Private hospitals and the challenges of navigating the new normal

• Published date: 07 October 2021
• Publication title: Business Mirror

WHILE hospitals are equipped to deal with emergency situations that involve multiple casualties, they were not prepared to deal with an invisible enemy known as the Covid-19 virus.

Imagine the concerns and the fears going through the heads of hospital administrators. Will frontliners get infected? What rooms can accommodate Covid-19 patients? Do we have enough medicines to treat them? Do we have enough PPEs for frontliners? How can we get non-Covid patients to come back to the hospital so that their illness will not worsen?

The BusinessMirror had the opportunity to interview the executives of nine private hospitals to get their views on how the pandemic has changed the way they run and manage the hospitals. One theme was common with all the nine hospitals-the challenges they face with PhilHealth and how they managed to keep afloat financially in spite of this.

Cardinal Santos

Medical Center

It all started in Cardinal Santos Medical Center (CSMC) last year when on March 6, 2020, the doctors at CSMC diagnosed the first local Covid-19 case. While he had no history of foreign travel, the 62-year-old was hypertensive and diabetic. He started coughing on February 25, 2020, went to CSMC on March 1 where he was admitted and diagnosed with severe pneumonia. The Department of Health (DOH) confirmed he was infected with Covid-19 on March 5.

On March 16, 2020, President Duterte announced the imposition of Enhanced Community Quarantine (ECQ) over Luzon, including the National Capital Region effective 12 am of March 17, 2020. This ECQ was to be extended on several occasions.

This first local Covid-19 case prompted CSMC to put in motion the safety protocols and the other services that they needed in order to address the expected influx of Covid-19 patients.

Dr. Zenaida M. Javier-Uy, CSMC Senior Vice President and Chief Medical Officer

On managing physical resources

Dr. Zenaida M. Javier-Uy, CSMC Senior Vice President and Chief Medical Officer, said the direction from day one was for the hospital to increase its capacity to handle Covid cases.

'That was the direction that we took up and as we speak, we are building another wing in our hospital that will really handle our Covid cases,' Dr. Uy said. 'It will be well-equipped to handle our Covid cases and there will even be Intensive Care Unit (ICU) cubicles for Covid cases. So increasing capacity is one we have addressed.'

According to Deidre Arnold Able A. Malapitan, AVP and Head of Facilities and Management and Safety Division, the facility is a duplication of the ER with a triage area, isolation rooms and beds.

'We are not treating our Covid patients in a temporary shelter but in a rigid structure that was built in 15 to 20 days,' Malapitan said. 'We also converted two operating rooms (OR) into negative pressure ORs.'

Since the hospital did not have any dedicated ICU beds for Covid patients, Malapitan said they started building Covid ICUs last June and they are expected to be ready some time in October.

'It is a 28-bed Covid ICU, eight ICU beds and 20 isolation rooms. That is how Cardinal is preparing and continuously improving its response to Covid,' he added.

Another step that CSMC took to address the pandemic was to construct its own Molecular Laboratory which became operational sometime in September or October last year. Prior to that, Cardinal had been sending out its RT-PCR samples to the Research Institute for Tropical Medicine (RITM), the Lung Center and then to a private laboratory.

'One of the things that I will always be proud of is our strong collaboration with our local government. From day one, we were in close touch with the San Juan City local government and we collaborated on all efforts even on where to quarantine our healthcare workers,' she said.

More Covid-19 patients meant a growing demand for RT-PCR testing. Cardinal designated their parking area located in front of the Emergency Room as the swabbing station to provide enough ventilation.

'I think the doctors and the patients also appreciated the fact that they do not need to go inside the hospital or the Emergency Room just to get their swab. So we had swabbing schedules from Monday to Sunday,' related Dr. Monserrat S. Velasquez, Assistant Vice President and Head of Clinical and Specialty Services Division and Offsite and Ancillary Services.

Velasquez said they also faced challenges in sourcing Covid-19 medicines amid growing demand but a dwindling supply. The Pharmacy had to project how much the hospital actually needed to purchase for patients so that they would not have to stock up on them for a long period.

'We were actually well ahead of other hospitals, if I may say, in terms of making sure that we actually have all those medications,' she said. 'And I think one of the advantages is that we worked closely with our infectious disease doctors. They are actually the ones recommending that this will be coming up soon and that we would be needing these medications in the next few months.'

A standard procedure for all Covid-19 patients is to undergo a CT scan and Cardinal devised a schedule where all clean cases, or non-Covid cases, are scheduled in the morning. Covid patients are scheduled in the evening until the early morning hours.

'The direction of the hospital is since we accommodate all these patients, we cannot admit all of these patients. We try as much as possible to treat them on an outpatient basis so that we can include doing ancillary diagnostics on an outpatient basis,' Velasquez said.

On financing and cash flow management

In terms of CSMC's financial standing, Marivic S. Mabuti, Vice President and Chief Finance Officer, recalled that on the first month of the lockdown, CSMC's revenues 'really shrank, probably by 50 percent, and it was aggravated by the fear of people to come to the hospital.'

'Despite the significant drop in our census and revenues, we still decided at that time to retain everyone, all the employees and staff. As such, we had to bear the burden of having a huge fixed overhead cost versus the low revenues,' Mabuti said.

Every year, the hospital has a purchase plan and at that time, CSMC's inventory levels were at an all-time high because 'management was gearing for an increase and higher growth in 2020, coming up from the momentum of 2019.'

'So we were ready to take off. We had a huge inventory on hand and then suddenly the census of the hospital dropped. So we had to bring down inventory,' she explained.

In terms of capital expenditures, Mabuti said Cardinal already had several committed capex and projects underway. Due to the pandemic, some of the projects had to proceed while the necessary adjustments were made to either cancel or defer the other capital expenditures.

'All of those contributed to the erosion of our operating margins and the deterioration of our cash position. So what did we do? As they say, the worst thing that could happen is to do nothing during a crisis,' she said. 'In our case, we turned our focus to cash, realizing that we need cash in order to survive during the crisis.'

Concrete steps were taken on the drivers of the hospital's cash position and these include receivables, inventory, payables, purchases and capital investments. On the receivables side, Mabuti said the hospital reinforced daily collection from admitted patients. Online payment facilities were provided to patients, especially patients' families who had a difficult time getting to the hospital because of transportation restrictions.

Adjustments also had to be made in CSMC's operational expenses. Mabuti said management had to reallocate some of its budget to more important activities like, for one, the Covid support programs for employees, which included shuttle services and medical assistance.

'For our payables, we also worked with our vendors to restructure the payment terms as we tried to cope with the pressure of cash payments for Personal Protective Equipment (PPEs) and other Covid medicines and supplies,' she said. 'Aside from taking these concrete actions on the drivers of our cash position, we also did a more frequent cash flow forecasting exercise. Instead of monthly, we made it weekly and even daily updates.'

After a year, Mabuti noted that the hospital is treating more non-Covid cases now compared to last year, when the hospital was treating solely Covid-19 patients. This patient mix has, according to Mabuti, 'provided us with a good source of revenue for us to be able to cover the fixed expenses or the fixed overhead expenses of our hospital.'

Raul C. Pagdanganan, CSMC President and CEO

'I would also say that we now have a better handle on the medicines and supplies, the stocking level, so we minimize the use of our working capital. On the receivables side, we remain diligent in collecting for our patients especially now that we are struggling with our ballooning receivables from PhilHealth.'

Raul C. Pagdanganan, CSMC President and CEO, added that the focus at the start of the pandemic was for the hospital to be liquid and come up with different scenarios.

'We call this scenario planning and what is important is whenever you have scenario planning, it is essentially what you call contingency provisioning because you really have to adjust in a pandemic situation with a magnitude such as Covid, you really have to prepare for what comes next, you really have to be agile,' he said.

In handling and protecting human resources

In any hospital, nurses usually are majority of employees and according to Leona Paula L. Macalintal, Director for Clinical Nursing Operations, two aspects influenced the way nursing services and resources were managed during the pandemic.

The first is in the way staff are allocated. Per Macalintal, in the nursing field, nurses tend to be assigned in one area and it is difficult to reassign them abruptly to special areas or other areas of practice they are not...