Operating Room Insourcing Versus Outsourcing

Operating Room Insourcing Versus Outsourcing Post COVID-19 By Alyssa Rapp, CEO, Surgical Solutions and Anand Christopher, Managing Partner, Claremont Hudson INTRODUCTION In March 2020, the COVID-19 pandemic created unprecedented disruption across the healthcare landscape and beyond. Many physician practices have stopped seeing patients in- person while hospitals face growing patient volumes in ICUs and a shortage of personal protective equipment (PPE) and ventilators. Elective surgeries have been postponed or cancelled, leaving many hospitals financially challenged as a key source of income has been frozen. Health systems like Tenet Healthcare are preparing to resume some surgeries in certain states, and HCA Healthcare expects to reopen across its 43 markets by the end of June 2020. i California is working with health-care providers to resume postponed procedures as well. According to a survey conducted by American Medical Group Association (AMGA), two-thirds of health systems report that their portion of payments from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, will replace less than one week of revenue lost due to the COVID-19 pandemic. The CARES Act allocated $100 billion to healthcare providers, but AMGA estimates that it will take as much as $318 billion to replace just half of the revenue hospitals and physicians will lose over four months, leaving many ii providers with greatly diminished cash reserves. As states and the federal government take different approaches to reopening the economy, health systems face more challenges ahead. Given the extraordinary level of uncertainty, health systems are re-evaluating operations and developing new short- and long-term strategies to ensure economic sustainability. KEY TRENDS IN THE CURRENT ENVIRONMENT Trend #1: Health systems are freezing capital expenditures and reducing expenses. In response to COVID-19, health systems are conserving cash by reducing capital expenditures, IT, 1