By Joe Benardello, co-founder, chief strategy and marketing officer, IKS Health.
Ambulatory care organizations throughout the United States are facing a new reality in the wake of the COVID-19 pandemic. Practice managers must face declining visit volumes, up to 70 percent in many instances, while simultaneously predicting and planning for pent up demand.
More than half of primary care organizations have had to furlough a substantial percentage of their staff and are posing the question of whether or not those employees will be willing or able to return if and when there is a need. With more questions than answers, how do practice managers make strategic decisions for the immediate and long-term health and stability of their organizations? Here are four considerations for leaders in this position.
Identify Where Work Must Happen and Contract for Variable Cost Support
By asking ourselves, what is that work that only doctors can do, ask the same of nurses, and ask the same of front office teams, we can streamline our organizational efficiencies. By job function, identifying which critical tasks each role must complete then enables us to look at where these jobs best sit by both job title and location.
From there, when work is not tied to a specific space, how do you keep the cost as low as possible and make that cost variable while ensuring business continuity and increased performance. Now that organizations have had to embrace a wider work from home policy, can you reduce hard costs like rent and utilities in administrative offices by retaining a remote team or vendor partner.
This can also enable you to variablize your overhead as you can more quickly scale up and down in response to the predicted waves or economic contractions that may occur in the months ahead. For organizations that have already downsized, finding a partner might allow you to reduce cost without bringing staff back on. This allows you to ensure the same standard of care while finding other avenues you can potentially reduce costs in the immediate crisis and permanently as visit volumes resume.
Focus on creating leverage through aggregation
Providers who are in a positive cash position are working increasingly hard to maintain their capital in the interest of gaining additional leverage as this crisis subsides. Struggling organizations may be more receptive to, or in need of, consolidating in the months ahead.
For smaller practices, a key consideration for the future will be to remain independent, become an aggregator or become acquired. We predict that the ramifications of this pandemic will further strain the few small independent provider groups remaining. Groups that are able to maintain some cash reserves will find themselves in a position of great leverage to pick up providers and practices and become the prominent player in their area.
We also continue to see private equity playing a role in driving aggregation, creating bigger practices and single-specialty national or regional roll-ups. To this end, setting your intention for next steps or an end goal will allow you to make strategic decisions in the management of your practices in this turbulent time.
Telehealth as a tool to increase access, reduce expense and further a deep connection between the patient and their provider of choice
Most ambulatory organizations are reporting that 60 percent of their visits are virtual during the social distancing exercises being practiced in most states today. Now, organizations will need to grapple with the learnings and determine if the adjusted reimbursement model will work for them. Various predictions show that reimbursement for telemedicine may settle somewhere between 60 percent and 80 percent of in-person visits.
Therefore, what administrative savings do you need to identify, or how much patient access will telemedicine offer, to allow you to operate in this model. Subsequently, how will you enable your physicians to connect and build relationships and also ensure the specialty or surgery referrals stay within network to further support your administrative demands?
Organizations that maintain ground and further, those that make headway, are poised for momentous gains in the future. Small and independent healthcare providers were largely struggling before the pandemic and as we emerge, we expect further contraction within the market in the months ahead.
The private equity investments in healthcare that we were seeing before the pandemic may be even greater as groups are looking for a cash influx, and aggregating practices and specialties is critical to organizations. The tumultuous days ahead will have limitless opportunities for organizations prepared to seize upon them both with available cash, flexibility and innovation.