Twelve percent of U.S. clinicians, care delivery leaders and healthcare executives do not believe their organization's financial health will ever recover to pre-pandemic levels.
That fact is "very disturbing," Baligh Yehia, MD, president of Philadelphia-based Jefferson Health, told Becker's. But it's no surprise.
The statistic comes from an October NEJM Catalyst report co-authored by Dr. Yehia and Alice Pope, CFO of Falls Church, Va.-based Inova Health System. In June, 915 members of a NEJM Catalyst Insights Council — composed of clinicians, clinical leaders, and executives at organizations directly involved in care delivery — were surveyed about their workplace's financial health. Half of the 543 U.S.-based respondents are employed by hospitals, while the rest work for health systems, clinics, physician organizations or other healthcare facilities.
Fifty-four percent of respondents said their organization's financial health is somewhat or significantly worse than before COVID-19, despite rebounding patient volumes. Demand has significantly grown in some areas — ambulatory care, emergency departments — although rising costs have offset potential gains. More than three-quarters of respondents said operating costs have somewhat or significantly increased compared to pre-COVID levels, more than double the 34% who saw revenue increase during the same time period.
"A fundamental challenge that we have in the healthcare system at large is that the reimbursement mechanisms, which come from the payers, are not keeping up with the cost of healthcare," Dr. Yehia said. "So health systems need to do their part to make sure that we're delivering effective, efficient care, in the way that creates the biggest value for patients. But at the same time, there's other parts of the health system ecosystem that are really important too."
Another consideration is the rising cost of novel drugs, including popular diabetes medications like Ozempic, Dr. Yehia said. Supply and drug costs have soared to 18 to 20 percent at Inova Health, Ms. Pope affirmed in the report.
"How do we make sure that healthcare financing, which comes on the payer side, is keeping up with the cost that it takes to deliver care?" Dr. Yehia said. "And many times there's a lag there, and it's important to make sure those two catch up to each other."
There are certain steps health systems can take toward steady ground, per the report and its authors. More than half of survey respondents said their organizations are focusing on cost reduction along the supply chain, while 35% mentioned staffing measures, including layoffs.
“If you look at our [profit and loss] here at Inova Health, higher labor costs are where the majority of margin deterioration is coming from," Ms. Pope said in the report. "Salaries, wages, and benefits form the biggest part of our expense structure, and while pre-pandemic it represented about 50% of our total costs, it has now risen to about 55%."
Jefferson Health is mitigating staffing costs by assigning virtual nursing teams to intake and discharge, according to Dr. Yehia. The system is also focused on ambulatory care and other methods of increasing patient autonomy, like moving scheduling options online to lessen the time employees spend on the phone.
"A lot of this stuff, first and foremost, starts with a very focused strategy," Dr. Yehia said. "Whenever you start to have different challenges, how do you start to think through different ways to deliver exceptional quality care by using more innovative and creative care models that allow us to do it at a different price point?"
Jefferson Health's hospitals stretch from the middle of the city to the surrounding counties, and they're all struggling with similar financial woes: these challenges are "not unique," Dr. Yehia said, and he "doesn't think anyone is particularly immune." Seventy-eight percent of U.S. healthcare organizations have yet to financially recover to pre-pandemic levels, including the 12% that doubt they ever will.
"Fifty-four percent say their [financial health] is somewhat or significantly worse [than it was before 2020]," Dr. Yehia said. "That [number is] very big and not necessarily surprising, but it's sobering."