While COVID-19 continues to fill hospital beds across the country as cases spike nationally, full beds in this instance should not imply stabilizing healthcare-provider finances.
COVID-19 has affected every element of hospitals from how the clinical staff is managed to the supply chain to ensure that people have the equipment to work safely. Some hospitals have managed to remain financially strong, but COVID-19 has placed additional stress on other hospitals that were already struggling financially.
“We are seeing a tale of two cities,” Ash Shehata, KPMG national sector leader for Healthcare & Life Sciences, told the In the Know Podcast. “Some organizations have the financial wherewithal and the support to build upon their success.”
“Many organizations continue to suffer,” Ash Shehata said. “We’re going to continue to see that dislocation in the healthcare economy.” Despite CARES Act funding to help hospitals and health systems, many healthcare providers have suspended elective surgeries through much of 2020 to reduce the spread of coronavirus, leaving many hospitals’ finances in a dire condition.
Distressed assets – healthcare providers that are financially struggling -- are one of three factors driving healthcare M&A during the pandemic, Shehata said. “Healthcare technology, as well as the modernization and consolidation of health systems among providers, payers and providers are the other two.”
COVID-19 has imposed on healthcare providers the need to embrace telehealth and encourage patients to do the same; opting for new care models that are outside the traditional hospital setting, which is also less expensive than inpatient care.
“We are starting to see a good, strong sound business model around transitions of care from home care, to the inpatient to the outpatient facilities; and also leveraging community health assets that the whole notion that we’ve been started to work to in population health is starting to become a reality,” Shehata said about an evolution toward creating more healthcare touchpoints outside hospitals and a greater emphasis on wellness.