Pandemic coronavirus wrecking ball

The Financial Impacts of COVID-19

The financial impacts of COVID-19 are unprecedented, crippling the operations of most healthcare organizations and leaving leaders to answer serious questions about strategies for stabilization. One of the quickest, most effective solutions is through workforce optimization. Improving performance by enhancing productivity and implementing processes to control labor costs will help hospitals and health systems to rebound in a systematic way that not only meets patient demand but ensures the right resources are in place to provide the best care.

These performance improvement strategies and associated opportunities include:

  • Rapid Operational Assessment to Determine Current Performance: staffing needs in all areas should be based on the increase/decrease volume modeling and benchmark evaluation
    • Workforce Management: 2-8% of Net Patient Revenue
    • A span of Control Realignment and Streamlining Management Structure:
      • 5-20% reduction in management positions
  • Opportunity Identification and Work Plans: action planning and necessary labor adjustments during changing volume scenarios
    • Consolidation of Corporate Services and Structure: 5-10% of system cost expense
    • Access and Throughput: 2-6% Net Inpatient Revenue
    • Care Models: 2-8% of inpatient expense
    • Perioperative: 5-10% improvement in volume and revenue
  • Physician Practice and Clinic Realignment: opportunities to improve practice management, patient access and scheduling, provider productivity and compensation and non-provider staffing
    • Restructure provider practices and clinics: 10-20% of expenses
    • Strategic reevaluation and reorganization of clinical programs: 2-20% of expenses

In addition, non-labor expenses, including medical and surgical supplies, pharmaceuticals, purchased services and other expenses associated with the delivery of care across the organization should also be evaluated. Opportunities in these areas are as follows:

  • Informatics and Technology: 10-20% reduction in IT staff expense
  • Revenue cycle: 1-5% Operating Margin
  • Supply Chain: 3-8% supply chain expense
  • Managed Contracts: 5-20% reduction in expenses

Healthcare organizations now have the unique opportunity to drive meaningful change and transform operations through a complete evaluation of existing services and delivery models. By implementing the appropriate structures and processes to efficiently and effectively provide care, hospitals and health systems can navigate financial recovery and continue to support the needs of the communities served.

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