South Florida Hospital News
Friday February 26, 2021
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February 2021 - Volume 17 - Issue 8
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Healthcare CFOs’ Priorities for 2021

Healthcare Partnerships Will Proliferate Through Pandemic and Beyond
The healthcare industry had been in a constant state of disruption for more than a decade. Then the pandemic changed everything again.
 
What were once viewed as long-term opportunities became immediate requirements. Care, cash, coordination and creativity took on new meaning as the eyes of the country turned to our healthcare system in its moment of greatest need.
 
It proved up to the challenge.
 
Healthcare leaders have navigated surges and shortages, all while working to ensure the best care for their patients and protecting their essential workforce. Now, even with continued prevalence of cases, the healthcare industry is moving forward with haste to form partnerships and solidify operating models that will help meet areas of patient need and overcome areas of distress.
 
The story of healthcare in 2020 is certainly marked by a national tragedy, but it also has many heroes in the form of doctors, nurses, researchers and workers. Crisis also puts everything into new perspective, allowing healthcare organizations to set sights on long-term silver linings for the industry.
 
Case in point, according to the BDO 2021 Healthcare CFO Outlook Survey, 52% of healthcare CFOs say that their organization made faster decisions during the pandemic. Healthcare leaders channeled that decisiveness into action that will shape the future of the industry.
 
Transformation Tracks
In late 2020, BDO surveyed 100 healthcare CFOs to determine how their organizations have pivoted during the pandemic and what they forecast for the future. For most healthcare organizations, transforming to meet the future needs of care will follow one of more of these paths: partnerships, product and practice optimization, and enhanced patient experience.
 
Partnerships and Consolidation
Healthcare partnerships continue to be on the rise, following years of mega-mergers that aimed to break down silos in the industry and get closer to the patient. From improving relationships between payers and providers to research partnerships between academic medical institutions and pharmaceutical companies, the walls in the healthcare ecosystem continue to come down in favor of collaboration and community to serve the greater good.
 
Healthcare CFOs’ intentions suggest that 2021 will see a further uptick in deals and partnerships. Some of the key findings include:
• Partnerships proliferate: 2021 will be a big year for healthcare deals. Among the CFOs’ plans: 31% will acquire physician practices, 28% will merge with another organization and 24% plan to enter a joint venture.
• More consolidation: 42% say the pandemic will cause increased consolidation and more than one third (35%) say that they will transform their operating model this year.
• Capital flows to care: While healthcare leaders will pursue several paths for funding, PE is the top cited source of outside capital for 2021.
 
While industry deal flow slowed during the peak of the pandemic, Teledoc and Livongo’s $18B merger in August is one of the biggest deals of 2020, according to S&P. Partnerships and consolidation will also fuel the ability to scale, through forming managed service organizations, and the ability to expand into new areas of service like behavioral health, where it is often more strategic to buy or partner than build.
 
Product and Practice Optimization
Healthcare organizations also viewed the crisis as a driving force to reset their areas of focus and specialties given both the short- and long-term needs of their patient populations. In some cases, healthcare executive teams will make moves based on essentialism. In others, it will be about changes in demand for care.
 
For example, as demand for virtual and behavioral health surged in 2020, many healthcare practices saw slower demand for primary care, dental, vision and other areas of care that consumers decided to put off. Looking ahead, healthcare organizations are hoping to fund and fuel a shift back to the primary care office as the center of health. More than 3 in 4 CFOs say they will invest in primary care in the next year, a notable increase over 51% who reported planned investment in primary care last year. A majority of healthcare organizations also plan investments in digital and mental health services to meet growing needs.
 
Even if patient confidence can be restored and generational care preferences can be evolved, the reality is no one service or provider has a full view of the patient. No matter the investment or area of focus, access to data and coordination across specialties will be critical to both preventative and reactive care.
 
Patient Experience
It’s telehealth’s time to shine as the digital health industry surges amid enthusiasm from patients and investors alike. More than one in four healthcare CFOs say the pandemic has increased the industry’s focus on opportunities in telemedicine, but it is not without challenges. CFOs top cited concerns related to telehealth include efficacy of care (46%), patient experience (39%) and productivity (34%).
 
When it comes to patient experience, getting it right will require coordinated investment in technology, education, and change management. That’s likely one reason why 24% of healthcare CFOs say their biggest priority is investing in technology or infrastructure, and 61% will be spending more in IT this year. Nearly 3 in 4 healthcare executives also pointed to improved consumer experience as a top digital objective in BDO’s 2020 Healthcare Digital Transformation Survey. Patients will be expecting high quality support, with both speed and personalization—whether they are in office or on their mobile device.
 
As digital health becomes mainstream, healthcare organizations must also keep in mind that telemedicine works best when it supplements vs. replaces in-office care. It’s a tool in the shed, rather than a brand-new type of shed.
 
Resilience Through Distress
Even amid optimism that healthcare organizations are on the right path for recovery, for more than one in three, that path will require restructuring or reorganization. The pandemic brought a financial cliff to many healthcare organizations who lacked more than a month or two of cash on hand. Government assistance helped stave off crisis for some, but the events of this year provided clarity to healthcare organizations across every sector around the importance of liquidity, what are truly essential services and operations and where they have underperforming assets or specialties.
 
Learn more about what CFOs are expecting this year in the BDO 2021 Healthcare CFO Outlook Survey 

Steven Shill, CPA, is National & Global Healthcare Practice Leader at The BDO Center for Healthcare Excellence & Innovation.

Contact:
Alfredo Cepero, Managing Partner
305-420-8006/ acepero@bdo.com
 
Angelo Pirozzi, Partner
646-520-2870 / apirozzi@bdo.com
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