How Hospitals Must Cope With Capital Losses Created by COVID-19 – Healthcare Market Overview

An article by Jason Sussman, CPA titled “Capital Allocation in the Wake of COVID-19: Fundamentals Still Apply” was published in Journal of Health Management (Sussman, 2020) explores how the emergence of COVID-19 earlier this year led to a reduction in elective medical procedures and related revenues, causing hospitals and healthcare systems to rethink their capital allocation strategies. The article argues that maintaining best practice capital allocation and management approaches should ameliorate the impact of COVID-19 on hospitals. The authors further suggest that using fundamental capital allocation decisions will inherently generate new data sets and new strategies for struggling healthcare organizations. Adequate analysis and review of this article requires a summary of its contents and personal analysis with correct predictions.

The main aim of this article is to reassure hospitals and healthcare systems that are suffering financially from COVID-19 in early 2020 and outlines the fundamental process structure, discipline and rigor of capital planning that supports optimal decision-making regarding capital allocation. The key question the authors address is “How should healthcare organizations navigate changes in revenue caused by COVID-19, properly allocate capital, and prioritize projects?” The most important information in this article echoes the point that the hospital’s capital allocation process must be integrated with the hospital’s strategic planning and finances, any decision making must be informed solely by process and scrutinized with assumptions and data-driven analytics, and the hospital must embrace adaptability with respect to with planning and decision-making processes. Hospitals should conduct a COVID-19 impact assessment that determines how the organization’s revenues will change due to COVID-19, what new expenditures are needed to meet the increased demands for quality and safety from COVID-19, and the ways in which COVID-19’s impact is changing course. hospital strategy (eg, increased priority for telehealth services). Hospital projects should be divided into ongoing projects that cannot be completed, ongoing projects that can be postponed or paused, and potential projects that can be postponed or canceled altogether. The main conclusions and conclusions in this article are that the underlying capital allocation and management processes must remain the same during challenging financial situations and the foundations of structure, discipline, and rigor and “agileness” in the planning and decision-making processes can be relied upon to accommodate changes. required. The key concept we need to understand in this article is that the basics of capital planning are structure, discipline, and rigor with the emergence of “agile” as a fundamental characteristic of planning and potentially new capital allocation. The main assumptions underlying the author’s thinking are: (1) Capital allocation strategies must change in response to disruptions caused by COVID-19, (2) Financial plans must be updated in line with changes in available short-term and long-term capital capacity, (3) If the capital allocation and management processes are well designed and properly followed, processes will not need to be changed and will accommodate necessary modifications, and (4) A fundamentally focused approach, depending on process structure, maintenance of discipline, mandatory rigor of data analysis, and attitude Disciplined yet agile decision-making is the key to successfully sustaining capital allocation and management processes (Sussman, 2020).

The implication of Sussman’s line of reasoning is that the uncertainty created by the novel coronavirus and the ongoing pandemic requires conceptual adjustments to current models of care delivery, multi-year strategic plans, and capital expenditures. If the reader does not accept Sussman’s line of reasoning, I believe that unless capital is allocated wisely, hospital failure and closure will likely follow a lack of elective medical procedures and related revenues. While the behavior of COVID-19 may be unpredictable, good capital allocation results and management processes are not. The main view presented in this article is that although hospitals have had to readjust capital allocations after COVID-19, the basic processes that determine capital allocations have not necessarily changed (Sussman, 2020).


Sussman, JH (2020). Capital Allocation After COVID-19: The Fundamentals Still Apply. Journal of Health Management, 65(5), 325-329. doi:10.1097/jhm-d-20-00177