Is the Current Environment Forcing your Healthcare Program to Close?
Thoughtful and Effective Best Practices to Discontinue Operations Graciously
The financial aspects of healthcare operations are challenging in the best of times. However, the COVID-19 pandemic has highlighted financial opportunities that previously seemed insignificant in profitable facilities, service lines, and hospital departments. With revenues at an all-time low, leaders across the country are forced to make tough decisions that go beyond suspension of operations, including the discontinuation of services and even facility closure.
Once all avenues have been exhausted and the determination is made that closure is inevitable, it is imperative to move forward as efficiently as possible to avoid unnecessary financial losses and mitigate risks, as a typical time frame for closure is 30-60 days. In the unfortunate event of a necessary closure, we find that best practices are commonly often overlooked.
Customize Messages to Each Audience, Especially Patients
For closures of any scale, a clear communication plan supports smooth operations and alleviates avoidable anxiety for all impacted. A strategically thorough communication plan including key deployment dates should be developed well in advance of announcement by a multidisciplinary team. Identifying all parties requiring information and establishing a structured timeline for communication not only supports the teamwork required for success, it also minimizes rumors that can cause unfortunate distractions. Patients, their families, physicians, staff, vendors, volunteers, and community members who rely on the organization for healthcare services should receive thoughtful and timely communication.
Communication materials should be available in languages common to the community.
Perhaps the most vulnerable population requiring communication regarding the closure are patients. We highly recommend care providers meet with all currently admitted patients for a one-on-one conversation and provide a letter from the CEO that includes a phone number to call with questions.
Past and future patients will also want to understand how the closure impacts them. Identifying and providing contact information for available healthcare facilities and/or care providers for patients is critical. Appropriate signage, handouts, recorded phone messages, and website communication should be updated with real time information, including contact information, to support ongoing needs for patients, employees, and vendors.
Many past patients will be concerned about their medical records. Standard messaging should be distributed to all staff, particularly phone operators, to support the inevitable influx of inquiries and requests.
Partner with Health Information Management leadership to review medical records access options and design a custom communication strategy for patients seeking their records.
Clear and accurate onsite signage ensures patients, visitors, staff, and vendors can navigate the evolving facility layout throughout the closure notice period. Communicating the schedule for locking vacant areas should be staggered based on the closure timeline.
Identify a security or plant operations staff member responsible for updating signage as new areas become inaccessible.
Specific access plans by area should be developed including, but not limited to, website messaging, letters, signage, personal phone calls, and more. To support consistency, we recommend developing scripts for specific community messaging.
Distribute a communications FAQ document to support consistent messaging from staff, including contact information for a point person for all media inquiries.
Recommended Communication by Audience:
Medical Staff Management
While transitions of any kind require a thoughtful communication plan to medical staff members, closures are especially complex. Perhaps more than other team members, physicians will feel personally impacted by the decision to close. Many have built their practices around hospital services. For some, the closure is devastating, and next steps can feel overwhelming.
We recommend meeting with your Chief Medical Officer and Director of Medical Staff Services first. Discuss all sensitivities and customize the medical staff communication plan accordingly. Next, engage with physician leadership and the Medical Executive Committee to announce the closure. Be sure to follow up with standardized written communication to all medical staff involved.
If applicable, assist medical staff to transition their practice to another facility. For physicians with patients scheduled for procedures, swift attention will be required to find another location to support the upcoming services. While shifting the procedure to a sister facility may seem straightforward, changing facilities may include licensing, privileges, credentialing (30-60 days), and processes around insurance verification.
Plan to transition scheduled procedures to another facility, keeping in mind that physician privileging can take months.
Immediately following the initial announcement, it is critical to review physician call schedules and agreements through the closure date to ensure adequate coverage and contractual compliance. Ensure the physician time sheet approval process is followed based on amendments and/or termination of service.
Review professional service agreements for terms of service. Amend or terminate as appropriate to maintain payment agreements through required date.
Transition of Care
Determining when your facility will discontinue accepting new patients will drive the time frame for a closure of your facility, department, or service line. Researching the notice period required by your state guidelines is critical and should be done before the decision is made to close. The downstream impact of this decision drives the piece of patient communication that warrants the most planning: patient care transition to another community resource.
If the closure impacts inpatients, develop a plan for discharging or transferring each patient. Case Management will play an integral role in facilitating smooth discharges and transfers by partnering with patients and families to identify referral facilities.
Ensure transfer agreements are in place with receiving facilities. Update transfer center operations, if required.
For outpatients and upcoming surgical patients, many variables must be considered. Patients undergoing treatment for chronic conditions, patients with upcoming appointments, and patients scheduled for surgical procedures within the next 120 days require individual evaluation. We recommend that in addition to written communication, these patients receive at least one personal phone call with a resource to support rescheduling at another facility to ensure there is no disruption or avoidable delay in care. Working closely with referring physician partners can make the rescheduling process seamless for all involved.
When rescheduling patient procedures, remember to consider Labor and Delivery patients.
Patient census by day over the course of the closure should be projected to ensure resources are available to provide care. This timeline should include the date the facility will discontinue accepting new patients, ensuring consideration of community obligations, including EMTALA. The established timeline is the basis for projecting staff members required to support available services each day.
Employee Support, Human Resources, and WARN Act
Loyal staff members are particularly impacted by the decision to close. Anyone who has navigated this challenging process in the past can share that there is an intense emotional side to closures which impact every team member from front line staff to executives in administration. Beyond the emotions are very real impacts to employee finances, as many are the sole provider of income for their households. One of the first reactions from staff after the closure announcement is often related to fear for their jobs and concerns around what they will tell their families.
Beyond the emotional and financial impacts, compliance is a very important consideration. If your organization is unionized, it is critical to review your union contract and meet all contractual obligations. Another critical component to compliance is understanding the Worker Adjustment and Retraining Notification (WARN) Act. The WARN Act requires employers with 100 or more employees to provide a 60-calendar day advance notification of closings and mass layoffs of employees.
Fully research the WARN Act and determine strategy prior to announcing closure, as the timeline is demanding.
Once impacted staff members are quantified, carefully review WARN Act language to determine notification requirements. Once a WARN Act determination is made, be sure to add notification information to the master communication plan for the closure. Pay attention to the WARN notice requirements and synthesize the timing, considering other communication plans, as it is possible to confuse staff members. Additional WARN Act considerations include:
As an act of good faith, will your organization be open to giving more than a 60-calendar day notice to employees?
The WARN Act does not provide explicit guidance on how to handle health & welfare and other fringe benefits. The organization should address the following: Employee cost for COBRA medical insurance premiums, Severance pay (in addition to WARN Act pay), 401K contributions, Tuition reimbursement, Pro-rated bonuses paid to employees (e.g. sign-on and retention)
If shut down procedures are completed prior to the 60-calendar day notice period, will you require non-exempt employees to continue to “clock in” to work?
How will you handle employees that become non-respondent during the WARN Act 60-calendar day notice period?
Will you offer career transition support to employees impacted by the plant closure and/or mass layoff?
For more detailed information on the WARN Act, review the U.S. Department of Labor FAQs, click here.
Human Resources takes the lead in developing any severance agreements required for employees. If severance agreements are required, we recommend including contract language to ensure employees continue work through specified dates that coordinate with the closure project plan to support patient care and closure needs. Retention bonuses may be appropriate for some staff members. Copies of termination/transfer letters should be kept in each personnel file. Arrangements should be made for the transfer of all employee records to ensure accessibility following the closure.
Supporting employees through the transition is critical to the community. If closing a department, service line, or facility within a system, perform an analysis of current vacant positions and attempt to transfer impacted employees into open positions at sister facilities. If your facility is not part of a system, consider inviting outside facilities to hold a recruiting fair specifically for the impacted employees.
Orient employees transitioning to new units as if they were new hires
Keep in mind that layoffs are major life events, not just for employees losing their jobs, but also for colleagues retained by the organization. Empathetic leadership is critical to supporting employees transitioning into a new role, and it is encouraged that organizations operating as a system treat internal transfers the way they treat new hires. Orientation and onboarding efforts should be comprehensive to ensure a smooth transition.
Vendor Relationships and Renegotiating for Reduced Services
Along with physician call agreements and PSAs, reviewing contracts with vendors who provide support services is an essential focus area. Negotiating out-clauses to reduce or eliminate fees associated with vendors and contract services is a critical piece of every closure. Ongoing contractual obligations and fees are an avoidable financial burden.
Assign an experienced leader to review all contracts, summarize any potential dollar impact, and begin renegotiating immediately to successfully resolve all contractual obligations to minimize financial losses. Steps to help effectively resolve contractual obligations include:
Negotiate out-clauses to reduce or eliminate fees and define obligations in relation to service, medical records, and future access to systems.
Review each agreement, determine how long each vendor will be needed, and tailor the contract end date for each unique service.
Consider that many systems and processes must remain operational after the closure is completed, even if closing an entire hospital. For example, the physical plant will still require maintenance until the property is sold or repurposed for another use.
While it is common to overlook post-closure needs, facilities are significant assets and neglecting to plan for post-closure necessities could depreciate the value.
Example vendors that may be required after closure include lawn maintenance, basic building management, and many more. Contracts with these vendors will not be terminated but modified. This process will likely require negotiation, so ensure thoughtful communication with these vendors.
Leveraging Department Leadership
Leveraging the expertise of local department leaders is critical for a successful closure. Department leaders not only intimately understand their own operations, but they may also identify existing contracts and help negotiate with their vendors based on existing relationships. Partner closely with these leaders to execute the closure, but first, ensure you understand how the closure impacts them personally. Work with HR and sister facilities on potential job placement, as this is critical to support their engagement in the closure process.
The project lead should meet with all department leaders, both individually and as a group, to understand current state, define ideal future state, and create a daily escalation pathway for concerns.
Work with department leaders to develop closure punch lists for each area.
The punch list template for departments may include, but are certainly not limited to the following:
Document retention procedures including records consolidation and transition
Communication plan: Patient, community, physician, and other service partners
Staffing plan
Inventory, physical plant, and assets (IT, furniture, supplies, equipment)
Ensure equipment is cleaned and prepared for storage
Contracts, leases, and agreements
Regulatory notifications
Department organizational structure through closure
Ensure inventories document post-closure locations for each item. Special considerations are required for capital equipment, lab analyzers, MRI, Cath, CT, nuclear medicine, and some pharmaceuticals.
Meeting daily is a great way to check in and provide both support and accountability for leaders responsible for project plan items. Ensuring certain department leaders, such as HR, security, HIM, and IT, are present at each daily meeting will be critical to support other department leaders’ closure activities.
Department staffing should vary each week based on activities required during and after closure. Design a unique staffing plan with the department leader for all areas impacted by the closure. The plan will likely change daily, so be sure that the plan extends throughout the closure. Measure adherence to the plan to reduce avoidable labor spend during and after the closure.
Adhere to Variable Staffing Plans to Support Operational Changes
If closing a full facility, several departments must remain operational throughout the notice period, but their schedules should be modified to meet the needs of the facility each week. Security is a prime example because of the support required to progressively close each area of the facility. Given the dynamic nature of security during the closure, staffing levels should be evaluated for appropriateness each morning, ensuring the correct amount of staff are present to mitigate risks.
Remove badge access timely as access needs change.
Ensure that coordination support for the transition plan is developed for key systems requiring post-closure access and activities. The following are examples of key areas for post-closure consideration:
Medical records access for past patients and custodial hand-off
IT—information system management for future access for patients and caregivers
Accounting records
Plant Operations – Recycling & Medical Waste, Landscaping, Maintenance Contracts
EVS
Inventory management
Contracts management
Landscaping
Medical gas systems, supplies, and servicing
PBX
Security of facility/department/area
If meals are currently served, cafeteria operations are a key focus area. Establish a daily plan for meals and staff required based on the last day of patient and staff meals, cost, and projected daily meals required. These projections may be slightly more complex if the closure of areas is staggered. Important considerations include feeding staff who are working to close an area for days or weeks after the facility has discontinued accepting new patients. Partner with finance and operations leadership to analyze options, considering physician needs, which may include sack lunches available for purchase in designated areas provided by the facility cafeteria operations, sister facility, or vendor.
Design the Project to Support Execution
Immediately after the closure date is set, an administrative leader with ownership for the transition should be identified and provided a defined accountability structure for reporting. We have found that even after clear ownership is established, the project timeline can be derailed if access to the decision-making authority is delayed. Establishing escalation protocols at the start of the project ensures that key decision makers are accessible to prevent costly delays, as the dynamic nature of closures tends to raise issues that require time-sensitive high-level approval.
Identify a key decision maker that the project manager can quickly access for fast turn-around approvals that are required to keep the project on-track.
An organized project management approach that identifies clear owners with accountability drives the success of every closure, regardless of size and scope. Local requirements can vary by state, but a typical timeframe for closure is 30-60 days with most activities occurring within this window. Monitoring the timely execution of detailed closure activities within this window and ensuring issues are escalated quickly to leadership and decision makers can prevent many avoidable costs.
Due to the dynamic nature and tight timeframes of closures, we recommend daily meetings onsite to review upcoming and overdue items within the master project plan. Separate meetings focused on appropriately detailed plans for certain areas should be regularly shared via email to all project team members.
Project Status Report Example:
In our experience, reporting key metrics at a high level keeps the closure on track to meet the project’s timeline and goals. We recommend distributing a weekly heat map to report the status of high-level items such as:
Percent of work complete compared to percent of remaining days until closure date
Patient volumes or census by day
Worked staff hours compared to staff plan FTEs by day, considering volumes
Scheduled procedures through closure date and rescheduled procedure percentage
Total contracts terminated or renegotiated as a percent of total contracts
Detailed closure activity status stoplight report - only include details about overdue items by focus area and owner
The weekly status communication should clearly highlight items behind schedule so that the reader may identify required intervention in 10 seconds or less.
Weekly heat maps and stoplight reports are effective tools to quickly communicate project status and highlight needs for top leadership intervention.
Conclusion
A closure of any magnitude is painful for everyone involved: patients, employees, physicians, and the community. The project management work required to successfully execute a closure is intense and complex, even without the emotional impact. By the time a decision is reached to close a facility, service line or department, generally all other mitigating strategies have been exhausted. While sometimes closure is the only reasonable alternative, it is our mission to support hospital viability. We partner with healthcare facilities to support course correction wherever possible through effective financial management strategies to support viability, ultimately preventing closure. For more information about expense management strategies to prevent closure, read our article focused on 10 Ways to Slow Spending Without Impacting Care.