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COVID-19 Continues to Undermine Hospitals' Performance Improvement, New Kaufman Hall Report Reveals

Analysis  |  By Carol Davis  
   October 18, 2021

'The pandemic has created a perfect storm of increasing expenses and decreasing revenues,' managing director says.

Bold, new thinking is needed in nearly every area of U.S. hospital and health systems' operations to counteract COVID-19's continued undermining of their performance improvement efforts, experts say.

Transformative change is needed in access to care; supply chain management; patient throughput, or the efficient flow of patients; workforce optimization and engagement; service line enhancement or rationalization; and revenue cycle, according to Kaufman Hall’s 2021 Healthcare Performance Improvement Report.

Labor and supply chain challenges are continuing to drive hospital and health system costs higher at the same time revenues are lower due to concerns over patient volume, the report found.

For example:

  • 100% of respondents said they faced staff burnout, difficulty filling vacancies, wage inflation, and high turnover rates.
  • 92% said it is difficult to attract and retain support staff
  • 88% have increased base salaries.
  • 65% are dealing with high turnover among clinical staff
  • 73% are dealing with wage inflation
  • 99% of survey respondents experienced challenges in supply procurement, including shortages of key items and significant price increases. 

Hospital leadership must rethink their approach to performance improvement, which will require revisiting the premise that not-for-profit hospitals and health systems can lower their costs while maintaining control over all aspects of operations, the report said. 

"The pandemic has created a perfect storm of increasing expenses and decreasing revenues," Lance Robinson, Kaufman Hall managing director who leads the firm's performance improvement practice, said in a press release.

"For most institutions, navigating today's financial and operational challenges and positioning for future growth requires radical change that is achieved only with new thinking and partnerships," he said. "Now more than ever, hospitals need to build relationships with physician groups, insurers, retailers, vendors, and other providers. It's increasingly apparent that most organizations don't have the resources they need to evolve on their own."

The report's other notable findings include:  

  • Volumes in many service lines remain well below pre-pandemic levels. While cardiology and cardiovascular services have seen the most significant rebound, just 44% of respondents in these services have seen a return to pre-pandemic levels. Pediatrics has been particularly hard hit; only 22% of respondents say pediatric volumes have recovered to pre-pandemic levels, and 16% say that pediatric volumes remain below 75% of pre-pandemic levels.
  • The pandemic is prompting potentially permanent changes to the workforce. Only 23% of respondents say they expect the ratio of administrative staff working remotely is to return to pre-pandemic levels, while 66% said that the number of staff working remotely will stay at the level experienced during the pandemic, while another 11% say they expect that the number to increase.  
  • More than half of respondents (52%) say the pandemic has driven their organization to adopt new processes, positions, or departments that will be continued going forward. 
  • Seventy-five percent of respondents have experienced adverse revenue cycle impacts during the pandemic, including a higher percentage of Medicaid patients and increased rates of insurance denial.

The annual Kaufman Hall State of Healthcare Performance Improvement Report analyzes the performance improvement and cost transformation efforts of hospitals and health systems. Results are based on survey responses from 73 hospital and health system leaders nationwide, including representatives from all regions of the country as well as from urban, suburban, and rural markets. 

Carol Davis is the Nursing Editor at HealthLeaders, an HCPro brand.

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