Hospital executives must address vulnerabilities in their supply chain operations, create safeguards for frontline clinical staffers, and preserve as much available capital as possible.
As executives look ahead to the next several months, health systems across the country are still combating the spread of coronavirus disease 2019 (COVID-19) while also preparing for a potential second surge of cases.
This problem is only further compounded by the beginning of flu season, which typically lasts from October until March, which could create another strain on an already challenged healthcare system.
To properly mitigate these issues, hospital executives must address vulnerabilities in their supply chain operations, create safeguards for frontline clinical staffers, and preserve as much available capital as possible.
In an interview with HealthLeaders, Hayley Hovious, president of the Nashville Health Care Council, discusses the top priorities on the minds of healthcare finance leaders as they head into the fall.
This transcript has been lightly edited for brevity and clarity.
HealthLeaders: In the conversations you've had with healthcare finance leaders in recent weeks, what have been the top issues they've identified heading into the fall? And what are some action items or strategies they've put into place to mitigate these problems?
Hovious: When you think about Nashville, you're thinking about a lot of large healthcare providers, [such as] Vanderbilt University Medical Center, and a number of these health systems that focus either on urban or rural areas.
I think one of the big things heading into the fall is what would a second wave look like? We've got schools coming back online in certain areas, [as well as] sports, and as the weather gets cold, you're going to be bringing people indoors. That's going to be another major issue. I think the flu is something [hospital leaders] are looking at and what the potential of flu season is going to do when it comes to [patient] volumes and being able to manage cases within their systems.
From an action items strategy standpoint, [leaders] have been looking at [the question] of, 'How are we going to pace the schedule of elective or scheduled surgeries?' They need to be continuing to do that. Early in the pandemic, by canceling all types of elective or scheduled surgeries, [hospitals] ran into issues from a lot of perspectives, but obviously, the fact that that means income drops substantially is huge for these finance executives.
As we look ahead, I think that CMS and HHS realize that was a huge problem on a lot of levels, so as [leaders] look ahead, I think it's going to be [important] to make sure that they're pacing to whatever this looks like. The other thing they'll probably be looking at are supply chains.
HL: On the topic of supply chain management, how have hospital executives been going about securing PPE and other necessary resources for their clinical staff?
Hovious: In the early days of this pandemic, there were some real concerns about being able to get PPE. It was just at the end of Chinese New Year, which helped a little bit because China had been laying away inventory because they would take a two-week break during this time period. [There's] this global pandemic, China itself is shutting down, everyone's needing the same equipment, and even if you had strong supply chains, I think most people were relying on China in a big way. When that was gone, there were some real concerns about the ability to use PPE.
The other thing that was happening during this period, is that early on in this pandemic and that kind of first wave in March, people were using such large amounts of PPE. Hospitals could count on the amount of PPE that they would go through on any given day, any given month. It was, relatively speaking, something that they could easily forecast. Some of our health systems were experiencing seven times [more] utilization of PPE that they had not anticipated, so suddenly what looks like it was probably six months of PPE is now two months of PPE.
To top it all off ... people would call and say, 'Hey, I have this guy and he's going to take his factory and he is going to start making N95 masks.' If you're a finance executive or COO, people are now knowing they're going to need this and having to separate the wheat from the chaff on where you can find this stuff was a huge issue.
As we look ahead, what I'm starting to hear from these executives is that they are looking at diversification of their supply chains. If you're not part of a purchasing group, if you're a [single] hospital, I would think that at this point in time, you're probably better off to make sure that you're part of a purchasing group that's thinking about these things.
[In regard] to diversification, it's not just resources from China, but sourcing from all over the globe. We're also starting to see some interesting potential partnerships and investments in supply chain domestically as well. It's usually a much higher-cost model, but with the acknowledgment that you might have some access to this higher-cost equipment. That is important to mitigate risk and you might just have to take that financial hit but that will help ultimately as we look ahead.
HL: Regarding hospital finances, where do provider organizations stand in terms of available liquidity and preparation for challenges that might mirror what we saw during the initial outbreak in the spring?
Hovious: Just like all organizations are these days, [hospitals] are looking at how they tighten their belts in different ways, and I think most people do think that the stimulus [funding] will run out after a certain amount of time. I think where they feel differently about where we are now is that even as we look ahead at different surge levels, we understand so much more about this virus and how it behaves and the fact that it is a hyper-regional virus in the U.S.
The biggest thing for most of these hospitals though is making certain that they are able to continue to do scheduled surgeries. I think that is something that the administration and hospitals realize and they're working hard to make sure that patients realize that hospitals are safe.
We've had several members [conduct] surveys around consumer sentiment about returning to their healthcare providers, and I think the sentiment has changed over time. Early on, people were leery of going back. I think now a lot of hospitals were starting to hit not necessarily the volumes that they had anticipated at the beginning of the year, but back up to 80% of those volumes.
Trying to keep those [volumes] steady over time, even in the midst of some of these outbreaks, has been key as well as how they continue their operations to balance the needs of a population that is sick from a pandemic while also balancing the needs of a population [with] the types of healthcare needs that we've always had.
HL: Is there any advice you would pass along to CFOs at health systems and hospitals as they head into what could be a grueling three-to-five month stretch of compounding viral outbreaks?
Hovious: [There's] this idea of collaboration that's come out of [the pandemic]; we're seeing it here in Nashville. I can tell you that beyond the fact that we have these health systems that have these global footprints, we have also our local health systems that have come together to collaborate.
The NHHC has been connecting and educating the industry for the last 25 years and that's something that we were doing at the height of this. We were [conducting] weekly COVID update team calls with about 150 different members, sharing information, and allowing people to talk about things that they were doing in their organizations, and how they were handling the pandemic in order to be able to share best practices with each other. Those were valuable, and I think they will continue to be valuable.
The leaders that I've spoken to who have developed a communications routine as we've gone remote, or even for workers that are in hospitals, have been absolutely critical during this time.
The more that you can make sure you're collaborating, make sure that you're connected to other executives, and understanding what's happening will not only benefit you from understanding what others might be doing that you could learn from, but it can also help if you need resources. There are opportunities to be able to get those resources occasionally from people that can be beneficial to you and your organization, and I think we've seen that over and over again.
Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.