COVID-19 has put immense pressure on hospitals. Labor shortages, supply chain and logistical challenges and declining reimbursements have put unprecedented financial strain on health systems.
At a November workshop at the Becker's 10th Annual CEO + CFO Roundtable, sponsored by Quest Diagnostics, Mike Lukas, vice president of health system, and Daren Alix, executive director of sales, health systems, both of Quest Diagnostics, lead a discussion on vast impact COVID-19 has had on healthcare and how strategic partnerships can help relieve the pressure.
Three key takeaways were:
- COVID-19 has strained most segments of healthcare; staffing is a particularly acute pain point. From staffing to IT and connectivity shortages to declining reimbursement and other capital challenges, since COVID-19 struck almost three years ago, hospitals have faced the toughest conditions in modern history. Roundtable participants agreed that those pressures aren't easing.
"It's gotten to where an employee can exit their position to become a traveler and make two times what they make today, noted Mr. Lukas, in turn quoting one participant from a 25-bed critical access hospital who said, "We're barely able to keep up with our infrastructure and facilities, let alone staffing. We can't afford to bring people in to do the work at these outrageous costs." - The revenue strain has pushed hospitals into survival mode, away from focusing on strategic initiatives. "Being able to pivot into alternative sites of care and alternative businesses to build a healthy ecosystem is one of the most critical things we have to pursue one participant said.” "We're struggling against a tide that many health systems and hospitals will not survive, unless there is some significant and material change.
- Strategic partners can help hospitals by providing expertise and focusing on common goals that are beneficial to both parties and to the patient. While many know of Quest as a reference laboratory that has relationships with more than half of all U.S. hospitals, "these relationships go far beyond the laboratory," Mr. Alix said. "We've been able to help providers mitigate inflationary pressures, we've helped them with labor, and we've helped them reduce their supply chain spend, because of our economies of scale."
Mr. Alix distinguished between a vendor and strategic partner. Vendors have relationships that are transactional and short-term in nature, and only provide what is requested. In contrast, "Strategic partners focus more on collaboration and on supporting our business objectives," he said. Strategic partners understand their partner's mission and align objectives, focus on strategy and finding the right solutions, customize programs for their partners and base the relationship not on transactions, but on long-term success. "Strategic partnerships are based on long-term success, not quick wins," he said. Benefits of strategic partnership include clinical excellence, operational efficiency, and financial resilience. Quest Diagnostics aspires to be a true strategic partner.
For example, Quest partnered with PeaceHealth to optimize this nonprofit healthcare system's lab operations across its hospitals. "A lot of times we see labs not running as a network," Mr. Lukas said. "They have different processes. We standardized absolutely everything and drove a lot of efficiency. We probably drove, on the inpatient-outpatient setting, about 20 percent of the cost out."
While there's no quick fix for the financial strains on hospitals, the right partners can help streamline operations to maximize resources and ease the burden on health systems.