As hospitals and clinics reopen for regular patient care and elective procedures, they face a hidden danger—and it’s not just about disease exposure. Instead, healthcare providers may be exposed to a false bubble that threatens their recovery.
Between pre-COVID patient demand projections, pre-COVID capacity models and the now-precarious financial positions hospitals find themselves in, providers need new data and a new strategy to manage their reemergence and survive the recovery.
Fortunately, that data does exist, and marketers can take the lead in helping healthcare survive for the COVID-19 recovery.
Understanding the False Bubble
The COVID-19 crisis has put many hospitals and health systems in the worst financial situation they’ve ever seen. According to one analysis, financial hardship from the pandemic could cause up to 100 hospitals to close within a year. This is a reality that affects for-profit, nonprofit and academic hospitals alike. On one hand, it creates a tremendous sense of urgency for hospitals to return to revenue-generating elective procedures and normal operations. At the same time, we have to acknowledge that “normal” operations are still quite a while away.
In the meantime, contribution margins are as important as ever to help restore a healthy cash flow. But many healthcare providers are set up to navigate this precarious position with numbers and projections that may no longer tell the true story.
The Problem With What We Knew
Ahead of the pandemic, we were looking at a slowly expanding economy, and millions of Americans were planning normal elective procedures. The COVID pandemic didn’t just close many hospital service lines—it also saw unemployment hit 14.7% in April, indicating losses of income and in healthcare coverage. That means we can expect fewer people will be in position to afford healthcare than would have appeared earlier in 2020.
It’ll also remain to be seen how confident patients will be in returning to healthcare facilities. A recent survey indicated that over 40% of respondents were uncomfortable visiting a hospital or urgent care during the pandemic; 41% have delayed healthcare, and 38% believe they’ll continue to delay it in the near future. Many will be opting for telehealth where possible, but many may also further delay care until they feel safe to enter hospitals and clinics — or as long as possible.
Finally, hospital capacity will look different over the next year or two, if not longer. This is due to:
- Space and resources allocated away from specific service lines to assist with the COVID-19 response
- Space and resources that will need to be eventually reallocated from peak COVID-19 response
- Forthcoming guidance from the Centers for Medicare & Medicaid Services (CMS) on patient density and facilities use
- Any shortages of personal protective equipment (PPE)
- Any staff shortages or layoffs from COVID-19
Because the landscape of consumer demand for elective healthcare will have drastically changed from the beginning of the year to now, we need better visibility of that new landscape to identify service lines and procedures with the highest margins and highest opportunity. Then, we can be strategic.
Outsmarting the Bubble
To navigate ahead, there are several interrelated data sets for healthcare providers to look at. None of these are perfect or should be taken in isolation, but it does give us a better early indication of the changes to patient demand and the ability to respond to demand in ways that help support rather than hinder recovery.
1. Unemployment Trends
Without solid data to reveal how insurance coverage trends have changed, unemployment numbers around a healthcare provider’s service area may provide an indicator of lost coverage.
Of course, this isn’t a perfect approximation. It’s also subject to a lag due to the monthly reporting schedule. Economic relief benefits and continued-benefits insurance may keep some individuals insured through COVID-related job loss. However, financial uncertainty may still hinder a large number of people from going forward with scheduled procedures.
2. Search Query Volume
For approximating customer interest, there’s possibly no better resource than the one you tell all of your interests to: Google. Use search engine marketing tools to measure local search volumes for keywords around elective procedures. Pay attention as well to trends, including historical and national benchmarks in order to help translate search trends into real insights about patient demand.
3. Patient Risk Acceptance
In addition to affordability (unemployment) and demand (search volume), the other part of the patient’s side of the equation is their willingness to actually step foot into a facility. This is a crucial part of the picture but will be especially hard to measure. For now, it may need to be based on early returns from location reopenings across the U.S. until more study is done.
Be careful, however, of using approximations in other industries as states continue to reopen dining and entertainment, since these might reflect different age demographics and overall states of health than may be key for your service lines.
4. Procedure Volumes
On the other side of the equation is the healthcare provider itself, including what procedures produce the highest patient volumes and what those capacity needs are. Historical patient volume can be a rough, at least proportional, approximator of future demand in the wake of the crisis. However, health systems also need to look at how space, staff and equipment resources have been allocated away from these service areas, as well as what needs they have in order to increase their capacity for these procedures — and what ability they have to do so.
Benchmarks for historical patient demand are also valuable only as long as they’re kept in view with the rest of the picture being painted by present patient desire and risk acceptance.
5. Procedure Contribution Margins
Finally, providers must look at what procedures drive the highest contribution margins. It’s not enough to identify that a specialized surgery brings in the highest volume of patients if the actual contribution margin is among the lowest. Under a thriving economy, volume may help to protect cash flow into that service line, but multiplying thin margins may be too risky for hospitals to undertake until their financial position is more stable.
Despite broad trends across more- or less-profitable service lines, the data used here should be hospital-specific.
Putting the Data Together
No single data set will open up all of the answers. Identifying where there will truly be opportunity for healthcare providers in the recovery needs to account for radical changes to the demand side and radical changes to the supply side. In fact, it’s more than a two-sided equation — instead, we can think of it like a Venn diagram with three circles:
- Desire — patient demand and acceptance of risk
- Capacity — our ability to service patient volume in the present and near term
- Viability — the volume and profit margin to be financially viable
The most valuable procedures that providers are able to promote through the pandemic recovery will be those that that fall in the very center of the Venn diagram, at the intersection of patient demand, hospital capacity and economic viability. While other procedures and service lines will be necessary and important, their future may in very real terms depend on strategic focus around that critical intersection to drive recovery.
And that’s what marketing is able to drive.
Conclusion: Hope Is Not a Strategy — But Strategy Is
Appointment scheduling and waiting room doors are opening back up, but healthcare providers need to do more than wait for patients to call and ought to do more than ramp up business-as-usual. Hope is not a strategy. Neither is doing what we did before. Rather than waiting for an outcome, hospitals must create an outcome. That starts by knowing the outcome you want to create and focusing your strategy accordingly — by asking, What can we do to drive more of the procedures we want, in order to serve the needs of our patients and our mission?
In this moment more than any other, marketing should be a strategic growth-driver in partnership with business operations and business intelligence (BI). As non-emergency healthcare reopens to the public and marketing initiatives start up again, this partnership needs to take the lead in order to help nurture hospitals back to health.
What help could your strategic marketing use as you reopen to non-emergency care? Contact us to see what we can do partner with you.