Kaufman Hall: COVID-19 will force permanent changes to hospital staff, supply systems

Hospitals need to completely overhaul their operations to handle major staff turnover and higher costs for supplies, a new report found.

The report, released Monday by consulting firm Kaufman Hall, underscored the importance of hospitals adopting bold thinking on revenue cycle management, access to care and workforce optimization to combat trends caused by the COVID-19 pandemic. The firm also noted that hospitals may need to pursue more partners to implement such changes.

“Now more than ever, hospitals need to build relationships with physician groups, insurers, retailers, vendors and other providers,” said Lance Robinson, a managing director for Kaufman Hall, in a statement. “It’s increasingly apparent that most organizations don’t have the resources they need to evolve on their own.”

The firm’s report included a survey of 73 hospital and health system leaders from a variety of markets.

All of them reported major problems with staff including high burnout, wage inflation and turnover rates.

“Ninety-two percent said it is difficult to attract and retain support staff, and almost 90% have increased base salaries,” Kaufman said in a release on the report.

More than two-thirds of hospital leaders (65%) report they are seeing high turnover among clinical staff.

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Another 99% of respondents reported challenges in getting supplies such as a shortage of key items and hikes in expenses.

The challenges have lingered more than a year and a half since the start of the pandemic, and Kaufman warns they are not likely to go away anytime soon.

Change will require not-for-profit hospitals and health systems to revisit the idea they can "lower their costs while maintaining control over all aspects of operations,” the release said.

Hospitals and health systems dealt with major shortfalls to revenue at the onset of the pandemic when they canceled or postponed elective care to preserve capacity to fight the virus and outpatient volumes plummeted.

Relief funding from the federal government was able to keep hospitals afloat, and volumes eventually recovered somewhat.

But most respondents say volumes remain suppressed across many types of services compared to pre-pandemic levels. For instance, only 22% of respondents reported that their pediatric volumes recovered fully.

Another 44% reported that cardiology services recovered to pre-pandemic levels.

A key recommendation in the report is for hospitals to improve their revenue cycle management. Only 25% of respondents reported no impacts to their revenue cycle.

Kaufman found that 33% of facilities are seeing a higher rate of claims denials, and another 34% report changes to their payer mix that include a higher percentage of Medicaid patients.

Hospitals need to improve their real-time monitoring and investigating of initial denials of claims and increase their scrutiny of revenue cycle vendors to evaluate their performance, the report said.

To address major issues with staffing, facilities need to adopt predictive analytical volume modeling and other staff forecasting tools to help determine the staff needed for care. Hospitals also need to eliminate waste and ensure that staffing volumes are aligned to demand to "reduce overtime or agency use,” the analysis said.

Hospitals also should look more closely at their inventory practices, including identifying acceptable substitutes of supplies that are consistently difficult to get. Hospitals should also get supply chain data to build models that show the demand for certain products.