An Operational Assessment Paves the Path to Sustainability as COVID-19 Relief Funds are Depleted
It’s clear that hospitals’ operations were disrupted and their finances threatened by the ongoing COVID-19 crisis. What wasn’t fully understood until recently is just how critical government funding was for their survival.
Despite substantial operating margin declines during the first year of the pandemic, U.S. hospitals by and large stayed on track financially thanks to billions in government relief funds, according to a study published last month in JAMA Health Forum. In fact, data analysis indicates that government subsidies not only stemmed operational losses but also, in general, significantly improved overall financial standing, especially for rural and community hospitals.
Hospitals are shifting back to normal operations, but with government relief funds dwindling, the cost of treating COVID-19 patients, many of whom are uninsured, still poses a hardship. The American Hospital Association requested additional funding from Congress in March, but with the request pending, hospitals must plan for an uncertain future. That means taking stock of their current situation and identifying areas for improvement. A comprehensive operational assessment identifies where hospitals stand and how they can enhance their performance in order to ride out COVID-19 surges and optimize operations for long-term sustainability.
What an Operational Assessment Entails
A hospital operational assessment involves reviewing and assessing several key areas to identify opportunities to improve financial performance. These areas include:
- Strategy. Financial difficulties obviously affect growth, but even hospitals in survival mode need a business plan.
- Operations. Hospital operations tend to prioritize quality care, and rightly so, but with mounting pressure regarding healthcare costs, an operational assessment can uncover ways to improve quality even while shaving expenses.
- Staffing. A worsening labor shortage and contract labor continue to drive up costs in this area, but a productivity evaluation can help keep controllable costs in check.
- Supply chain. Second only to labor costs, supply spend is a significant expense but also an area where optimization yields substantial savings.
- Revenue cycle. This is a complex function, and addressing snags in the process can yield significant savings.
- Finance. An internal audit can uncover any leaks in revenue collection and expense management.
- Medical Staff Composition. A clear understanding of potential gaps in physician specialty coverage can increase hospital utilization.
- Facility leadership. A leadership assessment considers several factors, including strategic direction, resource allocation, succession planning and skill-set gaps.
- Information technology. When it comes to information system review, hospital data security and patient privacy are at stake. An assessment can help guide decisions about expenditures.
CHC Consulting’s operational assessments start with a thorough data and document analysis comprising these areas, along with in-depth interviews with people whose historical knowledge and perceptions of the hospital provide context for the data points. We determine not only where the hospital stands in areas critical to its overall performance, but also how it got there.
Most importantly, these insights serve as the basis for a performance enhancement plan specific to that hospital and its objectives, vulnerabilities, culture, and surrounding community. CHC Consulting collaborates with hospital management to develop the plan, which provides realistic and specific recommendations for operational improvements, including their financial impact.
Guidance in Uncertain Times
The operational assessment process produces a report with its findings along with the performance enhancement plan. Some hospitals choose to implement the plan on their own, and others retain CHC Consulting in a consulting or hospital management role to help guide the process and provide ongoing support. Either way, hospitals that undergo an operational assessment are better equipped to withstand financial challenges that lie ahead.
COVID-19 relief funds proved to be a lifeline that kept hospitals afloat, but now pre-pandemic financial problems are resurfacing. Taking all of these challenges into consideration, now is the ideal time to undergo an operational assessment to find out where your hospital stands. It’s the first step that forges a path to sustainability.