Researchers from Boston-based Harvard Business School and Durham, N.C.-based Duke University shared three ways hospitals can be better prepared for a future pandemic in a June 10 report published in Harvard Business Review.
The COVID-19 pandemic spotlighted the inefficiencies of hospitals' financial models. Even as hospitals were filled to capacity, many hospitals encountered severe revenue losses. There is no effective model where demand increases, yet revenue plummets, the authors said.
The U.S. financial model relies on costly, highly reimbursed services, such as joint replacements, cardiac procedures and other elective services. COVID-19 cases used a lot of hospitals' resources, but they offered lower profit margins than lucrative procedures, which were postponed at the start of the pandemic. The authors suggest that changes to hospitals' financial models can best position hospitals for a future crisis.
Three ways hospitals can better prepare for the next pandemic:
- Expand into new services.
Although it is difficult to increase the number of beds in a hospital, hospitals can increase patient services, such as hospital-at-home. Many organizations should be capable of providing care remotely with monitors, sensors and clinicians who can make house calls. Humana and Phillips have already invested massive amounts in the hospital-at-home field. - Share resources with struggling hospitals.
Banks compete with each other, but also lend to each other when one is facing a liquidity crunch. Hospitals can work in similar ways with mutual referral systems and sharing equipment when there are shortages. Instead of hoarding supplies like personal protective equipment and ventilators, hospitals should have shared their supplies with hospitals in need. - Encourage plans for surges in demand.
Payers can influence hospitals to have a well-developed plan for when there are surges in demand and could advertise these hospitals to encourage this behavior. Patients who need consistent access to care, such as older adults, may be attracted to these facilities because they know they will still have access to services when a crisis strikes.