knew what was coming.”

There’s good reason to believe that San Francisco’s early action, particularly its lockdown, helped. The research indicates that stay-at-home orders and similar measures worked, with one preliminary Health Affairs study concluding:

Adoption of government-imposed social distancing measures reduced the daily growth rate by 5.4 percentage points after 1–5 days, 6.8 after 6–10 days, 8.2 after 11–15 days, and 9.1 after 16–20 days. Holding the amount of voluntary social distancing constant, these results imply 10 times greater spread by April 27 without SIPOs (10 million cases) and more than 35 times greater spread without any of the four measures (35 million).

That’s not to say San Francisco performed flawlessly.

Even the experts who praised Breed simultaneously raised alarms about how the virus had disproportionately affected minority populations — with about half of confirmed Covid-19 cases affecting Latin people, even though they comprise about 15 percent of the local population. The city’s large homeless population is also a major point of concern, with a big outbreak at the largest local homeless shelter. These are the kinds of blind spots with Covid-19 that have shown up across the country — as minority groups, in particular, are more likely to work in the kind of job deemed “essential” — and San Francisco isn’t immune to them.

“Myself, just taking care of patients, I know that some of those patients are going back to work sick if they don’t have to be hospitalized,” Yvonne Maldonado, an infectious disease expert at Stanford, told me. “They can’t afford not to work.”

Local officials point out they have taken aggressive action to shield marginalized populations — creating support programs for them, fielding contact tracing calls in Spanish, and setting up more than 2,500 hotel rooms for the vulnerable, including homeless people. And the disproportionate case count for Latin people is from a baseline of cases that’s lower than other parts of the state and country with similar disparities. Out of 57 Covid-19 deaths in the city, only one was a homeless person.

Breed acknowledged the challenge, describing the city’s response to Covid-19 as a work in progress as she and other officials struggle with the uncertainty that surrounds a virus that’s still relatively new to humans.

“That’s hard,” Breed said. “We have to make the hard decisions. What we hope people will understand is why. We keep trying to call attention to what’s happening or could happen to any of us. It’s a constant struggle.”

That’s especially compounded by the massive sacrifices that people have to make as they’re forced to stay at home, potentially giving up income, child care, and social connections.

Breed is aware this is no easy task. On a personal level, she said, “I’m tired of being in the house. I’ll tell you that much.” She acknowledged that the shutdown has left many people struggling, “because their livelihoods are at stake, their ability to take care of themselves is at stake.”

But the alternative, she suggested, is much worse. It’s not just more Covid-19 cases, hospitalizations, and deaths — but harm to the economy if a major outbreak forces cities and states to shut down all over again. As a preliminary study of the 1918 flu pandemic found, the cities that came out economically stronger back then took more aggressive action that hindered economies in the short term but better kept infections and deaths down overall.

Experts echoed a similar sentiment. “Dead people don’t shop. They don’t spend money. They don’t invest in things,” Jade Pagkas-Bather, an infectious disease expert and doctor at the University of Chicago, told me. “When you fail to invest in the health of your population, then there are longitudinal downstream effects.”

Breed had a key ally in San Francisco: The public

Chin-Hong, who lives and works in the Bay Area, recalled a recent experience he had at the grocery store. With the place at full capacity, people were waiting outside the store in a line. One person joined the line without a mask on. People began to eye him disapprovingly. He grew visibly nervous, at one point pulling his shirt over his mouth. After a while, a store staff member came out and gave him a mask, which he quickly put on.

The story is emblematic of one of Breed’s key advantages as she has pushed forward with aggressive actions against the coronavirus: San Francisco’s public is by and large on board, with a lot of solidarity built around social distancing and masking.

“The politician is only as good as her constituents,” Chin-Hong said. “It’s a key factor in all of this.”

In some ways, the public was even ahead of Breed. In the weeks before Bay Area counties issued a stay-at-home order, major tech companies in the region, like Google and Microsoft, told employees to work from home. That partly reflects tech employees’ ability to work from home with fewer disruptions, but also a greater sense of vigilance for an industry with close ties to the countries in East Asia that saw Covid-19 cases earlier.

It wasn’t just the tech sector. Restaurant data from OpenTable shows San Francisco was starting to avoid dining out by the first week of March, while most other cities in the US saw at best small decreases, if any changes: On March 1, dining out via OpenTable was down 18 percent in San Francisco, compared to down 3 percent in Los Angeles, down 2 percent in New York City, up 2 percent in Houston, and up 21 percent in Philadelphia. From that point forward, San Francisco’s numbers steadily dropped, while much of the US fluctuated before the depth of the outbreak became clearer nationwide.

San Francisco has also been better than much of the country about mask-wearing.New York Times analysis found there’s a roughly 60 to 90 percent chance, depending on the part of the city, that everyone is masked in five random encounters in San Francisco. In other parts of the US, including cities, the percent chance can drop to as low as 20, 10, or the single digits.

Even in California, it wasn’t guaranteed things would go like this. Orange County’s chief health officer resigned in June due to public resistance against a mask-wearing order. Sheriffs in Orange, Riverside, Fresno, and Sacramento counties said they wouldn’t enforce Gov. Newsom’s June order requiring masks in public and high-risk areas. With Trump and other Republicans suggesting that social distancing and masking requirements were part of a broader overreaction to the pandemic and an attempt at government overreach, and people genuinely suffering due to the economic downturn, San Francisco could have taken a very different direction.

We don’t know for certain why San Francisco’s public is more aggressive about precautions against Covid-19. One advantage San Franciscans have is many of them, particularly those in the tech sector and other office jobs, can work from home much more easily than, say, “essential” agricultural employees. The city also has close ties to East Asia, including China, potentially offering personal connections — and an early warning — to the first coronavirus outbreaks and the value of masking. San Francisco is also very progressive and Democratic, which helps as physical distancing, masking, and related measures have become politically polarized. Perhaps Breed’s more aggressive communication paid off.

Whatever the cause, there’s good reason to believe the public embrace of precautions helped the city. A review of the research published in The Lancet found that “evidence shows that physical distancing of more than 1 m is highly effective and that face masks are associated with protection, even in non-health-care settings.”

Again, it’s not perfect. Breed told me of a recent trip to a local store that was clearly far above the city’s reduced standards of capacity, with some of the staff and customers not wearing masks. “I was like, ‘What the heck is this? This is ridiculous,’” she said. “I called [the San Francisco Department of] Public Health, and they put a stop to it.”

More recently, Breed had to get tested for coronavirus after she went to an event attended by someone who reportedly knew they were positive. She used the moment to lightly admonish those who didn’t follow the recommended precautions: “I know people want to be out in public right now, but this disease is killing people. It’s simply reckless for those who have tested positive [to] go out and risk the lives of others,” she tweeted. “I cannot stress this enough: if you test positive, it’s on you to stay home and not expose others.” (Breed tested negative.)

But San Francisco’s public is seemingly better than much of the country at following the recommended precautions. Beyond Breed’s actions, that’s a potent explanation for why San Francisco has done relatively well — and why other parts of the state and country haven’t.

Local governments can only do so much about a pandemic

As successful as San Francisco has been relative to other parts of California and the US, it hasn’t escaped the recent rise in Covid-19 cases untouched. As of July 22 (the most recent reliable local data available), the city hit a seven-day average of 98 new cases a day — down from a peak of 120 several days prior but up from the previous peak of 48 in mid-April.

More than reflecting San Francisco’s own failures, experts said the upward swing in cases reflects the limits of what a local government can do when a virus spreads nationally and globally. When a virus can cross borders, there’s only so much San Francisco can do if its residents can drive an hour or two to a county where bars and indoor dining are open for service, or to meet with family members in an area that’s hit much harder by Covid-19.

“When you have different rules for different counties, it’s very confusing,” Maldonado said. “People lose the message.”

There are similar limitations to what even California can do. It can impose its own lockdown, but it has less control over cases from Arizona, Nevada, Mexico, or other parts of the globe. While the state has taken steps to build up its testing capacity — surpassing the benchmark of 150 tests per 100,000, which is the equivalent of 500,000 tests nationwide — it can only go so far if there are constraints around the country for testing.

The testing problem is especially acute now: With new outbreaks across the US, demand for tests climbed as supply constraints reappeared. That’s led to waiting periods of up to weeks for getting results back — making tests practically useless for confirming, tracing, and containing infections before they have time to spread.

But there are limits to what San Francisco or California can do if the bottlenecks for testing are originating in other parts of the country or world — whether they’re due to epidemics in Arizona and Florida, or because factories in the Northeast and South can’t produce enough swabs to collect samples or reagents to run tests.

“We need a national plan,” Cyrus Shahpar, a director at the global health advocacy group Resolve to Save Lives, told me. “In terms of the structures to improve the supply chain or procure more stuff for the whole country, that’s a federal level of support. You need that to be in place.”

The Trump administration, however, has explicitly left most of these issues for states to solve. The White House’s testing plan declared that the federal government is merely a “supplier of last resort,” leaving it to local and state governments and private actors to fix choke points along the testing supply chain. The New York Times explained this was part of a broader “state authority handoff” plan that would “shift responsibility for leading the fight against the pandemic from the White House to the states.”

To the extent the federal government has provided support, Trump has actively undermined it. When the federal government released a phased plan for state reopenings, Trump called on states to reopen faster — to supposedly “LIBERATE” them from economic calamity. After the Centers for Disease Control and Prevention recommended people in public wear masks, Trump said it was a personal choice, refused for months to wear a mask in public, and even suggested that people wear masks to spite him (although a recent tweet seemed to support masking). (The White House didn’t return a request for comment.)

In my interviews, local officials, health care workers, and experts repeatedly complained about the problems caused by federal inaction. Breed lamented that San Francisco, and California, couldn’t rely on federal support to get personal protective equipment for health care workers, particularly in the early stages of the pandemic. A San Francisco Department of Public Health spokesperson told me that testing took time to scale up while the federal government did little to address supply constraints, commenting that the mixed messaging and inaction from the federal government “are hampering local efforts to be as effective as we would like to be.”

Over time, even the once-proactive California let its guard down. As Gov. Newsom faced pressure from local governments and businesses to reopen the state quickly, he allowed counties to reopen at a quicker pace if they met certain metrics. That led to new outbreaks, particularly in Central and Southern California — each of which presented a risk of bleeding over to the Bay Area. As Bibbins-Domingo said, county-by-county variations “have not been helpful” for suppressing the virus in San Francisco or statewide.

California Health and Human Services Secretary Mark Ghaly said that, like everyone else, the state was still learning how to properly combat the pandemic. But he argued it does make sense to tailor local responses to Covid-19 to what’s happening locally — and that’s what the state tried to do as it let some counties move quicker than others, while keeping some oversight by enforcing certain criteria before counties moved ahead.

The state is still “figuring out … the balance between hundreds of different things,” Ghaly told me. That includes, he added, “how you support counties making local decisions while maintaining some level of cohesiveness at a regional and statewide level so we don’t erode gains.”

Still, the fractured nature of federalism doesn’t help for fighting a virus that ignores local, state, and national borders.

A recent study in Science backed that up. Running simulations for Europe, researchers concluded that better-coordinated action within the European Union can help suppress Covid-19 better than different countries acting in different ways. Drawing on that finding, the authors concluded:

The implications of our study extend well beyond Europe and COVID-19, broadly demonstrating the importance of communities coordinating easing of various [non-pharmaceutical interventions] for any potential pandemic. In the United States, [non-pharmaceutical interventions] have been generally implemented at the state-level, and because states will be strongly interconnected, our results emphasize national coordination of pandemic preparedness efforts moving forward.

That the US has by and large stuck to a state-by-state and county-by-county approach to public health — an approach that predates the coronavirus pandemic — can help explain, then, why the country has continued to fail to control Covid-19 in the same way countries with strong national plans and, in some cases, international cooperation haven’t. To this day, America reports among the highest rates of coronavirus cases and deaths in the world.

In that context, with outbreaks raging around San Francisco and California, there’s only so much any single local or state government could do. “When you look at success stories of countries on Covid, you had a strong central voice,” Chin-Hong said.

So while San Francisco has done a lot right, it will take the rest of the country adopting a similar approach for the city, the broader Bay Area, or anywhere else in the US to really be safe from the coronavirus.

 

 

 

 

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.