The COVID-19 pandemic has pushed 29 percent of hospital and health system executives to consider a merger, acquisition or partnership, a survey of 174 executives found.
The survey, conducted by the Healthcare Financial Management Association and analyzed by consulting firm Guidehouse, sought to understand the effect of the pandemic on provider revenue and strategic planning. It was conducted May 4-8.
Six takeaways:
1. Eighty-nine percent of hospital and health system executives said their revenue will be lower at the end of 2020, compared to the end of 2019. Of those 89 percent, 15 percent said the decrease will be greater than 15 percent, while 20 percent expect a decrease of more than 30 percent.
2. About 11 percent of executives said the federal funding will be enough to cover losses attributed to COVID-19.
3. Executives identified several areas they will most likely target for cost reduction, including reducing capital expenditures (76 percent), labor adjustments (76 percent) and contract negotiations (69 percent).
4. More than one in four executives said that COVID-19 has increased the likelihood of exploring M&A activity. About 15 percent said they would explore an M&A, and 14 percent said they would explore a partnership.
5. Half of respondents said it will take at least until the end of 2020 to see elective procedure volume bounce back to pre-pandemic levels.
6. To generate more revenue, respondents said that they would most likely target digital service expansion (71 percent), existing business growth (66 percent) and revenue cycle enhancement (57 percent).
“Healthcare has largely been insulated from previous economic disruptions, with capital spending more acutely affected than operations,” said David Burik, partner and payer/provider consulting division leader at Guidehouse. "But this time may be different, since the COVID-19 crisis started with a one-time significant impact on operations that is not fully covered by federal funding."
Read the full report here.