Many Australians are breathing a sigh of relief that the national impact of COVID-19 is subsiding. While we have seen the strains on health services in other countries, including in Europe and the United States, our health services have coped well.

But Australian health services would be wise to avoid complacency. COVID-19 will remain a major health threat across the world until a treatment and/or a vaccine is developed. This means COVID-19 will likely be with us for at least another 12 months.

Nonetheless, as case counts fall in most parts of Australia health services must now consider how they make up the ground that was lost due to COVID-19 and return to normal operations while staying ready to manage any future outbreaks. There are also valuable opportunities to embed new and better ways of working.

As health services leaders feel their way through this process, it is important to think and act strategically rather than on impulse. To do that, we have identified four strategic activities that will serve you well for the year ahead: scenario planning, review of finances, assessing sustainability and identifying lessons.

Scenario planning helps to prepare for uncertainty

With uncertainty about how COVID-19 may evolve, health services need to be flexible in their approach to managing the pandemic. To enable this flexibility, it is useful to map out possible scenarios for COVID-19 over the next year.

There are four phases that health services may progress through:

• Ready phase: manage business as usual (BAU) requirements while applying additional efforts to COVID-19 monitoring and planning.
• React phase: develop and deliver a systematic response, depending on the initial effects of COVID-19 and the number of cases.
• Recover phase: gradually scale-down COVID-19 activities, re-establish standard operations and understand flow-on effects.
• Return phase: manage the backlog of surgery, other procedures and appointments deferred during the previous phases and return to a new BAU.

Movement through the phases may not be linear, and services may skip phases or regress, but this provides a useful framework for understanding where an organisation is at.

Nous Group has identified scenarios that describe the circumstances at a national level. These can be adapted to look at the impacts on individual health services as they experience the four phases. Service-level impacts include staffing and bed capacity requirements, the effects on different elements of the service, the ability to conduct business as usual and opportunity for recovery, each assessed as low, moderate or high.

The benefit of scenarios is not that they offer an exact template for what may occur, but that they help organisations to structure their planning.

Reviewing finances can shed light on cost structures

COVID-19 has brought financial and operational challenges for health services. However, it has also created unique opportunities for hospitals to tap into the data generated during the slowdown to examine their existing processes and cost structures.

As governments required health services to defer elective surgeries, appointments and procedures to create capacity to manage COVID-19, many activities were scaled back or paused. This left many wards, operating theatres and staff underutilised and general hospital activity at levels not seen for many years. Despite this, health services had to maintain operations and cover fixed costs.

These circumstances create an opportunity for hospitals to collate real-time operational data on what happens when hospital activity changes significantly.

Reduced activity datasets span all hospital operations, for example:

• bed capacity across wards when elective surgeries are not carried out
• utilisation of clinical and non-clinical staff under reduced activity
• operating theatre utilisation.

Each can then be matched with financial data to understand:

• which variable costs can be scaled down with reductions in activity
• which costs have a fixed component and marginal components that can be tied to activity levels
• which fixed costs can be reviewed to alleviate reductions in revenue.

Better understanding the link between hospital activity on one hand and costs and revenue on the other presents significant opportunities for health services to increase sustainability.

As well as reducing immediate negative financial impacts, this understanding enables hospitals to identify how they can enhance their operational efficiency and financial sustainability as activities are restored to pre-COVID-19 levels.

Assessing sustainability relies on considering key questions

COVID-19 allows hospitals to review their operations and finances to ensure they are optimised for sustainability.

There are three focus areas when reviewing a hospital’s sustainability. Within each focus area, Nous Group has identified several opportunities and anticipated benefits for the health service. In brief:

• Budget planning: How can hospitals increase efficiency through more accurate planning, better utilisation and streamlined processes? An enhanced understanding of cost drivers will improve a hospital’s budget planning processes and inform a more nuanced planning process.
• Demand management: How can hospitals manage future demand? Analysing and managing changes in activity can inform how hospitals plan for and manage the growth in demand for their services.
• Staffing: How can hospitals match staffing levels to service demand? Analysing the data generated during a slowdown gives hospitals the information and tools to engage in strategic workforce planning.

Achieving sustainability requires asking the right questions and gathering the right data to answer those questions. Datasets should cover the period before and during COVID-19 so hospitals can compare changes in activity and costs and quantify these changes in dollar terms.

Learning lessons requires a deep dive

It is important to reflect on changes that have taken place during COVID-19 and identify what should be maintained in future.

In our experience is it valuable to dive deep into, say, four specialties in a hospital to really get under the skin of the operational changes during COVID-19 in order to learn what needs to be sustained. Earlier this year we helped a leading children’s hospital see what lessons it could learn from changes to its virtual care service, with encouraging results, including identifying up to 25 per cent of outpatient consultations that could be conducted virtually.

In another recent project, Nous Group examined opportunities in one state to identify what hospitals could learn from COVID-19. To do this we drew on some of the tools we have just discussed to better understand the impact of COVID-19 and how it could inform future activities.

Among the insights this work generated were four lessons for hospitals and health services:

1. Changes during COVID-19 can help to reduce demand on emergency departments. Recent adaptations have increased the options for patients who require medical assessment or treatment, beyond emergency departments, including GP visits via telehealth services.
2. COVID-19 provides an opportunity to improve the elective surgery system and reduce waitlists. Waiting lists for elective surgeries have increased due to the temporary restrictions in response to COVID-19. This gives governments an opportunity to gain agreement on consistent assessment processes for high-volume procedures and reassess all patients on current waiting lists.
3. Telehealth services offer efficient patient care and can become a mainstream service offering. The pandemic fast-tracked the implementation of telehealth services, which have been made widely accessible through the support of Medicare and expanding infrastructure.
4. Sustaining a reduced offering of low- or no-value services can improve patient outcomes and the efficiency of the healthcare system. During COVID-19, many low- or no-value care procedures have been restricted. As the COVID-19 situation changes, hospitals need to harness the opportunity and reorient resources to high-value care only.

The experience for other states and health systems is likely to be similar.

With government and household budgets tightened, hospitals and health services will need to find ways to drive every dollar further over at least the next year. A strategic approach to capturing the lessons from COVID-19 will be a vital step.

Get in touch to discuss how Nous Group has support your hospital or health service tap into the opportunities emerging from COVID-19.

Connect with Ian Thompson on LinkedIn.

Prepared with input from Stephanie Sealy, Raj Verma and Ian Sheldrake.

Published on 24 June 2020.