By Devin Partida, Editor-in-Chief, ReHack.com
Twitter: @rehackmagazine
The healthcare industry experienced a steep increase in IT roles during the COVID-19 pandemic, but an economic downturn may force it to scale back. Cybersecurity is critical for compliance reasons, so hospitals must prepare their teams for the effects of a recession.
How Will a Recession Impact Hospitals?
In the past, the healthcare industry was relatively recession-proof because commercial insurers acted as a buffer by paying much more for services than government programs, according to Kaufman Hall managing director, Eric Jordahl. Now, high unemployment rates and consumer-driven health plans have shifted that dynamic.
Alternative forms of care access have also contributed to economic uncertainty. Many health facilities shifted to a digital landscape in the wake of the pandemic because the isolation presented a need for remote work and care. In fact, online-centered startups raised over $29 billion in 2021 alone, which necessitated more roles for IT professionals.
On top of the initial demand, hiring increased because remote work poses a significant security risk for health care providers. Whether facilities share patient records or submit financial reports, they need software and data security. However, the considerable growth stagnated. Despite its initial success, funding only reached around $15 billion in 2022. As a result, many are downsizing operations and letting staff go. A recession could primarily affect the job security of hospital IT teams.
How Hospitals Can Prepare for a Recession
The IT department is one of the most essential parts of a healthcare facility because it ensures the security of personally identifiable information. To adequately prepare for a recession, ensuring its efficiency is crucial.
1. Consider Payment Plans
Consumers with less spending power are less likely to pay for voluntary health services, affecting hospitals. Even if they initially access care, some people may choose not to make payments afterward because of economic hardship. Hospitals can’t control the root issue, which is the price of goods and services. For instance, the U.S. had an average inflation rate of 8% in 2022, the most significant in nearly five decades.
Additionally, hospital services can be too expensive for many. For example, nearly 30% of firms offer high-deductible health care plans, which makes employees less likely to seek care because they must pay more out-of-pocket. Even with insurance, they still may be wary of spending.
For those who can’t afford to pay upfront, a payment plan ensures the hospital receives compensation in part. It could also encourage more people to seek care when they know they have alternatives. Secured revenue can help every department continue to receive proper funding.
2. Prioritize Spending
Even though a recession would impact IT teams, their skills are always necessary. The digital age saw many health care facilities shift to online billing, scheduling and storage platforms. Adequate cybersecurity is essential to remain compliant with regulations and federal law. Hospitals must prioritize spending to retain those workers.
The most important consideration is the Health Insurance Portability and Accountability Act, meaning they must ensure patient data security. Beyond that, each organization can prioritize based on their team’s needs. Doing so before a potential recession could help them maintain their productivity and capabilities.
3. Leverage Automation
Automated tools like artificial intelligence could help an IT team manage their workload despite understaffing. Once their tedious duties are covered, they can focus on more essential tasks. Rolling out such technology before a recession gives them time to adapt.
4. Reexamine Contracts
Reviewing contracts can help hospitals prepare for a potential recession. Vendors often offer discounts on products and services in times of economic downturn, so health care facilities should negotiate and take advantage of the opportunity. They can consider it an investment since improving software could mitigate the effects of a recession on their IT team.
Employee compensation is another area where they can determine where to focus spending. For example, major health care facilities pay executives high salaries and large bonuses despite their lack of equivalent contributions.
5. Focus on Employee Retention
Filling cybersecurity-related jobs takes 21% more time than other IT roles, so employee retention is critical. Budget limitations may affect the hospital’s spending on the department, but finding alternative compensation can help. For example, it could increase benefits or promise bonuses in exchange for reaching productivity goals.
Stay Recession-Proof
While there may be no avoiding the effects of an economic downturn in 2023 or beyond, hospitals still have some advantages. Preparing the departments that will be the most affected can keep them somewhat recession-proof. Leveraging automation, considering payment plans, reexamining contracts, focusing on employee retention and prioritizing spending can help.