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Event Recap | Transformation Series: State of the State | Economic Impact | 03.04.2021

On March 4, HC3 convened the CFOs of three local hospital systems to weigh-in on the financial impact of COVID-19. The CFOs discussed how they are focusing their efforts to recover and rebuild their operations, changing their business composition, and bracing for the impending recession.

Opening Remarks:

Meghan Phillipp, Executive Director, HC3

Moderator: Joe Fifer, President and CEO, Health Financial Management Associates (HFMA)

Panelists: Dominic Nakis: Chief Financial Officer, Advocate Aurora Health

Richard Silveria: Executive Vice President and Chief Financial Officer, UChicago Medicine

Doug Welday: Chief Financial Officer, NorthShore University Health System

News Coverage


Watch the Recap | Link to YouTube


Joe: Pandemic fatigue is happening everywhere, and the Chicago area is no exception. Stress from treating COVID patients, taking on greater caregiver responsibilities at home, and off-kilter work/life balance has caused more health care workers to experience an increase in burnout, leading some to consider leaving their jobs or the field altogether. How are your organizations addressing this issue?

Doug: At NorthShore we have tried elevating and recognizing health care workers with additional financial support such as holiday bonuses and have brought in travel nurses to reduce the burden on their staff. We have dealt with supply shortages, and as prices for supplies continue skyrocket, it has been a stressful time for everyone.

Dominic: We have made sure to recognize these heroes providing care throughout our system. In the beginning, there was the stress of the unknown, with the spike during the winter season and still grappling with this a year later, along with some of the added stressors throughout the year, such as the social unrest this summer, the political elections this fall…it is just a lot.

Advocate has acknowledged and given their care providers opportunities to provide feedback through round tables and town hall meetings. At the beginning of the pandemic, Advocate’s CEO did weekly videos for staff addressing issues upfront and how leadership was aiming to deal with each challenge (e.g., staffing shortages, supply chain shortages, and so on). Each week he would end the video by saying, “Calm over chaos, faith over fear.”

Joe: With bringing in visiting assistance – nurses or other professionals that came for a certain period – were there increased costs associated with this type of support?

Dominic: We have seen increased costs with the usage of visiting support, not only associated with the rate of compensating them, but also with time commitments guaranteed. There was a clear supply and demand issue for nursing care that peaked at the end of 2020, which drove up the price at the same time PPE and pharmaceutical prices were increasing.

Having a strong balance sheet beforehand, helped carry our system through the pandemic. Throughout the pandemic, “there were a lot of times that I just got out of the way. Whatever the cost was going to be, we were going to pay it because it is safety and quality first.”

Doug: In an effort to bolster the labor pool, we allowed people to choose to work additional hours. We offered some financial incentives to make it attractive for staff to work more, which made it less necessary to require outside assistance. Additional compensation made staff more willing to step up and take on additional shifts.

Richard: Additionally, we saw some of UChicago’s nursing staff leave to work with agencies that paid more which affected staffing needs and costs.

Joe: In addition to the psychological impact, of course, there is the financial impact of the pandemic to consider. The Illinois Hospital Association, in a recent bid to gain additional federal pandemic relief funding for hospitals, pointed out that hospitalizations during the fall/winter surge were almost twice as high as during the spring surge. Additionally, treating COVID-19 patients has become more expensive, widening the gap between what hospitals spend to provide care and the payment they receive from public payers. How is your organization adjusting its financial planning and forecasting strategies in light of the pandemic?

Richard: UChicago is looking at an $80 million per month loss due to the pandemic. We looked at their cashflow model right away, created a flexible budget, drew a line of credit as a precaution, and also stopped funding retirement benefits temporarily.

UChicago also assessed and prioritized the broader south side community we are part of. As an employer of many South Side residents, we delayed layoffs for as long as it was feasible to operate. Teams prioritized procedures and operations that had to be done (e.g., transplants and cancer surgeries). We separated staffing responsibilities to COVID and non-COVID areas to streamline productivity and risks. By June, activities were back up to about 90 percent. Overall, we remained vigilant about maintaining quality and safety.

Telehealth has been a huge asset, especially with the changes to policies and more consistent reimbursement rates. Cutting costs could be the right answer in the short term, but we have to prepare for what may happen in the future because we do not always anticipate the downstream impacts.

Dominic: Advocate Aurora Health made adjustments along the way, such as going back to vendors and trying to negotiate rates and cutting a significant amount of capital, mostly in the ambulatory space.

We are now evaluating what health care might look like going forward.

In terms of our staffing costs and benefit plans, we did minimal. We furloughed people early on, but we continued to pay them at 100 percent. We began pacing rates to 75 percent and 50 percent by June. The cost reduction from furloughs overall was very minimal.

We are now beginning to adjust staffing to the demand. For example, we have seen a significant reduction in pediatric services. Moving forward, we are updating our financial forecasts to every quarter and are moving towards a rolling budget on a quarterly basis.

Doug: The shutdown of elective services created a significant financial burden. The CARES Act and provider relief funds helped with some of the burden but did not eliminate the financial impact. “We pulled every lever that you would expect – furloughs, mandatory time-off, retirement plan adjustments, etc. – to try to mitigate those costs.” Since reopening, they are back to mid to high 90 percent of pre-COVID activity and patient volumes.

We have been planning quarterly and restating our expectations more regularly to get ourselves back on the solid financial footing. Long before we had any assurance that we would get government assistance, we began planning. “We’re not back to where we were a year ago, but I’m very bullish on the future of our organizations.”

Joe: How are your managing with a remote workforce? What have you learned from this experience? What can we expect to see?

Doug: NorthShore has been converting workspaces and we expect to continue accommodating a hybrid model of in-person and remote work. Although the productivity and level of service has remained high, people’s human connectivity and engagement has gotten lost and is something we can improve upon.

Dominic: Advocate Aurora Health has taken a similar approach. Allowing flexibility is good because it can save money for people and the health system. Moving forward, we will probably have a hybrid model. There are some continued challenges for people who do not have the right broadband connectivity or live in crowded spaces. However, looking at remote work will be the norm moving forward. Telehealth can also be utilized in a more flexible work environment. Remote jobs also provide us with the opportunity to recruit staff nationally and have a larger pool of candidates.

Richard: UChicago will follow the same approach with continued remote work currently, and some hybrid opportunities in the future.

Joe: How has the pandemic affected your transitions to values-based care (VBC)?

Dominic: The pandemic has not changed our approach to VBC. Advocate Aurora believes VBC is a good health care delivery model and being able to coordinate that type of care will lead to better outcomes. We want to continue to go down that path. We entered into a joint venture with an insurance company that will assist with our VBC as we pursue Medicare Advantage.

The pandemic and social determinants of health have elevated the importance of health equity and we need to do a better job of addressing this. Additionally, our board of directors added a diversity, equity, and inclusion council to oversee some of our health equity efforts. One of the issues we are examining is the major differences between health outcomes amongst the breakdown of different races and ages.

Doug: NorthShore is is stepping up our attention to the issues of health equity, access to care, health disparities, chronic conditions, and the like. We are much more focused on these issues than we were a year ago. We recognize that our population health efforts have had a direct correlation with health equity. And, we are doubling our focus on VBC and how we use that to improve general health of our overall community but also for individual communities. “You manage what you measure, and you improve when you set goals.”

Richard: VBC is the future. Health issues that we see in hospitals are sometimes linked to social issues (e.g., food or housing insecurity). “The issue that we have as health care professionals is trying to figure out how we can decrease utilization without decreasing revenue.”


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