The path for hospitals through COVID-19
Hospitals need to identify and leverage new opportunities to care and generate sustainable opportunities, says Raghava Rao
The healthcare industry was seen as a defensive sector that would have minimal / no impact with economic downturns and meltdowns. This was primarily due to the notion that demand for healthcare would not fluctuate. However, this premise was proved wrong when the COVID-19 pandemic struck during early 2020. COVID-19 was a stress test to the industry and highlighted all the systemic flaws.
It is envisaged that COVID-19 infections will persist in the population into 2021, notwithstanding the rapid development of effective therapy or vaccination. Accordingly, doctors and hospitals will be treating patients while infections are still present in the community. The healthcare facilities and doctors will need to treat patients with resource constraints including, but not limited to, lack of virus or antibody testing capabilities, lack of contact tracing support, unavailability of nurses, doctors, admin staff, personal protective equipment (PPE), and shortage of hospital or ICU beds.
To understand the impact of COVID-19 and the way forward for the sector, we undertook a study involving 125 senior executives of the healthcare industry. The report is aimed at answering three key questions, 1. What is the extent of impact to the sector from Covid 19? 2. What is the propensity to adapt to digital health? 3. What is the outlook for the sector from a three-year horizon?
For Indian hospitals, the key to remaining relevant and sustaining the winds of change will be to steer their way through the rapidly changing preferences of the patient. The place, nature and the type of care is changing as you read this report. Hospitals, both big and small need to embrace these changes to continue their care journey. Signs of an impending transformation are already showing. Johns Hopkins Medicine, one of the top hospitals in the world, is currently seeing 5,500 virtual visits per day as against a few dozen telehealth visits each day before the COVID-19 pandemic struck the country and about 30% of the in-person visits are expected to convert to virtual visits.
We gauged the pulse of the sector straight from the industry leaders and what they believe is in store for their hospitals over the next few years. The outlook is expected to be very promising and the sector has a huge opportunity to create a leaner and more efficient healthcare system that will be a combination of bricks and clicks.
Takeaway 1: COVID-19 had a deep impact on the hospital sector
Over 78% of the respondents said that COVID-19 has had either high impact or very high impact on their hospitals. The challenges faced by hospitals ranged from severe cashflow shortages to unavailability of nurses, doctors and PPEs. The sector which was known to be defensive with stable demand could not withstand the COVID-19 stress test.
In terms of challenges in the short to medium term, more than 60% of the respondents felt that the low turnout due to the fear of COVID-19 infection will be the biggest challenge. This was followed by almost 17% of the respondents saying that travel restrictions was a major problem and more than 16% citing the need for infrastructural changes to contain the infection, as a challenge. 58% of the respondents also felt that the key departments viz., outpatient, intensive care, IP and radiology & imaging would need to be redefined.
COVID-19 is expected to fast track the adoption of futuristic digital technology, automation and AI-based tools in healthcare. 78% of the respondents agreed that COVID-19 has made digital adoption a priority.
Takeaway 2: Hospitals need a clear digital health strategy to stay relevant and sustain
COVID-19 is an outside force that is pushing the hospitals and the healthcare system to say 'yes' to digital. For Mayo Clinic, Minnesota, the volume of virtual consults peaked from a few hundred a week to over 35,000 per week and their 2030 digital health plan is being revised to be launched in 2021. The adoption of digital tools crashed from years to a few weeks. The beginning could be the outpatient services, where a significant portion of the services are expected to be delivered outside the hospital.
Other key findings include:
• 70% of the respondents felt that patients are comfortable in receiving care through digital health.
• More than 56% of the respondents felt that the doctors are comfortable in providing care through digital platforms.
Convenience is a major benefit of digital healthcare. Also, geographical barriers between doctors and patients are nullified in the case of digital healthcare as a doctor can provide consultation to patients residing in any part of the world.
Takeaway 3: Huge transformation opportunity to unlock value
Patients are reluctant to go to the hospital because of the fear of infection. However, sickness does not recognise or acknowledge the threat of COVID-19, patients need to access hospitals to get themselves treated and cared for. The diseases that were there four months ago have not disappeared, they are hidden and will come back. Hospitals need to be ready to deal with them, but in a new way.
Apart from the hospital level factors that will influence the volume and revenue rebound, there are macro factors that will also weigh down on hospitals to operate in a sustainable way.
Unemployment levels are high, COVID-19 has thrown many people out of their jobs, so there is lesser disposable money available.
Hospital financial metrics even before the pandemic were such that they had to operate at high utilisation levels to generate a positive EBITDA and meet their annual CAPEX. Hospitals need to identify and leverage new opportunities to care and generate sustainable opportunities.
Hospitals have a huge opportunity to transform and will need to find new growth opportunities. A lot of these new opportunities of growth can come from executing initiatives that were always recognised but poorly implemented like digital health and others.
Hospitals will need to and will find new ways to treat patients. The place and type of treatment shall undergo massive transformation. The new care model will be a mix of bricks and clicks.
The key findings from the respondents are as below,
• More than 50% of the respondents said that hospitals will take around six months to one year and 24% said that it would take between 1-2 years to reach the pre-COVID-19 volumes.
• 40% of the respondents felt that hospitals would take six months to a year to return to pre-COVID-19 revenues followed by more than 32% of the respondents who believed that hospitals will take between a year and 2 years to achieve the same.
• More than 56% of the respondents believe that operational efficiency of their hospitals would be significantly better in the next three years, followed by more than 32% who believed that the operational efficiency would be slightly better.
Raghava Rao is the CEO of Camomile Healthcare Ventures.