The COVID-19 coronavirus pandemic is forcing hospitals and health systems to tighten their belts due to shrinking revenues and margins, but many CFOs won't be reducing spending in one key area: technology and automation.
In the recent months of the crisis, 84% of hospitals surveyed by Black Book and 79% of large physician-practices have confirmed they performed audits on the existing state of digital transformation.
Ninety-three percent of all providers said that missing capabilities and redundant or conflicting systems were identified in the second quarter, and will drive immediate financial systems rationalization and acquisitions.
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WHAT'S THE IMPACT?
While 100% of all CFOs surveyed recognize they will experience a significant revenue decline this fiscal year, and will have to adjust spending accordingly, only 12% expect they will need to cut or defer spending on their financial systems' digital transformation.
With health system margins waning below 3% nationwide, providers are urgently seeking opportunities for digital transformations to capture all revenue through updated software solutions – and they anticipate industry shifts through innovative analytics and forecasting tools.
The latest wave of pandemic impacts on providers is also accompanying the decline of procedure utilization and the imminent shift to value-based care.
The survey found that most providers are navigating these challenges through empowering virtual health (87%), initiating highly positive patient experiences (73%) and confronting radically sinking margins with layoffs and process changes (54%).
Eighty-one percent of CFOs and senior leaders said there was an absolute and immediate need for digital transformations for the long-term survival of their organizations.
Top-ranking vendors in customer satisfaction and client experience include Revint, Waystar, Revspring, Optum360, Verato, Axiom by Kaufman Hall, Oracle and Epic Resolute.
THE LARGER TREND
Data compiled for the month of April shows a harrowing impact on U.S. hospitals' finances, with volume and revenue in steep declines as the healthcare industry feels the effects from the first full month of COVID-19's impacts.
Along with stagnant expenses, these declines drove margin performance so low that it broke records.
Despite $100 billion in funding allocated through the CARES Act, operating EBITDA margins fell to -19%. They fell 174%, or 2,791 basis points, compared to the same period last year, and 118% compared to March. This shows a steady and dramatic decline, as margins were as high as 6.5% in April.
ON THE RECORD
"It would seem most CFOs understand what the pandemic has proved is the need to speed up digital transformation initiatives to not only survive but to prosper in the new normal," said Doug Brown, president of Black Book Research. "For CFOs eager to expedite their organization's digital transformation, the standardization and simplification leaders want in their back-end processes are allowing for less complicated, faster adoption despite the times."