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How COVID-19 is impacting hospital operations

How can Hospitals Manage the Financial Impact of COVID-19 Pandemic?

How is healthcare reacting?

Healthcare organizations are responding with a heightened sense of urgency. At the time of this writing, many are experiencing peak effect of the infection in their communities, while many more are bracing for impact. Preparing for the COVID-19 pandemic to reach a community, while caring for their patients and staff is a monumental task.

However, surviving the COVID-19 crisis for hospitals and health systems will not depend solely on the quality of clinical care. Understanding the financial impact of public health emergencies, like the COVID-19 pandemic, is imperative. This article discusses the key facets of financial operations healthcare leaders need to think about now.

How does this information impact the financial status of a healthcare organization?

This is a complicated question because there are many unknown variables. Simply put, however, when the peak of the COVID-19 pandemic has passed, hospitals and health systems will face negative margins.

Quantifying the impact of COVID-19 on your organization is imperative.

However, surviving the COVID-19 crisis for hospitals and health systems will not depend solely on the quality of clinical care. Understanding the financial impact of public health emergencies, like the COVID-19 pandemic, is imperative. This article discusses the key facets of financial operations healthcare leaders need to think about now.

What are the most important considerations?

It is important to first categorize your patient population by medical condition, and relative volumes, as well as to distinguish between elective (E) and non-elective (non-E) procedures/services for each category. For each of the new groupings of medical condition (E and non-E), it is necessary to understand expected volume case-mix variance through reviewing historical data.

Additionally, you must analyze the variance of relative expenses – direct vs indirect – to understand what could potentially flex down and up.

Lastly, from a resource consumption and cost perspective, consider the skills and training of your employees. Can clinical staff that traditionally manage elective procedures provide patient care in other areas?

How is COVID-19 impacting hospital operations?*

Here’s what we know now

  • Patient Demographics: Elective admissions, both surgical and medical, are being postponed. Approximately 25 to 35% of all hospitalized patients with COVID-19 are requiring treatment in an ICU setting and ventilator support. This parameter is difficult to quantify because it is related to the admission criteria; areas with high COVID-19 infection rates will have an increased percentage.
  • Emergency Departments: EDs represent the first point of contact for all patients that have NOT tested positive for COVID-19. If a patient has previously tested positive, and is currently in quarantine at home, emergency responders are bypassing the ED for direct patient admission.
  • ALOS: the average length of stay (ALOS) for COVID-19 patients that do not require ventilatory support varies, with reports noting 8-10 days if no complications develop. COVID-19 patients in the ICU requiring ventilators have a minimum stay of 15 days.
  • Supplies: Personal Protective Equipment (PPE) and disinfectants, like hand sanitizer, are scarce and in high demand. The WHO and in the U.S., the CDC, have been rapidly ammending recommendations for healthcare professionals caring for COVID-19 as new information about the virus and global availability of PPE is available.
  • Drugs: Pharmacotherapy for COVID-19 continues to evolve. Researchers and doctors continue to pursue an effective regimen.

(*) This information was collected directly from hospital providers and the sole purpose of this data is to provide insights on the potential financial impact (cost/revenue) of COVID-19.