Industry Voices—In a time of need, hospitals must be able to transform

America’s hospitals may be seeing the end of one of the most grueling phases in recent history. Throughout the COVID-19 pandemic, hospitals and health systems have demonstrated once again the essential role they play in their communities.

But the pandemic has put an incredible strain on hospitals and the people who work in them. And they face the future with depleted resources and an uncertain path to recovery.

Before the pandemic began, about one in five hospital partnership transactions involved a financially distressed hospital, many at risk of imminent closure. As a result of these partnerships, almost all of these hospitals are still in operation and providing critical access to care for their communities.

The pandemic only added to the pressures that hospitals were already facing: inadequate margins, downward pressure on reimbursement, and new competition from national retailers and tech firms with resources that dwarf those of even the largest hospitals.

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Hospital partnerships have been a necessary response to these pressures, as hospitals seek greater efficiencies and the necessary financial and intellectual capital to compete in a rapidly transforming marketplace.

Partnership activity among hospitals and health systems already has brought many benefits to patients and communities. Rural hospitals have added critical telehealth services. Many hospitals have established new and needed services. And systems have invested to provide a far better patient experience.

The pandemic has accelerated many of the forces that were already transforming healthcare. Hospitals will need increased flexibility to complete partnership arrangements that will be necessary to return the industry to its pre-pandemic operational level.

Beyond that, partnerships will continue to be necessary to provide America’s patients with access to necessary services in the post-pandemic period, which promises to be an even tougher economic and competitive environment.

Kenneth Kaufman is the chair of Kaufman Hall.