5 financial trends for CIOs to know during the pandemic

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Hospital CIOs have many factors to consider as they ensure safety and security of their organizations during the pandemic, as well as keep an eye on the future.

In some cases, projects are put on hold indefinitely as teams move to remote work and shift focus to support frontline clinicians. In other cases, hospitals are moving forward with their current projects but the financial hit from canceling or postponing elective procedures looms large for future IT spend.

Here are five key financial trends for health IT leaders:

1. Hospitals are beginning to release financial reports for the first quarter, citing the COVID-19 pandemic for substantial losses. Southfield, Mich.-based Beaumont Health reported a $278.4 million net loss in the first quarter and said operating revenue fell $1.07 billion. The health system plans to defer all nonessential capital expenditures and fine-tune staffing levels as well as cut other expenses. Now more than ever, CIOs looking for practical cost-cutting measures and turning attention to business analytics as they examine what technology projects are vital to the survival of their institutions through the pandemic.

CIO of CGH Health in Sterling, Ill., Randy Davis said it remains unclear how the hospital's finances will change plans over the next year, but for now he is moving forward with ongoing initiatives. "For projects already in the pipeline, our focus has not changed," he said. "Some projects requiring clinical interaction and feedback may slow a bit as everyone adjusts to a different type of interaction, largely video, but needed updates and infrastructure changes march on. The only real limitation will be capital budgeting restrictions brought on by the financial ramifications of [the pandemic]."

2. The top priorities of many hospital executives in the states hardest hit by COVID-19 has been the transition to telehealth and remote work. The transition presents a technology challenge to ensure lines for remote work are secure; Zoom and Microsoft have both reported hacks since the pandemic began and the account information for more than 153,000 Zoom users is now for sale on the dark web.

"COVID-19 is going to have a long term effect on how healthcare organizations look at their costs, how they shift delivery of care away from medical centers and how they pivot to virtual moving forward," said Seattle Children's Senior Vice President and CIO Zafar Chaudry, MD. "Healthcare systems must re-evaluate all aspects of how they deliver care and make sustainable plans to put cost improvement programs into place throughout all clinical and non-clinical areas. Healthcare systems should plan to reduce back office costs, including IT, human resources and revenue cycle also."

3. Rural hospitals and financially strapped healthcare providers continue to close, even as the demand for healthcare space increases during the pandemic. The National Rural Health Association CEO projected that hospital closures would escalate without more federal relief, as almost half were in the red prior to the pandemic. The hardest-hit rural counties are in Colorado and Idaho, with others also on the rise. The federal government has passed funding for hospitals and healthcare providers, but the first round of grants were distributed based on the historical share of Medicare revenue and the second will focus on providers "particularly impacted by the COVID-19 outbreak" as well as rural providers.

4. Hospitals continue to furlough workers as their financial situation changes. There are at least 140 hospitals and health systems that recently announced furloughs or layoffs of employees, focused on those that don't provide direct patient care. Most recently, Penn Highlands Healthcare in DuBois, Pa., furloughed or laid off 600 employees after revenue dipped 40 percent due to elective procedure suspension and San Francisco-based Dignity Health furloughed a portion of its nonclinical staff. In some cases, IT teams may dwindle, but IT is considered essential to ensure hospitals effectively coordinate needed care and keep the systems safe from cyberattacks.

5. CMS is continuing to release proposed payment updates during the pandemic, most recently focused on skilled nursing facility and hospice payment. The agency proposed increasing SNF payment rates 2.3 percent in 2021 and upping hospice payments 2.6 percent next year. It also aims to boost inpatient psychiatric facility payments by 2.4 percent. In all, CMS estimates the rate boosts will increase payments by more than $1 billion to hospitals in 2021.

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