Nine-in-ten CFOs plan to meet cost reduction targets in less than 12 months, according to a new survey.
Citing the impact of the ongoing coronavirus disease 2019 (COVID-19) pandemic, nearly half of healthcare CFOs plan to cut expenses by more than 10%, according to a survey released by The Chartis Group Thursday morning.
Another 40% of CFOs expect that it will take up to 12 months to return to pre-COVID volumes, though they also acknowledge that increased volumes alone will not be enough to return to prior liquidity levels.
Notably, nine-in-ten CFOs plan to meet cost reduction targets in less than 12 months, according to the survey.
Similarly, 90% of respondents expressed concern about having sufficient resource bandwidth to implement effective expense control measures.
"Hospital executives must reduce costs to offset the reduction in elective procedures and patient visits due to COVID-19," Pam Damsky, a director at The Chartis Group, said in a statement. "Given the long-term effect of COVID-19 on patient volume remains unknown, and new financial pressures have emerged, many hospitals will need to make tough decisions, including those that have previously been rejected as unpopular or politically sensitive, such as right-sizing management structures, addressing underperforming assets and restructuring the physician enterprise."
The survey highlighted cost reduction strategies already underway by hospital finance leaders, including two-thirds of respondents who said they were renegotiating contracts with vendors, over 60% who have reduced staff, and nearly 50% of whom have furloughed workers.
On the revenue side of the margin equation, almost 80% of hospitals are considering improvement strategies to optimize revenue cycle operations, nearly three-quarters are reexamining their supply chain, and half are focusing on improving ambulatory access.
The Chartis Group's survey was released about a month after a Black Book Research survey found that only 12% of healthcare CFOs plan to cut spending on digital transformation efforts in the face of the COVID-19 pandemic.
The survey indicated that shrinking margins and the lack of financial analytic tools has hampered struggling hospitals and "put focus on the immediate technology needs of chief financial officers."
Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.