The coronavirus (COVID-19) outbreak is causing widespread concern and economic hardship for consumers, businesses and communities across the globe. We’ve prepared some general guidance on COVID-19: What US business leaders should know: crisis management and response, workforce, operations and supply chain, financial reporting, tax and trade, and strategy and brand.
The crisis raises a number of unique challenges. In PwC’s inaugural COVID-19 CFO Pulse Survey, finance leaders in the United States and Mexico shared their top concerns.
Here is our take on some issues that companies in the health industries may face. Additionally, we’ve identified six considerations for health companies through our detailed analysis.
The health industry is the front line of the US response to the SARS-CoV-2 virus that caused COVID-19, an infectious respiratory disease. As of March 20, more than 10,000 people were known to have died of COVID-19 around the world — just a few months after the apparent start of the outbreak.
Health providers must simultaneously continue operations while preparing their pandemic response and in some cases, responding to immediate health needs due to infection outbreaks.
Pharmaceutical and life science companies are spooling up production of test kits and research and development infrastructure for vaccine development.
Avoid overcounting available staff. This is especially true for healthcare organizations with staff who work for more than one hospital or clinic. In the event of a community-wide emergency, which facility are those employees obligated to staff?
According to the AHA, 55% of hospital executives surveyed reported gaps in specialty coverage in emergency departments that may be harder to fill in a crisis. Pharmaceutical and life science companies may need to ramp up production and increase or move workforce around to help fill gaps.
Previous crises such as the Ebola outbreak have resulted in hospital emergency departments becoming contaminated, resulting in facility “lockdowns” in which no one could enter or exit until an all-clear was declared. Sometimes, the lockdowns last for days.
Surge requirements run counter to common inventory management practices. Because of financial pressures, many hospitals manage their supplies on a just-in-time basis and measure their inventory cycles in terms of days or even hours.
Although many health providers stockpile some supplies, the practice is far from universal. Stockpiled supplies are often stored behind those used on a more routine basis, and because they are rarely accessed, staff members may not know they are there — or how to use them.
There are already responses to potential shortages of critical supplies, equipment and drugs, which in some cases means limiting nonessential surgeries or other treatments, validating stockpiles and looking for alternate suppliers.
Revenue sources and payment rules may be in flux during the crisis. Federal rules around cost sharing for tests and preventative measures can change, and private insurance companies and employers may change benefits in a way that may ultimately affect revenue.
As pharmaceutical and life science companies make changes to supply chain and sourcing, revenue recognition issues may come into play.
Tax perspectives for health companies may be a follow-on issue to address after more immediate pandemic issues.
However, there are multiple potential issues for pharmaceutical and life science companies working in a global ecosystem, as well as for providers and payers that have to move members of their workforce to remote sites.
The pandemic may illuminate the need to consider new business models that are more flexible and resilient.
Health industry companies also may focus on these other issues.
Health companies are evaluating new policy and business decisions to respond to the unique needs of a pandemic. Business rules around insurance coverage and employee benefits may need to be updated temporarily to help support better health and safety.
Hospitals and health systems will need to make operational and staffing changes based on real-time knowledge of workforce and supply limitations.
Pharmaceutical and life science companies may consider changes to research and development strategies as new federal incentives for vaccine development and clinical trials emerge.
Health companies may come out of this pandemic stronger than ever. For years, health organizations have been moving to a more digitally enabled and virtual environment. This crisis may accelerate those efforts and ultimately make them more comprehensive. For example, the ability to provide nonclinical remote workforce capabilities has new urgency. Health providers that have worked in fits and starts on streamlining delivery systems around the creation of virtual health capacity through telehealth, remote monitoring and virtual clinical trials may now make more sustained efforts. The result may be the creation of a comprehensive virtual capacity that results in a more resilient system. Lastly, it has become clear that moving healthcare to the home is not just good for the consumer experience, but, in case of pandemics or even natural disasters, it may be key to keeping people healthy.
Some companies may also use this opportunity to shore up their core processes. They may look at implementing new consumer segmentation and behavior tools, reviewing vendor capabilities and alternative sourcing, and using dynamic and resilient strategy scenario-modeling capabilities.
US Health Industries Leader, PwC US
US Pharmaceutical and Life Sciences Leader, PwC US
US Health Services Leader, PwC US