Three Cost Centers in Planning for a Pandemic

Is your organization better prepared for a pandemic having experienced the swine flu? The H1N1 flu hasn't hit as hard as initially was expected, but it's not over yet. The CDC estimates there are close to 6,800 cases in the U.S. as of last week. Even worse is the possibility of it circling back in a mutated form six months from now, say hospital leaders. I spoke recently to Bruce Cadwallender, director of safety and emergency management for the University of Michigan Hospitals and Health Centers, about current planning and lessons learned from the H1N1 flu, which have ramifications for those focused on the balance sheet side of the business.

With the threat of the swine flu very real, leaders at Ann Arbor-based UMHHC—which is part of the larger University of Michigan Health System and includes 913 licensed beds, three hospitals and an ambulatory care services network—were forced to solidify strategic plans for mass care demand pretty quickly last month.

Cadwallender says UMHHC, like a lot of other organizations, began planning for a pandemic in earnest back in 2005 when the avian flu was becoming a worldwide threat. Because the system is both an academic medical center and a large ambulatory network, Cadwallender says planning was broad in scope and focused on ways to expand inpatient capacity while dealing with a potential surge in its ambulatory care network. While the threat of the swine flu has diminished somewhat, planning is still full throttle at UMHHC and leaders there are already looking at lessons learned so that they are prepared for an even bigger threat.

Check out these three planning areas UMHHC addressed in its most recent round of pandemic planning.

Labor
Labor is one of the bigger unknowns in terms of planning and costs for a pandemic. How do you adequately staff up and, more importantly, how do you keep staff on duty who may need to be at home, due to child care or any other number of reasons, including illness? "There is a chess game," that happens, says Cadwallender, noting that the reality is organizations are going to probably have more patients and fewer staff. "In this most recent H1N1 event, public health is calling for the closing of schools and day care centers so that throws another curve at your staffing because you may have single parents or two-income parents where one person may have to stay home."

Moreover, being part of a university, policies may call for staff to stay home because there is a public order banning large gatherings, says Cadwallender. "So now you are faced with the question of 'okay, they are staying home, but are they getting paid and if they are getting compensated then what about my folks who have this duty to come in to work? Do we have to augment their pay?' We never got any good answers nailed down to those questions," he acknowledges.

Cadwallender says other labor costs came up during the intense planning for the swine flu, including time leaders and staff spent away from regular duties. "Our lead physician in infectious diseases had to rearrange clinic schedules and reschedule patients and he will be seeing some changes in his revenue over this whole thing," he says.

Cadwallender adds that while leaders have determined that they can reduce the pace, work needs to continue so that the system is ready with executable plans. "It is a hard thing in today's financial environment to say 'yeah I am going to take people offline on patient care and do routine duties for contingency planning for something that may or may not happen, but it is essential for business continuity to invest in this type of thing."

Inpatient demand
Creating additional inpatient capacity or repurposing beds is another cost for which organizations must plan in the case of a pandemic. Cadwallender says at one point H1N1 looked as if it would cause a surge on the system's ambulatory care network as opposed to a lot of hospitalization. This shifted the focus to managing the ambulatory care system he says. "Our most extreme plans call for concentrating resources. If we have falling staffing and huge patient demand, we are looking at potentially closing some of the smaller locations and concentrating our staff in some of our bigger ones."

In dealing with the latest threat of the swine flu, the University of Michigan Hospitals and Health Centers also had to determine how to expand its respiratory isolation rooms. Cadwallender says in the case of over-capacity, plans also call for "cohorting" patients who need to be isolated. In addition to determining where to place those patients, UMHHC had to ensure that it could adequately staff up and provide them with specialty care providers. "Once again it becomes a chess game," says Cadwallender. "We spent the last couple of weeks meeting quite frequently to talk about very specific ideas about what we would do if it came to that and fortunately in the meantime things have eased up."

Supplies
How many supplies do you keep on hand and when do you buy them are other questions that come up in planning. UMHHC has been stockpiling certain supplies, something that flies in the face of today's hospital policies of just-in-time delivery. One issue for those with an eye on the budget is that a stockpile is well, just that. It is huge and there is a good chance that it will not be used before it has to be replaced. Organizations like UMHHC also may have to store supplies at another location because of limited on-site storage.

"We thought we had plenty of masks but now we have decided we need more and that concept of stockpiling things bumps up against our finance and procurement folks," says Cadwallender, adding that the system would like to increase its 20,000 masks to 30,000. "There is a real potential that this thing could come back in fall. If the virus mutates it may not be responsive to antivirals like it was this time." In addition to respiratory masks, UMHHC has stockpiled pharmaceuticals and bottled water.

Purchasing in advance ensures supplies will be available when you need them and avoids having to face rationing. Cadwallender says that as the system tried to purchase additional masks for the swine flu it was told by its supplier that a federal emergency had been declared and that the government would dictate where supplies went. "That was quite a revelation," he says.

While each crisis will have its own set of planning requirements, the swine flu has perhaps forced many organizations to provide some finality to their pandemic or mass care plans. At the very least the experience has offered them a more on-target assessment of strengths and weaknesses. In the case of UMHHC, questions around labor and inpatient planning still need to be worked out.