Quick Q&A on how health systems can restart smartly as the nation reopens

June 04, 2020

Before the pandemic, many providers already were operating on thin margins, with enough cash and patient receivables to cover only three to four months of operations, according to an analysis of hospital finances by PwC’s Health Research Institute (HRI).

Deferred procedures and visits have led to depleted revenues and the payer mix is shifting because of swelling unemployment; fixed costs, however, remain static. Many solutions that worked in the past—rethinking service mix, bumping up capacity—are ineffective in the COVID-19 period. The American Hospital Association estimates that hospital losses between March 1 and June 30 of this year will total $202.6 billion.

HRI spoke with PwC partners Nikki Parham, John Argenziano and Alex Marsden about ways in which health systems can engage patients again and bring back lost revenue as the country reopens.

PwC Health Research Institute (HRI)

Describe the current financial circumstances of many health systems and how we got here.

Nikki Parham, PwC partner

Generally, the liquidity situation varies depending on the health system. There are health systems across the country that operate with limited days cash on hand, so for them, the situation is pretty dire. Weeks of limited elective and ambulatory services have created revenue and cash flow challenges, and the road to recovery is going to be really challenging for many.

HRI: How is consumer sentiment playing into reopening scenarios?

Alex Marsden, PwC partner

I think what we’re seeing is patients who are already in a care pathway are coming back at disproportionately greater rates than new patients are establishing new care pathways. Patients that are already in a care pathway will hopefully keep health systems afloat. However, the impact of new patients failing to come in for the past few months may well result in a second decline in electives after the initial backlog is done.

John Argenziano, PwC partner

Patients are avoiding going back in right now. I think that’s what it comes down to. On the surgical side, there are a lot of surgeries that have to happen, and the surgeons themselves are aggressively going out and trying to get them back into the OR. But on the ambulatory and clinician side, you have to overcome a lot of barriers, and one is just pure discomfort. From a safety perspective, COVID is impacting patients’ willingness to enter the healthcare space due to fear around cleaning measures.

Alex Marsden: This is where virtual health is starting to come into play, because those barriers don’t exist. Patients don’t have to feel discomfort going back into a physician’s office. But I think those are some of the bigger questions that we’re getting from our providers. They don’t understand what the proper engagement strategies are to draw these new patients back into the medical group.

Nikki Parham: The leadership and operations teams are trying to get patients back to historic ways of doing things, as in getting patients to come in face to face. They need to focus on demand generation: not only getting established patients back in, but acquiring new patients. This increases the need for customer relationship management solutions, as well as scaling virtual health strategies. It will be a very different experience taking a patient from initial consult to the OR solely through virtual measures.

This time during COVID may force health systems to be more strategic and proactive in maintaining patient flow and capacity, as well as drawing in new patients. Providers will need to begin reaching out to patients, make scheduling much easier, and allow for flexibility and capacity to take on patients.

HRI: What steps can health systems take to recruit back patients in a post-COVID environment?

Alex Marsden: Historically, we have ample data from health systems showing they’ve done a poor job managing demand. They lose patients in many different ways, but disproportionately patients are lost before they’ve started care journeys. There’s often a time association with patient abandonment. The longer we make a patient wait, the less likely they are to actually establish relationships with us.

One of the things we’re seeing is that health systems that are failing to adjust to the new reality are still losing those patients. New patients will schedule but still have to wait two to four weeks out, because health systems are not flexible enough to take in patients on the same day or same week with specialists. Referrals are still taking too long to be converted. While new patients used to abandon health systems with lag times of three to four weeks, today they are abandoning in three to four days because some other health system is offering same-day or virtual care access. Scheduling has never been easy, but during this time it is crucial that scheduling become easier and more accessible.

John Argenziano: Health systems need to assess how to individualize the communication mechanisms to target specific groups of patients. These systems do not have the technology and automation on a large enough scale to implement individualized communication to draw patients into the practice. From a tech perspective, the tools simply are not there.

Nikki Parham: For chronic illness patients, how are health providers maintaining data for these patients over time? This is crucial to consider in order to track the health and progress of these patients. Many providers just wait for the patients to schedule and use prescription refills as a forcing mechanism.

Providers are going to have to become salespeople and demand-creators more than they have ever had to be. They’re going to have to network with other providers. They’re going to have to figure out what is their alignment to other health systems or to those other channels that may be getting patients to them. It’s just not the typical model they’ve been operating their business under. It truly is a new operating model.

Alex Marsden: This time during COVID may force health systems to be more strategic and proactive in maintaining patient flow and capacity, as well as drawing in new patients. Providers will need to begin reaching out to patients, make scheduling much easier, and allow for flexibility and capacity to take on patients.

New patients may feel more comfortable with virtual care now, but rather than thinking about the initial return of reimbursement on care, think more long term about the patient’s health needs. Health systems will need to create demand pathways and strategically leverage data. For health systems, the era of COVID has been majorly disruptive, but we also need to look into changing the way things have always been done.

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Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Crystal Yednak

Senior Manager, Health Research Institute, PwC US

Erin McCallister

Senior Manager, Health Research Institute, PwC US

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