The Growth Channel

Canceling elective surgeries? These 5 factors can help you estimate the revenue loss.

by Kaci Brooks, Sebastian Beckmann, and Lauren Lawton

Many hospitals have canceled or postponed elective surgeries for the next few weeks or months. While this move is important for creating capacity for COVID-19 patients, it will also create financial challenges for many hospitals.

Hospitals are cancelling elective surgeries amid coronavirus crisis. Here's why.

To help hospitals navigate those financial challenges, our team is currently working to model these effects. Here are the top variables we're considering that health systems should weigh when estimating financial impact:

1. Crisis level over time

There's a lot we don’t know about how the COVID-19 crisis will play out. But it's possible that the impact on hospitals may ebb and flow over time, rather than peaking and then steadily declining. Therefore, it's important to consider and prepare for varying levels of crisis over time.

Potential crisis levels include:

  1. High: Health systems face a major shortage of supplies, staff, and beds;

  2. Moderate: Health systems have a slight shortage of supplies and staff, plus a major shortage of beds;

  3. Low: Health systems have an adequate level of supplies and staff, but face some bed capacity constraints from additional patient demand; and/or

  4. Remission: Health systems have adequate supplies, staff, and beds.

2. Categorization of elective procedures

What is considered "elective" will likely vary across different crisis levels. All procedures that can safely be postponed are likely to be considered elective during the highest crisis level, but some of those procedures may go ahead during lower crisis levels. Therefore, health systems should consider the percentage of current procedures that would count as elective under different levels of crisis acuity.

3. Dispersion of elective procedures

Next, consider what might happen to postponed elective procedures. Some procedures may simply be postponed, while others may be pushed to an ambulatory surgical center or never rescheduled due to patient choice or change in condition while waiting for care. Planners should model the financial impact of different dispersion plans, taking into account reimbursement differences across sites of care.

4. Future demand

Hospitals should also consider how the pandemic will affect future demand. For example, there may also be a decrease in demand for new elective procedures that need to be scheduled during remission periods or that won't be scheduled at all due to capacity constraints.

5. Capacity to accommodate both postponed and future demand

During times of lower-crisis acuity, providers will need to accommodate both postponed procedures and new demand. Consider pre-crisis excess procedural capacity and the percentage of pre-crisis excess capacity that will (or will not) exist during remission periods. Supplies may be limited, and staff may be fatigued. Remember that there are several factors that inflect capacity, including personal protective equipment  and other supplies, surgeons and other staff, ORs, and beds.

Given the COVID-19 pandemic will likely last for many months, hospital leaders need to ensure they have the financial resources necessary to care for patients. We are currently building a model to help hospitals estimate their specific revenue impact.

Your top resources for COVID-19 readiness

Advisory Board is collating our best-in-class research and tools to support members and non-members alike in tackling COVID-19. We’re updating this page regularly with our top resources on how to safely manage and prevent the spread of COVID-19.

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