Becker's Hospital Review

10 CFO / FINANCE Hospitals aren't over the pandemic By Laura Dyrda M ore than four years have passed since COVID-19 first emerged in the United States, triggering a federal public health emergency that persisted until May 11, 2023. Yet, many hospitals are still grappling with the lingering effects of the pandemic. e financial impact has been severe, with many hospitals facing devastating losses. Although average margins have shown some improvement in recent months, they remain significantly lower than pre-pandemic levels. According to Kaufman Hall, 40% of U.S. hospitals are still operating at a loss, and the disparity between the best and worst-performing hospitals is growing. In its June "National Hospital Flash Report," the ratings firm revealed that top-performing hospitals reported margins around 30%, while the lowest performers were at -16.1%. "ere may be a sense that, post-pandemic financial pressures are easing up but that really is not the case," said Susan Turney, CEO of Marshfield (Wis.) Clinic Health System. "is is particularly true for rural-based providers who are still dealing with the same structural and systemic impediments that have thrown rural healthcare into crisis for nearly the past 20 years." Lyndon Edwards, COO of Loma Linda (Calif.) University Medical Group, sees similar assumptions about the financial stability of rural hospitals within its network. Hospitals are still grappling with rising costs, and the thin margins make it challenging to invest in innovative technologies and patient care initiatives. "e long term impacts of the pandemic, such as higher acuity patient cases and increased mental health needs have increased strain on providers," said Mr. Edwards. "Ongoing support and innovative financial models are essential to ensure healthcare systems can provide the vitality that our communities need." Even urban medical centers and academic health systems are still feeling the strain. According to Jeff Gautney, CIO of Rush University System for Health in Chicago, the country is heading toward a situation where most hospitals will be unable to fund essential capital needs through their operations unless there's a significant financial turnaround. "e biggest misconception [of 2024] is that we are all over COVID," said Jeff Gautney, CIO of Rush University System for Health in Chicago. "at will forever be a mark in the history of every organization, like before 9/11 and aer 9/11. Our workforce, how we see our patients, how our industry is perceived and rusted, and how sustainable our mission is will never be the same." Healthcare workers le the field in droves during the pandemic, and hospitals signed pricey contracts with travel nurse agencies to fill gaps in care. Now, many health systems aim to hire a more stable full time staff, but it hasn't been easy. Labor costs continue to rise and competition for top talent is heating up. Pam Teufel, senior vice president and chief human resources officer for Main Line Health in Radnor, Pa., also said the biggest misconception this year is that "things are back to normal" aer the case volume and severity of COVID-19 waned. "ings will never go back to pre-2020 normal," she said. "Specifically around the people side of the business. Talent is still scarce, expensive and doesn't stay as long as they used to. New employees have high expectations for processes to be smooth, IT systems to be as easy to navigate as Amazon, and for their manager to care about them as an individual and tailor work to their strengths." Workers are also demanding more flexibility in their schedules than in the past with work from home, flexible hours and work-life balance. Health systems are developing innovative ways to upskill their teams and meet the expectations for more flexibility while still serving patients with high quality of care. "e health systems that learn to navigate [workplace flexibility] will win in the engagement war and hit their objectives," said Ms. Teufel. Another lingering trend from the pandemic is the faster pace of change. Health systems embraced nimble transformation during the pandemic to continue providing safe care for patients despite unprecedented challenges. Many hospitals stood up testing and vaccine clinics nearly overnight, expanded capacity and launched virtual care functions to better serve their communities. Rochester, Minn.-based Mayo Clinic executives said the pandemic accelerated its digital transformation by 10 years out of necessity, and other systems felt a similar shi. "ere may be the impression that the pace of change has slowed or evened out post-pandemic but that is not what we are seeing," said Ms. Turney. "If anything, the pandemic accelerated the pace and opportunities for disruption." Artificial intelligence fueled an even faster pace of change in the last 18 months as health systems grappled with the most valuable use cases. AI has shown clear beneficial results for boosting the workforce and automating administrative functions. e technology can also support clinicians stressed from COVID-19. "Now that the pandemic has settled out, there's an expectation that we can get back to business as usual," said Eric Katz, MD, physician executive of medical specialties and graduate medical education at Banner Medical Group in Phoenix. "Yet we have had radical changes in our workforce and supply chain, the finances of healthcare have continued to morph, and we are looking at an unprecedented disruption from AI and biotechnology." e most successful health systems will adapt to the changing landscape and adjust to disruption quickly, while still being a high quality care provider and great place to work, said Dr. Katz. "It is quite a challenge, and it is a challenge that motivates," Dr. Katz said. n "e health systems that learn to navigate [workplace flexibility] will win in the engagement war and hit their objectives." — Pam Teufel

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