Thought Leadership

Top Reputational Risks Facing Health Systems and Hospitals in 2021

Ryan Colaianni
By Ryan Colaianni
posted Feb 12, 2021

With the nation’s heightened focus on hospitals and health systems, 2020 was a once-in-a-lifetime year for our industry. Yet, many of the challenges faced in 2020 continue into 2021. Here’s the good news: this time, we can learn from the past and prepare.

Here are the top reputational risks facing health systems and hospitals in the coming year and the steps your health system can take to prevent and mitigate risks.

M&A Activity Likely to Accelerate While DOJ Scrutiny Increases

The pandemic has created financial challenges for health systems, hospitals, surgery centers, and physician practices across the country, accelerating consolidation industry-wide. Large organizations that have weathered the storm will likely look at this period of instability as an opportunity to invest when prices are low and return potential is high. Providers experiencing financial distress may need to sell or partner with large health systems or health plans (like Optum) to stay afloat.

This trend comes at a time of increasing quality and cost scrutiny from media, statehouses, and the Department of Justice. We anticipate this scrutiny – particularly regarding anti-trust – to continue under the Biden administration and as states look to expand oversight for approving M&A activity in healthcare.

Before announcing an agreement, you should build a messaging plan that communicates how the M&A activity will maintain quality without adding to cost. Your organization’s communicators must identify and engage third party stakeholders to deliver your message as soon as M&A activity is announced. Importantly, news of a merger or acquisition should be shared internally first and should clearly communicate how the transaction will impact staff and clinicians, focusing on new opportunities and investments that will make things better for team members.

Vaccine Rollout Will Determine Long-term Trust and Goodwill for Health Systems

During the first ten months of the pandemic, providers across the country received a groundswell of appreciation and support. As health systems continue to accelerate the vaccine rollout, the ability to distribute the vaccine quickly and equitably will determine which health systems maintain the public’s goodwill.

As demand continues to outpace supply – and likely will for months – successful health systems will set expectations with their communities while also managing distribution guidelines set by state and local health agencies. Successful health systems will simplify the vaccination process for the public – including for individuals without an existing relationship with the system. They will clearly communicate when and how the vaccine will be made available and to whom. If the public perceives a health system to delay distribution or prioritize existing patients over the groups outlined by the CDC, they may lose the trust they worked so hard to earn.

Communications should include various digital tools for scheduling and notifications that focus on the customer experience. With vaccination rates among Black Americans and Latinx significantly lower than whites, health systems should include community outreach programs to improve these inequities. These efforts serve as the first step in a long road to rebuild trust between the medical establishment and these communities of color.

As vaccinations expand to pharmacies and other retail clinics, new competitive challenges will arise for health systems. Retail clinics are looking to drive volumes from traditional care settings, and the ability to administer the vaccination will facilitate this mission. Not only will retail clinics be administering vaccines, but they’ll be capturing data and broadening their understanding of patients, allowing them to increase patient engagement.

And retail clinics aren’t just looking for more patients – they’re actively recruiting medical professionals from hospital settings to expand staff, further exacerbating hospital staffing challenges.

Take Care of Your Staff

Clinicians across the country have heroically navigated the biggest health crisis in more than 100 years. But after a year, and with many more months to go before the pandemic is behind us, the health system and hospital staff are exhausted. Employee appreciation and support are paramount, including providing tools and resources to help staff deal with the mental trauma associated with COVID-19. In a competitive hiring market, staff wellbeing and recognition programs will help providers maintain necessary staff levels and even potentially reduce the risk of labor organizing that has seen an uptick during the course of the pandemic.

Price Transparency Is Here to Stay

Health systems scrambled to comply with a new CMS rule that went into effect on January 1, 2021, to disclose the cost of 300 patient services as well as payor negotiated rates. Up to this point, media coverage has largely focused on patient information usage and national compliance levels. However, we expect this narrative to shift to the following three topics: scrutiny on individual services in the market, expected CMS compliance enforcement, and payors leveraging these public disclosures in future contract negotiations.

Many health systems fear a race to the bottom on pricing, further eroding already thin margins. In this environment, health systems must educate the public on major cost centers, including what it takes to provide exceptional care each day. Make clear and concerted efforts to educate both the media and the public on the basic healthcare business principles that guide your system’s choices. The industry needs to leverage this leadership position before it passes hospitals by.

Focus on Health Equity Will Grow

Racial disparities and injustice were a focal point in 2020, with issues entrenched across our society coming to the forefront. This activity increased corporate activism and revised approaches to diversity, equity, and inclusion. Long-standing biases in healthcare delivery have been on full display during the pandemic, with disproportionate cases and deaths among minority groups, rural populations, and those with lower incomes.

Vaccines present an immediate opportunity for health systems to begin the long journey of resolving these injustices through equitable distribution. But even if health systems get that chance, there is much more to be done long-term through community health initiatives, population health programs, and even executive team diversity initiatives. This isn’t a problem that will be solved in the short term, but health systems must act proactively in addressing the unique needs of the disparate communities they serve.