As part of our ongoing research, Alexander Group recently surveyed 85+ C-Suite executives from healthcare providers across the country to understand how COVID-19 will impact healthcare revenue and operations. Their insightful responses provide new visibility into the current state of the healthcare sector for the remainder of 2020 and into 2021.
The Healthcare Provider Survey Wave II shares a contemporary view into key areas that impact healthcare vendor planning scenarios and their commercial models such as elective procedure volumes, budgetary expectations and vendor access.
The decrease in elective procedures due to COVID-19 has greatly impacted the healthcare sector as it loses an estimated $50+ billion per month.
Craig Ackerman, principal and a healthcare practice leader at Alexander Group explains, “When we look at elective procedures, they are currently at 80% of pre-COVID-19 levels. We bounced off the bottom low of around 20%. But we are not expected to return to 100% until the second half of 2021.” One primary cause for elective procedure decline is a lack of patient willingness, as patients are reluctant to book non-emergency surgeries amid the pandemic.
Nearly two-thirds of providers cite the implementation of new safety protocols necessary to combat COVID-19 as an inhibitor to elective procedure volumes. While necessary, these new procedures have slowed hospital processes, making it difficult to accommodate a 100% return to pre-COVID-19 elective surgery levels. Over half of the survey respondents also indicate that complications associated with COVID-19 testing contributed to the slowness of recovery.
Survey respondents are employing virtual approaches to patient engagement, with nearly 7 in 10 providers utilizing telehealth and increasing marketing efforts to ease patients’ elective surgery concerns.
As elective surgeries and their associated revenue streams have decreased, the need to conserve economic resources has increased. Not surprisingly, healthcare executives tell us that they have lowered expectations for both operating and capital budgets heading into 2021.
Capital budgets are seeing the biggest cuts, as much as a one-third reduction in Q3 of 2020, as organizations put large capital projects, including new buildings or improvements, on hold or cancel them entirely. Capital budget cutbacks are decreasing in severity, but still expected to continue through 2021.
Operating budget cutbacks are also expected to continue, but at lesser rates than capital budgets. The top expense reductions are anticipated in vendor spend and staff furloughs. These budget cut reductions are expected to continue through 2021 at approximately 20% of pre-pandemic baseline as a degree of economic uncertainty remains.
The good news is that providers are beginning to re-open their doors and vendor in-person access is slowly returning. The bad news is that healthcare providers do not anticipate a quick return to normal. Respondents estimate the current volume of third-party vendor visits at approximately 40% of typical, pre-pandemic volume and are only anticipating a return to 70% of historical norms by the second half of 2021. Perhaps even more enlightening, more than 30% of all respondents are skeptical of ever seeing a complete return to pre-pandemic levels. Alexander Group recommends commercial leaders begin taking action now to meet the shifting vendor engagement expectations of providers.
Virtual engagement and support of providers by vendors will be a necessary and lasting expectation beyond 2021. As an industry, virtual support effectiveness needs to improve as only half of provider survey respondents are satisfied with current levels of virtual vendor support. Even with below-average customer satisfaction, approximately half of survey respondents say they will prefer virtual interactions post-pandemic. It is apparent vendors must continue to improve their virtual support services to meet the changing needs of providers while integrating them into their traditional in-person promotion and customer engagement.
Provider executives tell us that the very unfortunate and lasting disruption associated with COVID-19 revealed the benefits of virtually engaging, under appropriate circumstances, with both patients and vendors. While the pressures from spending cuts and patient reluctance will abate in 2021, the changed perceptions and expectations around virtual engagement look to be gaining momentum and likely to persist.
Vendors looking to meet changing provider preferences should abandon a bias for in-person only commercial models and embrace the agility virtual engagement, alongside traditional in-person selling motions, affords them. Orchestrated properly, the addition of virtual engagement offers vendors the promise of delivering a more satisfying and differentiated level of service to providers. Understanding the appropriate application and mix of virtual vs. traditional modalities will require a deeper understanding and categorization of customers than historically necessary. Take the time to test, learn and adapt while elevating your commercial model to meet new buyer expectations. A failure to act may leave you scrambling to meet customer expectations with an outdated commercial model.
Alexander Group is committed to bringing the latest research and trends in the healthcare industry so that you can quickly react to the changing business environment.
Want to learn more about the findings and the implications for your organization? Contact us to discuss your situation.