Roadmap for Resuming Elective Procedures

Health organizations combatting the COVID-19 pandemic are facing significant pressure, much of which is financial. The most pressing are decreases in cash flow resulting in an absence of revenue from deferral and suspension of elective procedures, expenses due to emergency testing and services, and increased treatment of uninsured patients. When hospitals across the country halted elective procedures back in February and March, they immediately started losing revenue. That’s in large part because the U.S. health systems make a sizeable portion of their revenues from lucrative, non-emergency procedures. But what exactly are elective procedures?

Within the medical profession, elective procedures are surgeries that can be scheduled in advance, including many that are medically necessary. They are the financial foundation for many hospitals and health systems as new studies have found that they bring in approximately 48 percent of hospital revenue. But under the current climate, these procedures have been halted causing a tremendous financial hit. Rick Pollack, President, and CEO of the American Hospital Association (AHA), which represents 5,000 hospitals, health care systems, networks, and other providers of care estimates that hospitals could be losing as much as $50 billion a month.

Many hospitals are currently spending large sums to treat patients and keep their staff safe during this pandemic. And while there is some reimbursement revenue associated with COVID-19 patients, it is nowhere close to being on par with what hospitals typically make from elective procedures. To make matters worse, many patients are delaying primary care as even patients with life-threatening conditions worry about exposure and choose to avoid coming in.

The situation is not sustainable forever as some hospitals have had to lay off staff, cut hours for medical providers, and even file for bankruptcy. The federal government has assisted, but various reports have shown that it is far from enough. The health system is fragmented and payments are based on procedures, not patient outcomes.

Many Providers are looking to replace lost revenues from elective procedures in the coming weeks, by ramping up surgical procedures and will begin treating the accumulation of patients needing care. With this, health systems will have had to strategically plan an effective and safe way to provide quality care to their communities and boost revenue. Some strategic thoughts include:

• The relationship between elective procedures and COVID-19: To ensure patient safety, providers will have to supply personal protective equipment, vast testing, and limited capacity until a treatment or vaccine has been provided. 

• The affordability gap: The current climate has exposed and will continue to wreak havoc on patient financial responsibility. This may affect patient demand for services in the long run, as people with less money are less inclined to seek health care.

• A full spectrum solution: Health systems will have to adapt to the new normal and look to implement a patient-centric financial solution while simultaneously reducing accounts receivable and bad debt.

People, small businesses, physician practices, hospitals, and health systems are all facing the demanding and financial strains of the COVID-19 pandemic. Now is time to start preparing for the future and ask, what does it look like as we progress through this pandemic and how can we best serve our communities in the new normal?