COVID-19 still undermining performance improvement efforts, report finds

Despite efforts by hospitals and health systems, the COVID-19 pandemic is still damaging their improvement efforts, showing a need for major changes in operations, according to Kaufman Hall's 2021 Healthcare Performance Improvement Report Oct. 18.

"The pandemic has created a perfect storm of increasing expenses and decreasing revenues," said Kaufman Hall Managing Director Lance Robinson. "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. 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 survey included responses from 73 hospital and health system leaders, including those from urban, suburban and rural areas.

Here are six things to know:

1. Labor and supply chain challenges are making costs higher and revenues lower, with reduced patient volume also contributing to decreased revenue. All respondents reported issues with staff burnout, filling vacancies, wage inflation and high turnover. Ninety-two percent are struggling to recruit and retain staff and about 90 percent have increased base salaries. Almost two-thirds have had high turnover with clinical staff and 73 percent have experienced wage inflation. Additionally, 99 percent of respondents are experiencing supply chain problems, with shortages of key items and price increases.

2. Service line volumes are still below pre-pandemic levels. Cardiology and cardiovascular services had the most improvements, but only 44 percent of respondents said these services are at pre-pandemic levels.

3. COVID-19 is forcing permanent changes to the workforce, with only 23 percent of respondents saying the ratio of administrative staff working remotely will return to pre-pandemic levels. Sixty-six percent said the ratio will stay the same as during the pandemic and 11 percent said the ratio will increase.

4. Fifty-two percent said they've had to change processes, positions or departments and plan to continue doing so.

5. Seventy-five percent have experienced poor revenue cycle effects, with more Medicaid patients and higher rates of insurance denial.

6. Experts say innovative changes are needed in every area of operations to improve performance. Hospitals and health systems may also have to consider that being a nonprofit could reduce costs and provide more control over operations.


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