Coronavirus: 15 emerging themes for boards and executive teams

https://www.mckinsey.com/business-functions/risk/our-insights/coronavirus-15-emerging-themes-for-boards-and-executive-teams?cid=other-eml-alt-mip-mck&hlkid=0e0b80570bfe48508db4370a1999a949&hctky=9502524&hdpid=b867bc22-e8f5-41b6-b080-40a5d4c21c71

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Board directors and executives can pool their wisdom to help companies grapple with the challenge of a lifetime.

As Winston Churchill said, “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” We are seeing some faint signs of progress in the struggle to contain the pandemic. But the risk of resurgence is real, and if the virus does prove to be seasonal, the effect will probably be muted. It is likely never more important than now for boards of directors and executive management teams to tackle the right questions and jointly guide their organizations toward the next normal.

Recently, we spoke with a group of leading nonexecutive chairs and directors at companies around the world who serve on the McKinsey Resilience Advisory Council. They generously shared the personal insights and experiences gained from their organizations’ efforts to manage through the crisis and resume work. The 15 themes that emerged offer a guide to boards and executive teams everywhere. Together, they can debate these issues and set an effective context for the difficult decisions now coming up as companies plan their return to full activity.

Managing through the crisis

1. Boards must strike the right balance between hope for the future and the realism that organizations need to hear. There are many prognostications on what comes after COVID-19. Many will be helpful. Some will be right. Boards and managers may have some hopes and dreams of their own. Creating value and finding pockets of growth are possible. It is important to have these aspirations, because they form the core of an inner optimism and confidence that organizations need. However, leaders should not conflate aspirations with a prescience about the future.

2. The unknown portion of the crisis may be beyond anything we’ve seen in our professional lives. Boards and managers feel like they might be grappling with only 5 percent of the issues, while the vast majority are still lurking, unknown. Executives are incredibly busy, fighting fires in cash management and other areas. But boards need to add to their burden and ask them to prepare for a “next normal” strategy discussion. Managers need to do their best to find out what these issues are, and then work with boards to ensure that the organization can navigate them. The point isn’t to have a better answer. The point is to build the organizational capability to learn quickly why your answer is wrong, and pivot faster than your peers do. Resilience comes through speed. This may be a new capability that very few organizations have now, and they will likely need to spend real time building it.

3. Beware of a gulf between executives and the rank and file. Top managers are easily adapting to working from home and to flexible, ill-defined processes and ways of working, and they see it as being very effective and also the wave of the future. Many people in the trenches think it is the worst thing to happen to them (even those that are used to working remotely). Remote working is raising the divide between elites and the common man and woman. There is a real risk of serious tension in the social fabric of organizations and in local and national communities.

4. Don’t overlook the risks faced by self-employed professionals, informal workers, and small businesses. These groups are often not receiving sufficient support. But their role in the economy is vital, and they may be noticed only later, when it is too late.

5. Certain industries and sectors are truly struggling and require support. Several disrupted industries and many organizations in higher education, the arts, and sports are severely struggling and require support to safeguard their survival.

Return to work—the path ahead

6. Mid- to long-term implications and scenarios vary considerably. It’s important to differentiate between industries and regions. Some industries may never come back to pre-COVID-19 levels.

7. What went wrong? Boards and executives, but also academics, need to debate the question. Where should we have been focusing? Take three examples. Why did companies ignore the issue of inadequate resilience in their supply chain? The risks of single sourcing were well known and transparent. Also, why did we move headlong toward greater specialization in the workforce, when we knew that no single skill was permanently valuable? Finally, why did we refuse to evolve our business models, although we knew that technology and shifts in societal preferences were forcing us down a treadmill of ever decreasing value-creation potential?

8. How can we prevent a backlash to globalization? The tendency toward nationalism was already strong and is growing during the crisis. The ramifications will be challenging. For example, in pharmaceutical development, residents of the country where a pharma company has its headquarters may expect to get the drug first. Global companies, despite their experience, may find it harder to address and engage directly with diverse, volatile, and potentially conflicting stakeholders. In such times, societies may need someone to mediate between the private sector and some of these stakeholders.

9. Companies need help with government relations. Strong government interventions are occurring on the back of a serious loss of confidence in free-market mechanisms. There is little question that different governments will land on different answers to the debate around how free markets really ought to be structured. The corporate community has been thrust into a new relationship with government, and it is struggling. The government landscape is fragmented, with highly varied approaches and competencies. Companies are looking for a playbook; no one has an infrastructure to manage this complexity.

10. Where will the equity come from, and with what strings attached? Governments are propping up various sectors with new capital. What will they receive in return? Will they distort markets? How can companies manage this process carefully to emerge from the crisis with a stronger balance sheet? Further, much more capital is likely needed; presumably some of it will come from the private sector. Will capital markets be effective and trusted in such times? Who governs this overall process, and what role should the government play? Is it the time for more state funds?

11. The balance between profits and cash flow is tricky, and essential to get right. Many companies are caught right now and are sacrificing their bottom line in order to pay for their financing. That’s not sustainable; companies will need guidance on how to balance the two.

12. It may be time for responsible acquisitions, including to help restructure certain industries. Many “resilients” have “kept their powder dry,” and are now ready to acquire. But they need to be sensitive and allow sellers a good path to exit. We need guidelines for responsible acquisitions.

13. Cyberrisk is growing. Remote working increases the “attack surface” for criminals and state actors. Both are more active. Chief information officers and chief information security officers are grappling with the overwhelming demand for work-from-home technology and the need for stringent cybersecurity.

14. Innovation may never have been so important. Innovation has always been essential to solving big problems. The world is looking not just for new things but also for new ways of doing things (especially on the people side, where we need new behaviors, long-term rather than short-term), capabilities, and work ethics.

15. The path ahead will surely have ups and downs and will require resilience. As lockdowns are relaxed, and segments of the economy reopen, viral resurgences and unforeseen events will keep growth from being a straight line going up. It will likely be a lengthy process of preserving “lives and livelihoods” over several months, if not years. The reality is that many or even most business leaders made choices over the past decades that traded resilience for a perceived increase in shareholder value. Now may be the moment to consider that the era of chipping away at organizational resilience in the name of greater efficiency may have reached its limits. This is not to say that there are no efficiencies to be sought or found, but more that the trade-off between efficiency and resiliency needs to be defined far more clearly than it has been in recent years.


It is the board’s responsibility to coach and advise its management team, especially when the terrain is trickier than usual. However, boards should not mistake the need for vigorous debate with the need for consensus. More than ever, a bias to action is essential, which will frequently mean getting comfortable with disagreement. Apart from all the operational focus needed for the return to work, it is even more important that boards and management teams take a step back to reflect upon these 15 core themes. In summary:

  1. Take the time to recognize how the people who (directly or indirectly) depend on the company feel.
  2. Have aspirations about the post-COVID world, but build the resilience to make them a reality.
  3. Strengthen your capability to engage and work with regulators and the government.
  4. Watch out for non-COVID risks, and make sure to carve out time to dedicate to familiar risks that have never gone away.
  5. Find out what went wrong, and answer the uncomfortable truths that investigation uncovers.

 

 

 

Insurers face uncertainty in setting 2021 premiums

https://www.healthcarefinancenews.com/news/insurers-face-uncertainty-setting-2021-premiums?mkt_tok=eyJpIjoiTldabE9UTTFZbU16TkRneSIsInQiOiI1djBwUWV6SVpzNlJtRUJEdXBEcEM1UkdGZWtvYTZpdkZ5V1NkTHhpNVFnVFwvR2FJSGlDTVVDcE5lTGtmTDhHY0hWQ05XU1NQNWt3UjRRYUtCOVZtS1ZoNG9SN2wxNU1xYmJVT1k5YWptY2hYVVBObCszNVhiREVFSERNT1hxRkMifQ%3D%3D

What To Do When Faced With Career Uncertainty

Insurers need to project the future cost of delayed elective procedures and total expenses of COVID-19 care.

While health insurers have saved money by the cancellation of elective surgeries and many are currently refunding excess revenue under the Medical Loss Ratio, premiums for the 2021 plan year are still in question.

There is a lot of uncertainty, America’s Health Insurance Plans said. Without comprehensive data, insurers are working to estimate 2021 healthcare costs and must base their rates on projected costs, AHIP explained in an infographic.

It is too soon to know what the real healthcare costs of COVID-19 will be. Also, delayed elective and non-urgent care will likely be delivered – and paid for – later.

That care could be more complex and costly because it was delayed, AHIP said.

WHY THIS MATTERS

Insurers are working to meet state deadlines to file 2021 premiums in the individual market.

THE LARGER TREND

Federal law requires insurers to spend 80-85 cents of every premium dollar on medical services and care. The rest, under the Medical Loss Ratio, may go towards administrative expenses, regulatory costs, federal and state taxes, customer service and other expenses.

The COVID-19 pandemic’s postponement of elective surgeries and regular care has created a surplus in revenue for insurers due to lower spending, which many are refunding now.

ON THE RECORD

“COVID-19 has had a very real impact on the economic, physical, and mental health of millions of Americans,” said Jeanette Thornton, senior vice president of Product, Employer, and Commercial Policy at AHIP.  “Our members are working through this uncertainty to strengthen access to affordable care as the fight against the coronavirus continues. COVID-19 dramatically changed the healthcare landscape–in 2020 and for years to come.

 

 

 

 

Trump: U.S. will terminate relationship with the World Health Organization in wake of Covid-19 pandemic

Trump: U.S. will terminate relationship with the World Health Organization in wake of Covid-19 pandemic

Coronavirus Fears Grind International Diplomacy to a Halt

President Trump said Friday the U.S. would halt its funding of the World Health Organization and pull out of the agency, accusing it of protecting China as the coronavirus pandemic took off. The move has alarmed health experts, who say the decision will undermine efforts to improve the health of people around the world.

In an address in the Rose Garden, Trump said the WHO had not made reforms that he said would have helped the global health agency stop the coronavirus from spreading around the world.

“We will be today terminating our relationship with the World Health Organization and redirecting those funds to other worldwide and deserving urgent global public health needs,” Trump said. “The world needs answers from China on the virus.”

It’s not immediately clear whether the president can fully withdraw U.S. funding for the WHO without an act of Congress, which typically controls all federal government spending. Democratic lawmakers have argued that doing so would be illegal, and House Speaker Nancy Pelosi threatened last month that such a move would be “swiftly challenged.”

The United States has provided roughly 15% of the WHO’s total funding over its current two-year budget period.

The WHO has repeatedly said it was committed to a review of its response, but after the pandemic had ebbed. Last month, Robert Redfield, the director of the Centers for Disease Control and Prevention, also said the “postmortem” on the pandemic should wait until the emergency was over.

As the Trump administration’s response to pandemic has come under greater scrutiny, with testing problems and a lack of coordination in deploying necessary supplies, Trump has sought to cast further blame on China and the WHO for failing to snuff out the spread when the virus was centered in China.

During his remarks, Trump alleged, without evidence, that China pressured WHO to mislead the world about the virus. Experts say that if the U.S. leaves the WHO, the influence of China will only grow.

“The world is now suffering as a result of the malfeasance of the Chinese government,” Trump said. “China’s coverup of the Wuhan virus allowed the disease to spread all over the world, instigating a global pandemic that has cost more than 100,000 American lives, and over a million lives worldwide.” (That last claim is not true; globally, there have been about 360,000 confirmed deaths from Covid-19, the disease caused by the coronavirus.)

When Trump earlier this month threatened to yank U.S. funding in a letter, Tedros Adhanom Ghebreyesus, the WHO director-general, would only say during a media briefing that the agency was reviewing it. But he and other officials stressed that the agency had a small budget — about $2.3 billion every year — relative to the impact the agency had and what it was expected to do.

Mike Ryan, head of the WHO’s emergencies program, said the U.S. funding provided the largest proportion of that program’s budget.

“So my concerns today are both for our program and … working on how we improve our funding base for WHO’s core budget,” Ryan said. “Replacing those life-saving funds for front-line health services to some of the most difficult places in the world — we’ll obviously have to work with other partners to ensure those funds can still flow. So this is going to have major implications for delivering essential health services to some of the most vulnerable people in the world and we trust that other donors will if necessary step in to fill that gap.”

 

Some Coronavirus Patients Test Positive For Weeks. Interpret Those Results With Caution

https://www.forbes.com/sites/coronavirusfrontlines/2020/05/29/some-coronavirus-patients-test-positive-for-weeks-interpret-those-results-with-caution/#2d8a96bb343e

Some Coronavirus Patients Test Positive For Weeks. Interpret Those ...

PCR tests are precise, but they can also detect the presence of the virus well after it’s no longer contagious.

Dr. Matthew Binnicker, an expert in the diagnosis of infectious disease, explains why someone might still test positive for Covid-19 weeks after they’ve recovered.

To date, the majority of patients with Covid-19 have been diagnosed using a laboratory test called PCR, which detects the virus’ genetic material (i.e., RNA) in clinical samples (e.g., nasal swabs). PCR is a very sensitive laboratory method – meaning it can detect minute amounts of viral RNA – and has been used for nearly 2 decades to diagnose a variety of infectious diseases, including influenza and strep throat. Despite being a rapid and inherently sensitive test, PCR has certain limitations that need to be carefully considered when interpreting the results.

One of those key limitations of PCR is its inability to determine whether a patient is infectious, or not. This is because the test is designed to detect the virus’ RNA, which is generally present when a virus is causing an active infection. However, RNA can also be present, and therefore, detected by PCR after a virus has broken down (i.e., become non-infectious) and released its genome into host cells or body fluids. From prior experience with other infectious diseases, we know that PCR tests can be positive for days or weeks after a patient has recovered from the illness and is no longer infectious.

As more testing is being performed for Covid-19, we are learning that some patients can test positive for weeks following their initial diagnosis. A recent study showed that 16% of patients with Covid-19 continued to test positive for SARS-CoV-2 RNA up to 24 days after resolution of symptoms and discharge from the hospital. In addition, some Covid-19 patients who recover from their illness and test negative by PCR may again test positive (i.e., go from PCR positive to negative to positive). So does this mean they never fully recovered? Are they still infectious? Or did they become reinfected with a new strain of the virus?

Here are some things to understand.

FRANCE-HEALTH-VIRUS-SCIENCE-BIOLOGY-TEST

RNA from SARS-CoV-2 might be found in your body long after you’ve recovered from the disease.

Even though they inform isolation and return-to-work decisions, PCR tests don’t measure if someone is contagious

When an individual tests positive for Covid-19, it is a common policy to require that they remain in isolation for a period of 10-14 days. In fact, the Centers for Disease Control and Prevention (CDC) recommends that those who test positive for Covid-19 remain in isolation until they have received two negative PCR results on samples collected at least 24 hours apart.

This is a conservative approach, but has been justified during the early stages of the Covid-19 pandemic due to the lack of data on the period of infectiousness of SARS-CoV-2, as well as the significant repercussions of allowing an infected individual to return-to-work or interact with others before there is confidence they are no longer infectious. However, PCR is not typically used as a ‘test of cure’ for other infectious diseases, since it can remain positive after a patient has cleared an infection.

What does it mean when a patient tests positive after recovering from Covid-19?

While studies are being performed to definitively answer this question, new data are emerging that suggest the period of SARS-CoV-2 infectiousness may not correlate with PCR positivity. In other words, an individual may not be able to infect others for as long as they test positive by PCR. To determine this, researchers have investigated two important questions. First, can the virus be cultured, or grown, from samples that are collected weeks after resolution of a patient’s symptoms but test positive by PCR? And second, do close contacts (e.g., family members, coworkers) of patients with persistently positive PCR tests become sick with Covid-19?

Last week, the South Korean CDC published important data aimed at addressing these questions. The study followed approximately 800 contacts of Covid-19 patients after they had recovered from their illness, tested negative, but once again tested positive by PCR. The researchers found no evidence that the contacts became ill with Covid-19. In addition, the South Korean scientists were unable to grow the virus from samples that were PCR positive at the latest time point.

Although these results suggest that Covid-19 patients may not be infectious for weeks or months following resolution of their symptoms, the exact timeframe over which an individual can transmit the virus to others remains unclear. Additional studies are needed to better define the period of viral infectivity, so that we can prevent the spread of Covid-19 but allow recovered patients the opportunity to emerge from isolation as soon as it is safe to do so.

 

 

 

 

Essentia Health lays off 900 employees

https://www.beckershospitalreview.com/finance/essentia-health-lays-off-900-employees.html?utm_medium=email

Essentia Health to lay off 900 employees, including 178 workers in ...

Essentia Health is laying off 900 employees, about 6 percent of its workforce, to help offset severe financial damage caused by the COVID-19 pandemic.

The Duluth, Minn.-based health system is facing $100M in losses due to declines in patient volumes since the beginning of March. Essentia has taken several steps to help offset those losses, including placing 850 employees on administrative leave, reducing physician and executive compensation, eliminating certain leadership roles and limiting capital spending. The health system said it is now forced to permanently reduce its workforce.

“Despite our best efforts, the many cost-reduction measures we’ve taken over the last several weeks are not sufficient to preserve our mission and the health of the organization,” Essentia Health CEO David C. Herman, MD, said in a news release. “This has prompted our leadership team to carefully consider the most difficult decision we’ve faced since I joined Essentia five years ago and move forward with permanent layoffs.”

Essentia said it will continue to provide health insurance for noncontract employees affected by layoffs for the next three months. The health system said the 850 employees on administrative leave will be called back as needed. 

 

 

 

 

Cartoon – Are you Socially Distancing or in Denial?

Weekly Humorist