Strategic management in local hospital markets: service duplication or service differentiation

The other side of the crisis: organizational flexibility in balancing Covid-19 and non-Covid-19 health-care services

Background

Many healthcare systems have been unable to deal with Covid-19 without influencing non-Covid-19 patients with pre-existing conditions, risking a paralysis in the medium term. This study explores the effects of organizational flexibility on hospital efficiency in terms of the capacity to deliver healthcare services for both Covid-19 and non-Covid-19 patients.

Method

Focusing on Italian health system, a two-step strategy is adopted. First, Data Envelope Analysis is used to assess the capacity of hospitals to address the needs of Covid-19 and non-Covid-19 patients relying on internal resource flexibility. Second, two panel regressions are performed to assess external organizational flexibility, with the involvement in demand management of external operators in the health-care service, examining the impact on efficiency in hospital capacity management.

Results

The overall response of the hospitals in the study was not fully effective in balancing the needs of the two categories of patients (the efficiency score is 0.87 and 0.58, respectively, for Covid-19 and non-Covid-19 patients), though responses improved over time. Furthermore, among the measures providing complementary services in the community, home hospitalization and territorial medicine were found to be positively associated with hospital efficiency (0.1290, p < 0.05 and 0.2985, p < 0.01, respectively, for non-Covid-19 and Covid-19 patients; 0.0026, p < 0.05 and 0.0069, p < 0.01, respectively, for non-Covid-19 and Covid-19). In contrast, hospital networks are negatively related to efficiency in Covid-19 patients (-0.1037, p < 0.05), while the relationship is not significant in non-Covid-19 patients.

Conclusions

Managing the needs of Covid-19 patients while also caring for other patients requires a response from the entire healthcare system. Our findings could have two important implications for effectively managing health-care demand during and after the Covid-19 pandemic. First, as a result of a naturally progressive learning process, the resource balance between Covid-19 and non-Covid-19 patients improves over time. Second, it appears that demand management to control the flow of patients necessitates targeted interventions that combine agile structures with decentralization. Finally, untested integration models risk slowing down the response, giving rise to significant costs without producing effective results.

Tsunami of economic turmoil to hit the healthcare in 2021-2022: COVID-19 pandemic is just an earthquake

The COVID-19 pandemic caused the United States to hit record numbers of COVID-19 cases: peak unemployment of 14.7%, an increase in $4 trillion in national debt, and an estimated 3.4% GDP decline. The current socio-economic environment the pandemic created is just an earthquake that can create a tsunami that is bound to hit the healthcare system and can be felt around the globe. This tsunami is composed of a post-pandemic increase in healthcare facilities admission of indigent patients, decrease in medical reimbursement, and high operating costs to maintain healthcare workers, which can cause a synergistic effect that can lead to healthcare facilities experiencing significant negative total revenue. Time is of the essence, and it is imperative to make a collective effort from all healthcare professionals and legislatures to shift the nation's attention to the issue at hand that can threaten the closure of many healthcare facilities post-pandemic.