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Reopening US state government operations on a path to the next normal

State leaders must continue to address the COVID-19 challenges facing their own operations while also considering how to rebuild and reimagine for the next normal.

The COVID-19 crisis struck with terrifying speed. In a matter of weeks economic activity had slowed to a crawl. Government operations were pulled in two directions—needing to surge some services to meet the crisis, while needing to adjust others to physical distancing and stay-at-home orders. Recovery is going to be much more gradual and governments have the dual task of reopening and restarting not only their own operations, but also the economy. This article focuses on how US states can start preparing now for the next normal for their own operations and workforces. Already many states are beginning to pivot from focusing almost exclusively on crisis response to planning for a restoration of some services and functions, including their own operations.

As state leaders begin planning for this reopening, they must continue to address challenges to their own operations brought on by COVID-19, from strained budgets to work backlogs, while also considering how to rebuild in the context of an altered world.

The challenges are real, but there are also opportunities to reimagine our collective future. This moment has been an inflection point, pushing states to operate in new ways. States should take stock of knowledge gleaned from the crisis while the opportunity for change is highest. States must plan all the immediate steps necessary to reopen their own operations, while taking time for thoughtful reimagination of their place in the longer-term next normal.

The most pressing short-term needs are planning the government workforce’s safe return and restarting the delivery of essential government services. To some extent, restarting means redesigning. States will need to change how they operate to succeed within a changed environment. The optimal balance between planning immediate steps and architecting a new future will vary from state to state, but all states will benefit by doing both.

The state of the states

In most states, the state government is the biggest employer. It’s no surprise, therefore, that most have taken strong action to protect their workforces from COVID-19. While essential services such as transportation, health, and emergency services have continued (in a modified way) throughout, many other services have been scaled back and/or operated remotely, including most administrative services.

Clearly, recalling workers and returning government services to full throttle will not be as simple as pressing a start button. Powering up a large, multifaceted organization from a mostly dormant status is a complex task. States must find a systematic way to prioritize and sequence the various elements of their machinery as they are brought back online and identify and address the most pressing needs first. It’s a formidable challenge; compared with the private sector, many of the services provided by government, such as education, social services, and healthcare, are both critical and hard to provide remotely, safely, and effectively.

Even as they do this work, states should focus on longer-term issues that will better position them for the future. This includes accelerating plans to address long-standing needs, like building digital capabilities, as well as addressing new needs revealed by the COVID-19 crisis, such as weaknesses in remote service provision and talent gaps that impede nimble, data-driven solutions.

Restarting government services and operations

States will need to carefully balance the actions required to restore government services as quickly and as safely as possible with the unique opportunity this period offers to put in place much needed change programs. As states begin the job of restarting operations, they should consider focusing on four major workstreams (Exhibit 1). These four workstreams will help them find the right balance between solving for immediate needs and building a new, more resilient future state.

1. Build a new baseline of agency services and employees

To reopen services as quickly and safely as possible, states should consider segmenting and sequencing both services and employees. States can ask a series of questions to rapidly segment services according to those that are most urgently needed by the public, the health risk they pose to workers and the public, and size of the population they serve, as well as quickly classify employees for rapid deployment to fulfil these service needs.

Classification and prioritization of services

Most services will fall into four archetypes, which correlate with four waves for reopening (Exhibit 2).

The first wave consists of all essential, low-contact services, which can include vital IT or public-utilities services. These operations should be both low risk and high value and should therefore be at the head of the queue for reopening. Governments can think through the actions necessary to get these vital services up and running as quickly as possible, prioritizing those that have been most hurt during the period of remote operations.

Next in line are essential high-contact services, which can include corrections or mental-health services. Governments will need to think through additional safeguards necessary to reopen and restore services quickly while minimizing the health risk to workers and the public. This could include steps to reduce or defer demand for these difficult-to-deliver services.

The third wave includes all flexible, low-contact services, which can include human-resources services. In many cases, the task will be to develop processes and tools to sustain long-term remote operations. Governments should consider whether any services or workers can be transitioned to permanent remote work.

The final wave includes all deferrable, high-contact services, which can include documents and licenses services. The questions to consider here are whether these services can be deferred or reduced while viral transmission is active or whether the mode of service delivery can be reconfigured to reduce risk while still maintaining adequate service levels.

Classification and prioritization of employees

As governments plan which services to reopen when, they should also consider the best way to sequence and prioritize roles within agencies. One way to prioritize is by using a talent-to-value approach to identify the most critical teams and roles for specific high-priority services. This approach encourages leaders to look beyond traditional hierarchies to pinpoint where the true value of a service or function is being created and enabled.

Using this analysis, agencies can divide their workers into four categories, creating a detailed return-to-work plan for each.


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First are on-site critical workers. These workers can be recalled in stages based on local health conditions, but there should be a detailed plan that looks at virus spread, guidance from local public- health authorities, workforce readiness for returning to work, and legal liability.

Next are on-site flexible workers. Here, the ramp-up might be slower and include staggered shifts and retraining to build more flexible skill sets and a shift toward flexible work arrangements.

As states categorize their employees, it is important to assess which roles and teams are critical for delivering a service, regardless of where they sit in the hierarchy.

Virtual workers are those who can continue to carry out their roles effectively while working from home. Employment data from 2018 suggest that nearly 30 percent of state and local government employees can work virtually, including office clerks, assistants, and lawyers. Agencies should focus on providing any additional support necessary to ensure productivity, connectivity, and health. Again, work arrangements should shift where needed and possible to become more flexible.

Finally, governments and agencies should consider new demands and opportunities and provide the necessary transparency and reskilling to fill these new, reimagined roles.

As states categorize their employees, it is important to assess which specific roles and teams are actually critical for delivering a service, regardless of where they sit in the hierarchy.

2. Prepare safeguards for workplaces and employees

The return of the workforce to their places of work must be executed with care, making worker and public health a top priority. To provide adequate infrastructure to do so, governments need to have a clear understanding of the working conditions for each role, including level of contact with the public and level of control that can be exerted over the work environment (Exhibit 3). The measures taken to protect the health of teachers, for example, will be very different from what’s needed to protect judges or call-center agents.

States can think about the steps they will need to take in three ways.

First are the measures needed to ensure healthy humans, such as enforcing physical distancing and providing adequate sanitizing of materials and products that come into contact with the broader population.

Healthy business operations include practices and policies aimed at keeping workers safe, such as monitoring the temperature of workers, embracing policies to allow people to work from home, and instituting flexible sick leave.

Practices such as installation of barriers to limit physical contact between workers and ensuring adequate ventilation are aimed at creating a healthy work environment. Other steps include no-touch bathrooms, providing adequate supplies of hand sanitizer, and both routine and targeted cleaning and sanitizing.

3. Plan and execute return

State governments should work together with departments and agencies to define a clear approach for a safe return to sustainable operations. This road map for reopening includes the steps earlier outlined for segmenting workers and return-to-work plans for each. It also includes a sequence of steps to ensure that employees know how to return, how to resume their duties, and where they should focus their efforts first. Some elements of the job will remain the same, but others will change. All of this must be carefully communicated and monitored. The steps here fall into three areas.

Communication, planning, and scheduling

State central response teams can work together with departments and agencies to develop a schedule of major service and function reopenings and milestones, providing guidance and direction to department leadership, validating return-to-work plans from individual departments, and assessing related equipment and budget needs. Planning should be supported by a cadence of communication from the central response team to agencies, employees, and external stakeholders.

Measurement of reopening indicators and key performance indicators

Again, the first priority must be worker and public safety. Governments can develop dashboards and other mechanisms to monitor and address emerging risk areas. Designated agency leaders can ensure compliance with the state reopening effort and conduct regular check-ins to maintain a continued focus on safety.

Prioritization of backlogs, projects, and resources

States can also conduct an inventory of service backlogs for services that were slowed, paused, or limited during quarantine, creating lists of both essential and nonessential services and products that have been paused. They can then pivot staff and resources toward critical projects, such as improved IT services for remote delivery, and redistribute resources to bolster areas under strain. These decisions will be taken within the context of additional budgetary considerations given the crisis, and states will be pressed to consider efficiency opportunities across services.


How to restart national economies during the coronavirus crisis

Finally, as states work through the process of planning and operationalizing the next era of government, they should consider establishing a governance framework to facilitate smooth operations and coordinate all the tasks that will be part of this massive and wide-ranging undertaking. In addition to a steering committee and core working team that includes representation from health, technology, and other relevant agencies, they can consider including SMEs and representatives with backgrounds in economic recovery, emergency and disaster response, and other relevant fields, who can weigh in more occasionally on decisions related to their areas of expertise. Each of the areas of focus under each workstream should be assigned clear leadership, with agencies/leaders with expertise in the area deployed appropriately.

4. Reimagine a next normal for state service operations

The crisis has uncovered new work practices and opportunities for building a more responsive and resilient government. Even as administrators work through the complex process of “reboarding” their workforces and creating a safe environment for both workers and the public, they can think through ways to strengthen and support new ways of working as well as technologies that can support better provision of government services.

Some of the reinvention might be a matter of dusting off old ideas that have been stymied, while other initiatives might be based on new ideas born of the crisis. New, more flexible ways of working and remote working should be considered and evaluated based on their ability to increase productivity, rather than just insisting that everyone conform to traditional practices. Parts of the five-year plan may now become part of the five-week plan, and vice versa. Everything is on the table now, and governments should take the time to mine this recent period of enforced quarantine and remote working for practices that should be scaled to help society spring back better and stronger than before.

Focus areas for this reimagination include rethinking work, retooling talent, and redesigning customer experience.

Rethinking how work gets done

As states imagine their next normal, it is helpful to consider the new baseline of what work means in the context of this new landscape. This includes everything from baselining budgets based on post-coronavirus priorities such as safety and health to exploring automation and other digitization levers to make processes more resilient to future crises. Administrators should also take a hard look at the actual demand for services and reprioritize where appropriate. Some services that were paused may have been revealed to be of low value and may not need to be brought back on line. Other crisis-driven adjustments may be of much higher value and should be retained postcrisis.

Worker productivity is a rich area in this regard. There may well be important lessons from the crisis in how to support employees in working better and more productively, regardless of time or place. This should not be a matter of intuition; rather, governments can implement productivity- measurement tools to track outcomes.

Retooling worker talent and capabilities

Now is also the time for states to get serious about talent assessment and filling skills gaps. Carefully assess how the COVID-19 crisis may have changed the demand for certain roles, skills, and capabilities, and flag both higher- and lower-demand roles. Given the employment picture, there could be an opportunity to revisit job types that have previously been hard to source and explore outreach to talent who might not have previously considered government work. States may wish to explore opportunities to partner with large local employers that have been forced to lay off workers who can fill these high-demand needs. 

This is also the time to embed and reinforce new ways of working—and to flag new practices that are not desirable. States should assess which changes and new practices are most useful, and develop a training and communication plan to help agencies reinforce desired changes and revert away from less-desired behaviors. It is important to train agency leaders and supervisors to role model positive new ways of working. Finally, states should develop a plan to help agencies upskill and reskill workers to meet changes to their roles, postcrisis.

Redesigning customer experience

States are coming through a period of having to provide services under extreme stress. Despite best efforts, many services may have been delivered insufficiently or unsatisfactorily during the crisis, creating the need to restore public confidence.

By surveying residents and employers, states can determine where their systems held up—and where they need to be reinforced. In some cases, service provision may actually have improved and that, too, is important to know.

To streamline service delivery, states can then work with agencies to address the pain points for the highest-priority customer journeys. By surveying stakeholders they can also better project how service demands are likely to increase or decrease postcrisis—including demand for new types of services not regularly offered by states, such as remote education or childcare for essential workers. A short concept-ideation workshop can be useful in helping states uncover which areas to focus on, and answer the questions of how public behavior has changed in the wake of the COVID-19 crisis, and how service delivery can be reconfigured to meet change in service demand.

As they work through these customer-experience improvements, states and agencies can also align them with their broader digital road map. There may be an opportunity to invest or reallocate resources and projects toward strengthening digital and remote service capabilities.


Reopening government is a complex task unlike anything most states have ever undertaken, but it also presents a chance to institute new practices based on the enforced remote operations of the crisis or to accelerate long-standing plans that the crisis has made more urgent. The challenge is to balance the immediate necessary and difficult steps with the wider-ranging, longer-term shifts. It won’t be easy, but as the crisis abates, there is a clear path forward for states to reopen to a next normal and an opportunity to define a new and better future.

Restarting national economies during coronavirus

For weeks, most governments have focused on controlling the spread of the coronavirus, many of them by implementing a full lockdown strategy. That’s starting to change; in recent days, a few have moved to strike a better balance between “flattening the curve” and reviving the economy. But uncertainty is rampant. In our previous article, we outlined a selective lockdown strategy, in which certain regions and sectors can gradually return to work. Such a strategy makes it possible to define the optimal number of people allowed on the streets, making sure that lives are protected, while also minimizing the cost on livelihoods.

In this article, we explain the elements required for the selective lockdown approach to work: a fine-grained understanding of the virus’s spread in every part of a country; the economic relevance of every sector in every region; capabilities for testing, tracing, and isolation compliance (TTC); and protocols for physical distancing and safety. In some cases, expanded intensive-care unit (ICU) capacity is another key element. If governments can master these requirements and build the information systems needed to understand in real time what is working and what is not, then they will have found a way out of our collective nightmare.

Not all strategies are equal

Countries have used a wide array of physical-isolation strategies to fight the pandemic. Although each is unique, they can be grouped into two macro strategies, with different mindsets:

  • Full lockdown: a blanket nationwide lockdown to contain the virus and decrease rates of transmission where only essential sectors are allowed to operate, while citizens circulate only for basic needs, such as food and medicine. Several countries have followed this approach, including France, Argentina, and Colombia.

  • Selective lockdown: a partial lockdown with both essential sectors and some others allowed to operate, each with specific protocols. Countries have implemented this strategy in several ways; the most effective seems to feature a virus-tracing capacity that allows governments to isolate people who test positive and trace their movements to find corresponding chains of contagion. South Korea has used this strategy successfully.


While both strategies seek to manage the rate of contagion given a country’s healthcare capacity, they involve very different mindsets. Countries pursuing a full, prolonged lockdown are possibly betting on the development of a vaccine or an effective treatment; until one of those comes along, they seek to minimize rates of infection and expand healthcare capacity. A selective lockdown reflects the belief that a large percentage of the population will be infected before a vaccine becomes available. As we explain later, a selective lockdown strategy may require brief periods of full lockdown either to increase healthcare capacity, or if the speed of viral transmission becomes too fast to control.

If we plot the contagion curve over time, it becomes clear that in the absence of a vaccine or a cure, the number of people infected and of cases needing medical attention will be similar in all three scenarios: no response, full lockdown, or selective lockdown (Exhibit 1). But the cost in lives and livelihoods will differ significantly.

The idea of flattening the curve has become well established, but the two macro strategies do it in different ways. A prolonged, full lockdown could be very effective in flattening the curve, but it will also result in significant unused healthcare capacity (blue area of Exhibit 1) when compared with a selective lockdown, and will result in unnecessary costs to livelihoods due to excessive restrictions on economic activity.

Additionally, a prolonged full lockdown will increase the total time economic activity is restricted, which also represents an unnecessary cost in livelihoods (gray area in Exhibit 1). In our modeling for several countries, our directional estimates suggest that the economic cost of full lockdowns is at least twice as high as that of selective strategies. Furthermore, if a full lockdown strategy persists for several months, it could cost up to 20 percent of a country’s GDP. In many cases, that would undo decades of economic and social development.

A selective lockdown, on the other hand, allows countries to reduce the duration of government-mandated restrictions on economic activity by incorporating and optimizing the elements we describe in this article.

Even though a selective lockdown seems to be a smarter approach, many countries still remain in full lockdown, because too much remains unknown about how to transition successfully, and because each country’s context varies widely from others.

These uncertainties can be overcome. We argue that if countries strategically define who can be on the streets at any given time and have adequate tools to control the virus spread and manage the infected population, they will be better prepared to address the pandemic.

Who should be on the streets? The uncomfortable middle ground

A selective lockdown recognizes that the risk of contagion of COVID-19 varies from person to person, both because of their personal circumstances and the nature of their activities and interactions. Such a lockdown states that infected people and their chain of contagion must quarantine during the time of infection. It also advises that the more vulnerable populations (the elderly, people with preexisting health conditions), as well as others with a high risk of transmitting the virus, such as children, should stay at home until the rate of contagion is low enough to safely interact with other people. However, mandating physical isolation for everyone else is more difficult, as these people represent most of the economically active population. Isolating them has a severe effect on the general livelihood of the area.

If we leave aside those people who can work remotely, the question becomes what to do with the rest: in-person workers in nonessential sectors, who typically represent the majority of the population, particularly in emerging and often highly informal economies. Activities such as manufacturing, construction, commerce, professional services, and other key sectors can represent up to 80 percent of GDP in a given country. When should they go back to work? How many jobs will be lost if no action is taken early on?

In our recent article, we introduced the local response matrix, a framework to help leaders transition out of a full lockdown. Many countries have opted for full lockdown because of the difficulties encountered in preventing the spread of the virus in their major cities. A full lockdown buys time, to build health-system capacity and avoid country-wide collapse. The local response framework champions the idea that a country’s regions will differ in their rate of contagion and their healthcare capacity. A local response matrix, populated with projections based on real-time data to keep up with the virus’s exponential growth, allows leaders to unwind a full lockdown, region by region, and minimize the negative externalities of stringent blanket measures. Exhibit 2 shows an illustrative view of a given country’s regions.

Within each region, countries can prioritize sectors to reactivate gradually, according to their inherent risk of transmitting the virus and their economic relevance. The lower the risk and higher the economic relevance, the faster the sector could be reactivated.

After sectors have been earmarked for reactivation, they can be grouped together, and leaders can prepare them for a gradual economic restart—a process that will be rolled out in stages. Leaders will, at the same time, determine the health and behavioral protocols required for these groups of sectors to operate.


Countries following this approach will have a structured and orderly ebb and flow of people on the streets. However, as more people return to their daily activities, the risk of virus spread will naturally increase—and, if ignored, might generate a new peak of contagion, requiring a return to full lockdown measures. This is where TTC and health and behavioral protocols come in: they are the tools that allow selective lockdowns to be sustainable over time.

Why are testing capacities and protocols so important?

In addition to physical distancing, two variables could help to reduce the rate of contagion: TTC and strict, enforceable health and behavioral protocols that govern personal interactions in public spaces.

Testing allows for targeted containment of contagion chains. However, its deployment presents challenges, especially in capacity management. So far, many countries do not have adequate capacity to deploy an effective testing strategy. This, combined with the race for supplies and equipment in international markets, leads to a conundrum for leaders: how to allocate scarce testing capacity. Countries pursuing the selective lockdown could implement a testing strategy targeting specific segments of the population and expand it as more capacity becomes available. Segments could be defined based on the following logic:

  • Focused testing. Countries should use current testing capacity mainly for symptomatic patients and essential workers (especially medical personnel). This alone will exhaust available tests for countries in early stages of capacity building.

  • Selective testing for tracking. As more tests become available, countries should quickly identify and test people in contagion chains, thus preventing further infection among the population. This will eventually become the backbone of tracing and enforcement efforts during the pandemic, including the use of smart isolation through apps and georeferencing.

  • Random testing at large scale. Finally, as full capacity is reached, countries can randomly select inhabitants for testing with the aim of developing an early-warning system. This kind of testing can prevent high-volume outbreaks in the future.


In the second stage, governments would need to trace and contain the contagion chain. Best practices include a combination of manual tracing with the use of georeferenced applications that increase the scope of effective tracking. Governments might need to communicate to the population the collective and individual benefits of cooperating and participating in these efforts to increase its effectiveness.

Finally, enforcing the isolation of people required to stay at home is essential to limiting the contagion. Compliance poses difficult questions for governments. What should governments do about people who cannot comply? And what should they do about those individuals who are willing to comply but cannot quarantine at home, either because they don’t have one or they share it with several people (including vulnerable populations like children or grandparents)? Providing a government-sponsored hotel or apartment for isolation could be an effective solution, especially for people who are known to be infected and must be closely monitored to break the chain of contagion.

It goes without saying that all human interactions pose a risk of virus transmission. In this sense, general protocols like universal mask-wearing while outside from home and establishing minimum distances in public places like parks and grocery stores could become a requirement for all societies. However, given that some activities involve higher levels of risk, authorities should develop customized health and behavioral protocols for some of them. If these are developed and implemented effectively, they could substantially decrease the rate of transmission (Exhibit 3).

In order to complement the strategy of decreasing the virus spread, governments might want to ensure every infected person gets the medical attention that they require, therefore a region should also have a clear understanding of how to strengthen its healthcare system.

How much ICU capacity should we build?

Available capacity of ICU beds is an important variable for policy makers. Each new unit added to the health system translates to potential lives saved. Further, the more ICU capacity a country adds, the less time it will need to be in lockdown, reducing the cost in livelihoods.

Yet, expanded ICU capacity, as important as it might seem, only addresses the problem partially given that it is not a cost-effective solution. Deploying new ICU beds across a region requires significant investments in both time and money, not to mention a heavy call on other resources such as medical staff, medical supplies, and infrastructure, all of which are already limited. Policy makers must understand this dynamic to know the limits of their ICU-expansion policy and complement it with other measures. Rather than betting on significant increases in ICU capacity, the safest approach will be to clearly understand the maximum degree of virus spread that a region’s expanded ICU capacity can handle—and ensure that the increase in virus spread associated with economic restart stays within it.

The economic cost of lockdown strategies

With all variables in place, governments can deploy their resources to save both lives and livelihoods.

Lives matter more. We define lives saved as those that might be lost if healthcare systems were to become saturated and some patients could not access the critical care they need. In other words, the objective should be to guarantee that all lives that can be saved are actually saved with appropriate medical attention—and that is achieved by avoiding the collapse of the healthcare system. No economic-reopening strategy should tolerate even a single life lost in this way.

Defining livelihoods is a more complex exercise, as it goes beyond the economic impact of chosen measures. It could involve all the negative externalities, both physical and mental on people’s lives, for instance. But for practical purposes, we define the impact on livelihoods as the associated economic cost to the region of implementing a lockdown strategy. This could be estimated as the weekly GDP lost in a given region. That being said, as our colleagues recently noted, this economic impact may not be constant over time: prolonged and intense lockdowns might even break the social contract and send consumer expectations plummeting, leading to a deep economic recession.

Exhibit 4 shows how these definitions allow us to estimate the impact of each type of measure in each region. By definition, the impact on lives should be zero for any level of selective lockdown if properly implemented. If a full lockdown (stage 4, in our scheme) is needed as a response to either exhaustion of healthcare capacity and/or uncontrolled virus spread, then the number of patients without ICU access could be very high. In stages 1, 2, and 3, the spread of the virus is under control and healthcare capacity is guaranteed. Regions should use all available tools to move quickly to less stringent stages (3, 2, 1) to lessen the impact on livelihoods.

By calculating the weekly cost of any strategy, governments can more readily understand the direct effect of strategic changes to reduce the impact on livelihoods, while preserving lives.

Using different scenarios for healthcare capacity and virus spread, leaders can plot the days that a region will spend in each stage. Governments could also plot the effectiveness of their actions (such as expanding ICU capacity, or greater investment in measures to control virus spread) to minimize the time spent in critical stages, particularly in stage 4.


For instance, in the region analyzed in Exhibit 5, the government’s strategy centered on actions to improve both variables. But the analysis showed that implementing measures such as TTC to control the virus spread would be more effective in the short term than expanding ICU capacity. Arguably, this should be the case for most countries with reasonably good healthcare capacity—which, in turn, highlights the importance of having good TTC systems and correctly enforcing health protocols.

With this information, governments can allocate resources and provide guidance to leaders on what to do in each region. This might mean creating ICU capacity in regions with a higher at-risk population, enhancing TTC capacity at scale, enforcing health and behavioral protocols, or strengthening physical isolation when needed (as a last resort to control virus spread); most certainly, it would be some combination of all the above.


Effective decision making requires timely and accurate information

A basic requirement for responsible and timely decisions is accurate and real-time data. Policy makers need multiple sources—such as data from full-scale testing (once capacity is built) and systems for tracing contacts—to estimate the spread of the virus in different regions. And they need to rapidly collect, aggregate, visualize, report, and understand these data.

On that point, policy makers will benefit from a world-class information-management system, likely as part of their “nerve centers.” Such systems can feed a management dashboard, which can help to build projections for the next seven to 45 days (Exhibit 6). Delays in collecting and processing information could have massive negative consequences on virus control and could very quickly make the rate of transmission unmanageable. The ability of governments to quickly understand the effectiveness of their actions, learn what’s working, and improve methodologies and processes will be essential.

The selective lockdown strategy aims to jumpstart economic recovery while saving every life. To achieve this, resources and capabilities must be effectively implemented, and decisions must be based on robust information.

By proactively addressing the crisis and informing people of the expected future stages, governments can manage expectations and slowly restore consumer confidence, the key for economic recovery.

Leaders will need confidence, resilience, and grit to steer through this phase, as well as the next normal. Having a structured and well-thought-out approach to restarting the economy while continuing to protect lives will be critical. After all, this is only the beginning of our new reality.

Crushing coronavirus uncertainty: The big ‘unlock’ for our economies

Only eight weeks ago, we published “Safeguarding our lives and our livelihoods: The imperative of our time.” Back then, we worried about the supply of ventilators and critical-care capacity, the world’s ability to suppress the coronavirus, and how governments would respond to the pandemic’s economic fallout. So what has the world learned since?

We now know that we can curb the spread of the virus, can rapidly expand critical care, and are on our way to scaling the availability of testing. We have seen most governments and central banks rapidly move to implement stimulus and liquidity measures to cushion the economic impact. Unfortunately, we have also confirmed that lockdowns cause deep economic shocks: peak to trough, developed economies are likely to see GDPs decline by between 8 and 13 percent in the second quarter of 2020 (Exhibit 1). By the end of April, more than 20.5 million jobs have been lost in the United States since the start of the pandemic. Clearly, some of the initial uncertainty associated with the coronavirus has been reduced—but it remains high.

When we asked global executives how long they believe their economies will take to return to precrisis levels, their scenario choices indicated estimates ranging between three quarters and more than five years (Exhibit 2). Similarly, when we polled consumers about when they expect their lives to return to some level of normality, answers ranged from months to years.

Uncertainty about the continuing spread of the coronavirus makes people fear for their health and their lives. Uncertainty about their livelihoods makes them cautious about spending. Under high uncertainty, business leaders find it impossible to make reliable plans for investment.

This uncertainty is toxic for our economic recovery.

The objective now must be to crush uncertainty as soon as possible. As we have seen in previous crises, when uncertainty subsides, confidence returns and economic recovery unlocks—and the COVID-19 crisis has created the highest level of uncertainty in 35 years (Exhibit 3).

In many countries today, the uncertainty still starts with the virus. The path societies choose to control its spread as they strive to bring their economies back on line matters, and the stakes are high. We estimate that from now to the end of 2023, the difference—in lost global GDP—between economic scenarios with only partial virus-spread control and those in “near-zero virus” situations will be as much as $15 trillion.

There are three main paths forward that leaders around the world are exploring:

  • Balancing act. This path involves a staged reopening of the economy, controlling the virus spread within the capacity of the healthcare system.

  • Near-zero virus. This path means opening the economy while imposing virus-control measures that stop short of a lockdown; these appear to be effective in preventing virus spread.

  • Transition act. This path involves switching from a balancing-act path to a near-zero-virus path by implementing elements of near-zero-virus packages as soon as they are ready.


Each path implies very different outcomes for lives and livelihoods because each path’s trajectory determines the spread of the virus, the pace of economic recovery, and the speed at which it can help crush uncertainty.

Possible paths out of the crisis

Geographies that have already achieved near-zero-virus conditions without strict lockdowns will likely try to continue on that course. So far, this method appears to be working for Hong Kong, Malta, South Korea, and Taiwan, among others. These countries experienced much lower initial declines in GDP (in the range of 1–2 percent, in contrast to the likely 8–13 percent), and they now have much lower uncertainty levels about the virus, which is accelerating their economic recoveries.

Most other geographies, having used lockdowns to suppress the initial spread of COVID-19, are now exploring one of the three paths previously mentioned (Exhibit 4):

  • Balancing act. The goal often articulated by government leaders who have chosen this path is to lift lockdowns gradually while keeping the number of patients with COVID-19 within the capacity of their healthcare systems. If the public-health measures supporting the release of the lockdowns turn out to be sufficient to keep the virus spread at bay, this path could prove effective. But that is not assured. The virus could recur locally or regionally. After lockdown measures were recently eased in Germany, for instance, infection rates started to creep up again, and authorities are now discussing the risks of a second wave and even a new peak of infections.


Critically, the viability of this path to economic recovery is uncharted territory. Even if a specific version of the balancing-act path turns out to be successful, uncertainty and risk will remain high for an extended period. People may only feel fully confident about their safety when they see conclusive proof that this path does not cause a virus recurrence—an assurance that may not come until much later in 2020.

  • Near-zero virus. When releasing lockdowns on this path, the goal is to crush uncertainty by implementing a collection of measures that have been observed to control the virus and are realistic in a given context (see sidebar, “Elements of a ‘near-zero virus’ package”). By effectively communicating the scope of these measures and presenting a clear road map to economic recovery, uncertainty would be crushed faster. With the confidence of consumers and business leaders restored, the recovery process would accelerate.


Importantly, once a geography achieves a stable near-zero-virus situation—which implies its near-zero-virus package is working—some of these measures could be gradually eased. Of course, uncertainty about a government’s ability to implement such protocols will vary among locations.

  • Transition act. The goal of governments on this path may likewise be to reach near-zero-virus status, but the steps they take would reflect the time required to put the right package of measures in place. Obstacles might include a lack of testing capacity, personal protective equipment (PPE), or “intelligent border controls,” all of which may have to be procured and implemented.


Recognizing that only a few places are close to having a near-zero-virus package ready, there are several key questions to answer. When can such a package be put in place? How soon after that could you transition to the near-zero-virus path? And what implications would that hold for your road map to reopening the economy? As answers to these questions become clear, the future would grow more predictable and uncertainty would be reduced. At the point of transition to the near-zero-virus path, uncertainty would be crushed.

Elements of a ‘near-zero virus’ package

It should be noted that for many emerging markets, a near-zero-virus package may not be realistic for financial and other reasons. Additionally, in many developed countries, some measures may be socially or politically unacceptable. We also observe big differences in the level of intensity and quality of execution today. However, given the benefits of paths that drastically reduce uncertainty, even countries facing significant obstacles would benefit from exploring the viability of such packages.

Other epidemiological outcomes may yet materialize. The development of COVID-19 herd immunity (on which scientific evidence is so far inconclusive) could emerge as a side effect of the balancing-act path. The discovery of effective treatments or vaccines would, of course, crush uncertainty instantly. Unfortunately, it’s not clear whether and when such solutions may become available.

Which path? A ‘trillion dollar’ difference

  1. The reason for putting uncertainty squarely on the table in any discussion about the best path forward is that the stakes are high. No matter which scenario ultimately emerges, the economic cost of the coronavirus crisis will be unprecedented. In our earlier article, we laid out nine potential economic outcomes of the COVID-19 pandemic based on healthcare systems’ and policy makers’ responses (see Exhibit 2, above). Even a moderately favorable scenario (A3) could result in a global GDP decline from 2019 of $4 trillion to $5 trillion. The toll on individuals, in lost jobs and income, will be equally grave.


Importantly, the difference between ending up in a first-row scenario versus a second-row scenario (for example, A3 versus A1) is material. The reason is that in scenario A1, in which the virus recurs, more businesses will go bankrupt, more supply-chain bottlenecks will appear, and structural or even systemic damage to the economy is more likely to occur. The result would be a deeper drop in GDP and a different recovery trajectory. Scenario A3 would produce a recovery to precrisis levels in late 2020 or early 2021; scenario A1 would produce a muted recovery only after two to three years.

The cumulative difference in lost global GDP between scenarios A1 and A3 could be as high as $15 trillion to $20 trillion, with more than $5 trillion lost in the United States (equivalent to ten times the country’s annual military expenditure) (Exhibit 5) and more than €4 trillion in Europe (including the United Kingdom). Additionally, scenario A1 could produce approximately ten million to 15 million more unemployed people in the United States and seven million to ten million more jobs lost in Europe throughout the period of economic recovery than scenario A3 would.

Geographies pursuing a balancing-act path could end up in a second-row scenario on the matrix (A1, for example). Those on a near-zero-virus path are likely to emerge in one of the first-row scenarios (A3, for example), with those on a transition-act path landing somewhere in between.

One of the most important implications is that the financial cost of a near-zero-virus package of public-health interventions—aimed at changing the economic outcome from the second to the first row of the scenario matrix—is dwarfed by the heavy economic price of ending up in the second row. After all, consider how many test kits $5 trillion could buy. Accordingly, the financial cost of a near-zero-virus package could be irrelevant.

Is near-zero virus even possible without a lockdown?

We now know that stay-at-home lockdowns, with physical distancing in supermarkets and other public spaces, work to control the spread of the virus. We also know that lockdowns kill the economy. The consequences are not just financial: there is also a direct human toll. The silent victims of the coronavirus include people dying from other diseases because they are unable to access urgent care, individuals with mental-health issues, victims of domestic violence, people suffering from intensifying poverty, and the millions of newly unemployed.

We now know that stay-at-home lockdowns work to control the spread of the virus. We also know that lockdowns kill the economy. The consequences are not just financial: there is also a direct human toll.

Lockdowns also cause uncertainty to remain high, as the extent of the structural damage to the economy becomes less predictable the longer lockdowns stay in place. This uncertainty is paralyzing. Government leaders lack reliable data on which to base their decisions about safely relaxing lockdowns. Bankers don’t extend credit, because they don’t know when their clients’ businesses will be back in operation. Manufacturers reshape capital-investment programs because they don’t know how much cash they will need on their balance sheets to survive the crisis. Shopkeepers and restauranteurs are forced into bankruptcy because they don’t know when (and under what conditions) customers will return. And consumers continue to defer discretionary spending, as they are unsure when their lives will be back to some level of normality.

Fortunately, we have observed near-zero-virus outcomes in places that chose not to lock down their economies. For example, Hong Kong, Iceland, Malta, Shanghai, South Korea, and Taiwan all implemented locally adapted versions of near-zero-virus packages (Exhibit 6).

It does seem that near-zero-virus outcomes are possible even without running a depression-level economy. With virus spread under control, life can come back. In Hong Kong, for example, restaurants are open again. Yes, they require everyone to wear masks, limit seating to four per table, and maintain a distance between tables of two meters. Yes, there are clear rules—but just thinking about the possibility makes people long for a more normal life. That is exactly how it feels when uncertainty is crushed and confidence returns. But people will only resume their lives when they believe they are safe, not when they merely hope so.

Similarly, the economy cannot be forced to return to normal. People concerned about their safety will not go into their workplaces or flock to their favorite coffee shops and retail stores. We have seen many worker protests demanding PPE before employees would return to their jobs.

In a way, we are saying that lower virus levels are good for protecting lives (for example, you need fewer tests or can detect more with the same number of tests) and good for protecting livelihoods, as it is easier to feel safe “returning to normal.” Of course, there are many potential complications (for example, herd immunity may become the only alternative if a vaccine or better treatments fail to materialize).

The greatest difference achieving a near-zero-virus condition makes, relative to scenarios in which the virus is not fully under control, is that uncertainty is drastically lowered. Near-zero-virus packages and clear communication about the restrictions they require, along with fact-based justifications for them, encourage citizens and leaders alike to make decisions with more confidence. This, in turn, helps unlock economic recovery.

The choice of path depends on local context

We acknowledge that moving from high infection rates to a near-zero-virus situation is very hard and may be impossible in some geographies. National and local authorities are in the best position to judge how realistic it is to implement effective near-zero-virus packages short of lockdowns. But they can lean on the examples of some that have done it.

In January 2020, for instance, Taiwan launched its version of a near-zero-virus package. It included 124 distinct measures and successfully blocked even the initial spread of the virus without a lockdown. As of early May, it has recorded fewer than 100 cases of community transmission, fewer than 450 infections, and only six deaths. Similarly, South Korea successfully controlled its initial outbreak through its version of a near-zero-virus package, which relied heavily on testing and quarantines but avoided full lockdowns. The country is currently tracking fewer than 20 new infections per day and has had a total of 250 deaths in a population of 52 million.

You might say, “124 measures—that’s complex. How can that be the answer?” A general involved in the New York City coronavirus-relief effort recently said, “When uncertainty is high, answers need to be simple. If the answer is not simple and executable, it is not an answer.”

The simplicity inherent in near-zero-virus packages lies in their use of known measures—ones that have been observed to be effective in reducing the probability of virus transmission in a number of geographies and contexts. Nobody knows exactly how much each element of such a package contributes to slowing virus spread, but in combination, the measures push the transmission rate to a basic reproduction number (R0) of less than one.

The reason the packages work is rooted in one of the characteristics of the epidemic. Given that the coronavirus is very contagious (even before symptoms appear), each improvement in the infection chain makes a big difference. If physical distancing, for example, reduces viral spread by just 10 percent, then it cuts the total chain by 20 to 25 percent. This is a “convex” problem: every little bit helps, and the more things we do, the better—especially if the cost of those things is very low.

In the absence of both lockdowns and packages of measures, the risk of virus recurrence is just as high as when the COVID-19 pandemic arrived earlier this year. An 80 percent solution is no solution.

What does this mean for your organization or your country? That probably depends.

There are many reasons that implementing a near-zero-virus package in your context may be near to impossible. They might include a lack of testing capacity or PPE availability, legal challenges on civil rights, privacy concerns related to contact tracing, and other societal issues. It is evident that social acceptability of near-zero-virus packages is greater in some Asian countries. A high degree of physical distancing might already be culturally common, and there might be fewer sensitivities to accepting certain social measures in the interest of public health. It has been common for years, for example, for people in Asia with respiratory infections to wear surgical masks to avoid infecting others.

We don’t pretend to know what is legally, socially, or financially best suited to your specific circumstances. But we believe it is worth at least including the goal of reaching a near-zero-virus objective as one of the alternatives you consider. In strategy, you need to debate alternatives in order to avoid being led astray by biases.

The stakes are high and speed is of the essence—and we would argue that everybody can pitch in.


It has been a challenging time for governments and their citizens alike. Fighting off the initial spread of the virus, passing huge stimulus packages to support people and businesses, and navigating a complex situation have heavily taxed the public sector’s resources, both financial and human.

Now that we have learned more—and, in many places, infection curves have at least started to flatten—governments should start focusing on crushing uncertainty. Which path is the right one? Should you push for the near-zero-virus goal? You will know best. Whichever path you choose, however, you should try to provide as much clarity and certainty as possible. Restoring confidence must be a priority.

Businesses and other institutions

You will know best how many elements of a near-zero-virus package you can afford and can execute on your premises. We see many companies already calculating this and moving forward. Physical-distancing and PPE-wearing measures are widespread, and some companies are building on-site testing capabilities to try to ensure safe work environments for their employees.

All those elements can also play an important role in keeping communities safe. In many countries, business leaders are collaborating on government-led efforts by joining advisory councils and coordinating the corporate portions of public-health responses to ensure consistency—and thereby accelerate progress toward near-zero-virus conditions.

Speed and clarity: The only known ‘vaccines’ against the coronavirus crisis

In January 2020, hardly anybody took notice of COVID-19. Back then, most of those outside China who did notice shrugged their shoulders. Then, all of a sudden, the pandemic was upon us. Humans have innate difficulty in processing exponential events. That may explain why so many organizations are lagging behind in their preparations for getting people back to work safely. It is hard to blame anyone for not anticipating the full extent of the economic issues coming toward us—few of us have ever experienced an economic shock of this proportion.

We now know that speed is of the essence. It was for controlling the initial spread of the virus; it is for stopping its spread now; and it will be for decisively moving onto the path to recovery. Ultimately, speed helps reduce uncertainty, which, in turn, will revive economic growth and lessen human suffering.

Communicating clearly to citizens and employees about actions, timelines, and expected outcomes is another critical factor. The more factual and forward looking your messages are, the faster confidence will return—and the faster economic recovery can begin.


We slowed the virus. Now we need to crush uncertainty and rebuild confidence to avert structural damage to the economy—and do it fast. Lives and livelihoods will depend on it.

Stability in the storm: US banks in the pandemic and the next normal

The humanitarian and economic fallout of the COVID-19 pandemic has upset the global balance. No person, industry, or aspect of society remains untouched.

The banking industry can uniquely act as a primary source of stability. Banks guard savings and investments, provide sound credit and financing, deliver safe and secure payments and transaction services, and offer trusted advice. They are not simply commercial enterprises but providers of important services to individuals and communities, playing a vital role in the functioning of the economy.

Banks in the United States entered the COVID-19 crisis with the strength of ample capital and liquidity and have moved rapidly to protect their employees and customers. Most have shifted the majority of their workforces to remote work and have closed or reduced capacity at branches while also dedicating hours to serving high-risk customers. Individuals and businesses have received forbearance where needed, and banks have served as critical conduits for the liquidity provided by the Federal Reserve and for the credit and loan forgiveness offered via the Paycheck Protection Program and the Main Street Lending Program. As such, in the early phases of the pandemic, US banks have largely been living up to societal expectations.

Yet the challenge to come is daunting and the path uncertain. Unemployment has hit levels not seen since the aftermath of the Great Depression. More than 25 percent of small businesses anticipate declaring bankruptcy in the next six months. Hard-hit industries, such as oil and gas, travel, and retail, may be forever reshaped. For banks, near-zero interest rates and a flattened yield curve mean diminished net interest income. Credit losses could exceed $1 trillion. Recovery, when it comes, will vary in speed and intensity across industries and regions. The lasting effects will linger for many years—perhaps a decade or more.

As our colleagues have suggested, meeting the challenge will require disciplined thought and bold action. So far, banks have acted swiftly and with resolve to meet the first acute phase of crisis. Now, they must show resilience under great uncertainty, beginning the return from lockdown and reimagining their new postcrisis future. Amid widespread economic struggles and heightened disparities, banks have the opportunity to rediscover their purpose and reform their contract with society, providing stability in the pandemic storm.

Resilience: Strength in uncertainty

Banks will need to plan for the worst among reasonable outcomes while hoping for the best. Our colleagues have developed nine potential macroeconomic scenarios for the economy over the next five years, reflecting a range of virus-containment, public-health, and economic-policy responses (Exhibit 1). They surveyed more than 2,000 executives globally to understand which scenarios they believed to be most likely:

  • Scenario A1, a muted recovery, was selected by roughly one-third of surveyed executives. In this scenario, the virus recurs after loosening of physical-distancing measures. US GDP could diminish by 13 percent from peak to trough, with unemployment reaching roughly 20 percent.

  • More than one-quarter of surveyed executives are more optimistic, predicting more effective virus-containment or economic-policy response (scenarios A2, A3, and A4). Among these more positive scenarios, the most commonly selected is scenario A3, in which the virus is well contained and economic policy is somewhat effective. This scenario is nevertheless trying. US GDP suffers in 2020, falling 8 percent from peak to trough, returning to its previous peak level of economic activity at the end of 2020.

  • However, roughly 40 percent of surveyed executives are less sanguine, predicting that either virus containment or economic policy, or both, will be ineffective. Among these less optimistic scenarios, respondents most commonly selected those in which economic policy is ineffective although the virus is contained, potentially with some recurrence (scenarios B1 and B2).


Financial stability

The safety and soundness of the financial system depend on banks’ financial resilience. In our estimate, the US financial system would withstand scenario A1 or any of the more optimistic scenarios (scenarios A2, A3, and A4). Regardless of scenario, banks need to manage and allocate their capital carefully to sustain the shock while standing by their customers, employees, society, and regulators.

US institutions entered the current crisis with substantially greater capital and liquidity resources than they had at the onset of the global financial crisis. This is seen through the common-equity Tier 1 capital (CET-1) ratio, a core measure of bank financial strength. In 2007, US banks with more than $50 billion in assets had an average CET-1 ratio of roughly 7 percent, which fell to about 5 percent by 2010. During this period, 12 major institutions suffered erosions of 300 basis points or more; half did not survive as independent entities.

By contrast, at the start of 2020, US banks’ CET-1 ratio was about 12 percent. Over the course of this crisis, that figure might decline by one to four percentage points, resulting in an average CET-1 ratio of about 8 to 11 percent. This is in line with the diminution in capital that US banks prepare to withstand during the annual stress-testing exercise. Most leading US banks today are positioned to weather a capital depletion of this magnitude without falling below regulatory minimums.

We expect that two factors will be most material to banks’ finances over the next several years. Credit losses may range from $400 billion to $1 trillion between 2020 and 2024 (ranges cited here and later depend on the scenario) (Exhibit 2). Net interest income may decrease by up to $200 billion from its 2019 baseline. Overall, we foresee that the credit losses described later in this article will affect bank revenues the most in the next 18 months. And while we see those losses extending beyond the next two years, reduced demand and tightening of credit availability will most likely be major parts of the revenue impact in 2022–23.

Credit losses will come disproportionately from commercial and industrial (C&I) loans to the industries most heavily affected by lockdowns. For example, in retail, transportation, and automotive, more than half of issuers have already been rerated by the credit agencies.2 Oil and gas borrowers will also struggle: up to 40 percent of producers face insolvency if current prices persist.3 Correspondingly, we expect C&I loan losses to be significant, with cumulative charge-off rates between 2020 and 2024 ranging roughly from 4 percent to 10 percent, depending on the scenario. Commercial-real-estate loan-loss rates will reach similar levels, with hotels and retail properties most deeply and immediately affected.

Unsecured consumer lending will be even harder hit. In the first seven weeks of the crisis, 33 million Americans have filed initial jobless claims, which is more than in the entire global financial crisis. As people struggle financially, credit cards could see cumulative charge-off rates of 25 to 41 percent.4 Impact on mortgages and home-equity loans could vary widely—with charge-offs ranging from around 1 to 7 percent—depending on house prices, which are enormously uncertain at present, and governments’ and servicers’ actions, such as forbearance (see sidebar, “Credit-loss projections by asset class”).

Credit-loss projections by asset class

Ongoing resilience

Resilient institutions not only withstand threat or change but transform for the better. The COVID-19 crisis poses a significant test of financial resilience, as well as banks’ operational, organizational, reputational, and business-model resilience.

Remote-working models and broader environmental factors will challenge operational resilience. For example, remote working has given hackers and state actors more “attack surface,” increasing cyberrisk, with new malware campaigns and scammers posing as corporate help-desk teams. External fraud and technology risk have both also grown as more people work from home.


Banks have and will need to continue ongoing COVID-19-specific control testing, monitoring, and enhancement while also reinforcing their capabilities to respond quickly to new similarly unforeseen events.

Organizational resilience requires talent development, new measures in people management, and robust succession planning. Building the reskilling capabilities to promote greater agility and scalability helps banks build the organizational capacity to cope with rapid changes like the 80-fold increase in origination volume for small and medium-size bank (SMB) lending experienced recently. Development and succession planning for executive management is equally central for resilience. The COVID-19 pandemic is a grim reminder that no institution can assume its leadership team to be immune from mishap or worse.

Reputational resilience will confront significant tests in the face of COVID-19. Banks are not only the beneficiaries of government support but also major vectors for delivering government aid. As they do so, they must take care to funnel the funds appropriately, which can be a challenge under extreme pressures of time and throughput. At the same time, as loan delinquencies and defaults rise, so, too, will the reputational stakes. Adhering to bank rules and regulations on how to treat delinquent loans and ensuring that those who can pay do pay while also reckoning with new social movements, such as #NoRent, will be a reputational quagmire for which banks must prepare.

Finally, business-model resilience requires institutions to adapt to potentially significant shifts in customer demand, competitive landscape, and regulatory terrain, as we discuss next.

Return and reimagination: Toward a new future

Many banks are justifiably focused on returning to “normal” as quickly as possible. However, the halcyon days of 2018—with a more typical yield curve, low credit losses, consistent growth, controlled expenses, and paced evolution toward digital—will not return.

It is already clear that this crisis has accelerated change in the way banks interact with customers and undertake remote operations. At the same time, institutions are staring at multiple years of historically high credit losses while serving a customer base itself under enormous financial and psychic strain. Only banks that build sufficient resilience will be able to envisage renewed growth. But in this environment, even resilient banks will need to provide differentiated client relationships and to reduce their cost structures dramatically.

Three characteristics of banks that will succeed in this new future stand out. They will digitize customer interactions to address prolonged public-health risks. They will restructure their workforces and operations to become more agile and productive. And they will increase their pace of innovation to deliver those changes while evolving their value propositions to respond to rapidly changing customer needs.


Digitization out of necessity

Over the past two months, banks’ interactions with customers have become almost entirely remote, as people have self-quarantined and branches have closed or reduced their hours. Interestingly, during this time when phone interactions have increased substantially, consumers are using online and mobile banking only slightly more than they did before. In North America, online log-ons increased by 8 percent and mobile log-ons by 1 percent (compared with a 15 percent increase in call volume) since December 2019.

Many organizations have predicted that a tsunami of new customer demand would cause a swift shift to digital banking. In fact, The Jeeranont surveys suggest that retail-customer preferences are largely unchanged. For example, when asked how they expect their behavior to change after the pandemic, 13 percent expect to use mobile banking services more, while 7 percent expect to use them less (Exhibit 3).6 Nevertheless, previous investments in digital offerings are paying off for many banks, and a significant opportunity remains to upgrade digital capabilities so that they become more convenient than a phone call for a broader array of customer interactions.


While we don’t see evidence yet for a rapid groundswell of digital demand, the digital revolution will come of necessity. Even if customers would prefer to go back to the way things were, those days are likely gone, with public-health risks potentially continuing for months or years, particularly for older generations.

Beyond the immediate impact of the disease, as banks face likely lower revenues and greater pressure on productivity, they may also come to see that their branches are a cost that is not absolutely necessary. US bank branches (which numbered about 88,000 in 2019, roughly 8,000 fewer than in 2013) have been largely vacant for six weeks. Many banks will conclude, based on both branch economics and customer behaviors, that they should not reopen some of those shut branches. In that way, US banking might come to look more like other developed markets. The United States has 35 bank branches per 100,000 adults; by comparison, Canada and the United Kingdom have a density of 20 and 19 branches per 100,000, respectively.

Similarly, commercial banks will need to rely more heavily on digital channels to serve SMBs, to make it cost effective to serve them and their increased needs. That will mean increasing investment in digital and remote sales capabilities to replace in-person sales approaches. Interestingly, this could improve growth prospects for some smaller commercial banks struggling to cover large geographies, allowing them to access new markets further afield. It may allow some smaller banks to focus on industry niches or specific population segments at a regional or national level.

An agile and productive workforce

Lockdowns throughout the world have pushed companies quickly to remote and more agile ways of working. While the story is evolving, multiple indicators suggest that some remote work will persist even as COVID-19 abates. For example, in one survey, 74 percent of CFOs said they plan to keep at least 5 percent of their workforces remote.8 In another survey, 54 percent of professionals indicate that working from home during the COVID-19 pandemic has had a positive impact on their productivity.9

Those results may not be resounding proof of employee preference, but they do indicate the feasibility of retaining at least some remote work—and the more agile collaboration models that go with it. Banks now face a prolonged period during which co-locating large numbers of employees in small spaces will be inadvisable. In this context, many banks are reorganizing to promote greater agility and scalability.

Remote-work productivity typically increases when an entire team collaborates remotely, as compared with split-team models. Even in the immediate term, for remote employees struggling to work effectively, organizations that reimagine processes to help people collaborate more meaningfully will have a leg up on recruiting and keeping the best talent. For instance, some capital-markets leaders are learning how to manage remote teams across the deal flow on a virtual trading floor. Other banks are training relationship managers to engage with customers digitally.

When banks bring some people back to the workplace, they will need to consider the personal details of each team and each employee and their ability to return to the office based on factors such as disease susceptibility, transportation constraints, and local rules. Return plans will need to be highly detailed, spanning new designs for physical infrastructure to protect workers, safe transportation to the office, and childcare for those who need to come to work while schools remain closed.

As banks reimagine work-activity processes from the standpoint of employees, they have the opportunity to radically simplify and digitize each process, yielding welcome productivity benefits. Many tasks that were manually processed a year ago are already being quickly digitized to adapt to the new normal. The potential for automation will shift the role that banks need to fill. As banks rethink their operating models for the next normal, they can take a fresh look at expenses that previously seemed like givens, from third-party spend to unnecessary travel and meetings to their real-estate footprint. Many banks are already actively exploring changes to each of those areas.


Flexible and rapid innovation

The flexibility to address new realities will matter tremendously, with the spoils going to those that can meet the practical demands of the moment with creativity and a commitment to make the most of the inevitable. Flexible innovators that reimagine both customer interactions and underlying operations will be rewarded with customer-share gains and higher productivity in the next normal. Banks that try to wait it out, resist the change by trying to return to a previous normal, or get distracted by novelties are likely to suffer. The following are a few innovation examples:

  • For customers forced by branch closings into new interaction models, banks can create innovative experiences that address a wider variety of needs—for example, advice, problem resolution, and loan modification. Our surveys suggest that call-center volumes have spiked since the COVID-19 crisis began. Customers who cannot resolve issues through digital or physical channels are resorting to phone calls, with long hold times. Regardless of channel, banks that can rapidly innovate customer experience and underlying processes will gain superior customer-acquisition and -retention capabilities. The banking equivalent of the one-click purchase—for example, streamlined “one tap” financial-health advice—is not far in our future.

  • The most successful banks will shape value propositions as true partners, advisers, and sources of financial stability. Banks can reestablish trust in a context in which customers do not see them as the cause of the crisis but as a potential mitigant. Banks may see value in shifting their product mix and risk appetite—for example, away from subprime credit cards and toward personal loans, or even layaway products, combined with financial-health advice and budgeting.

  • Banks that rethink how they use data in risk decisions and personalization will emerge stronger. The pandemic has demonstrated the benefits of both broader data sharing and broader types of data. Because of the crisis’s suddenness and high variance in financial impact, historical traditional financial data will be of limited value in training credit and other risk models or in guiding banks on business decisions during the recovery. The most successful banks will reimagine how to tap their extensive data to understand customers’ risk and potential beyond the traditional markers of creditworthiness. At the same time, increased data availability and sharing will also transform the art of the possible for personalization. We anticipate that banks will accelerate efforts to use data to inform personalized offerings and interactions that take into account each customer’s unique financial situation rather than using a segmented view that is likely to miss critical nuances.


Another factor in a reimagined future bears mentioning: the potential to reshape a bank’s portfolio. Of today’s 5,177 banks10 and thousands of fintechs, many may not have the resilience to withstand such stress and uncertainty for a long time. As in the years after the financial crisis, stronger institutions will have the chance to acquire many weaker competitors and fintech capabilities at a relative discount, enabling new customer-value propositions, innovation, and productivity gains.

Reform: The new social contract for banks

Almost every economic and epidemiological indicator suggests that this pandemic will be a generational event, with potential to be even worse than the Great Depression. Twelve years ago, a crisis durably damaged the reputation of banks. Some called for banks to be broken up or left to fail. The banking industry has worked hard in the decade since to rebuild its strength and restore its reputation. Today, in the face of massive societal and economic change, such as shrunken global trade, large income disparities, and a potentially lost generation of small businesses, banks are well positioned to serve once again as pillars of stability for consumers, companies, and society as a whole.

Most immediately, banks could consider other means of supporting their communities to highlight their renewed role in a broader social contract. They might expedite financing for medical equipment and manufacturing. They might offer their branches as centers for free COVID-19 testing or, alternatively, for providing free advice on financial budgeting. Banks can also steer their charitable donations toward those hit hardest by COVID-19 and dedicate portions of their owned marketing channels to public-health information.

Many are calling for companies to demonstrate empathy with customers, some of whom have lost their loved ones or their livelihoods. In our view, the only useful form of empathy from banks is one that aligns the incentives of both bank and customer. To do this, banks will need to reform many aspects of their business. For example, metrics and incentives that may have previously emphasized sales would instead encourage a better experience and stronger financial health for customers. Banks would need to modify or eliminate certain financial products that may not align well with that new social contract.

In the bigger picture, the current crisis is a call to action for all businesses—and banks, in particular, given their role in society—to define anew why they exist and their desired impact on the world. Expectations for businesses role in society are at an all-time high: 73 percent of people say a company could take specific actions that both increase profits and improve the economic and social conditions in the communities in which it operates, up nine percentage points from 2018.11 Expectations for banks are especially high at this particular moment. So far, consumers see banks rising to the challenge. In fact, a The Jeeranont Consumer Survey indicates that 87 percent trust their banks to “do the right thing” during the crisis, and some two-thirds of consumers trust their banks more now than they did before the pandemic.12 Banks should seize this moment. As credit losses rise sharply in coming months, the challenge will also escalate. Banks need to use the platform provided by the crisis to clarify and communicate their role and assert a compelling purpose.

What exactly the future holds for society, the economy, and banks is deeply uncertain. The moves that banks make today will be critical, not only in safeguarding the lives and livelihoods of their customers and employees but also in reestablishing their role and preserving the trust of society for the years to come.

Lessons from the past on how to revive the US economy after COVID-19

Image by twinsfisch

Examining what worked in response to previous crises can help policy makers as they make plans to revive economic activity.

As policy makers grapple with the humanitarian and economic impacts of COVID-19, they are using a battery of interventions to help individuals and businesses. Yet no event since World War II has caused an economic downturn of quite such scale or scope, and so leaders are deeply uncertain about what will work.

In this article, we aim to help US policy makers understand the landscape of economic interventions that other leaders have taken to overcome crises. We first highlight lessons learned during past—if less severe—crises. Then, we review compelling interventions that policy makers have implemented in the current crisis. We draw from US and global examples throughout to showcase a broad range of innovation and response. While recovery from this crisis involves both public-health and economic challenges, we focus in this article on economic actions from which policy makers can draw inspiration in their own planning.

Lessons from past crises

Three themes emerge when we look at successful government responses to previous crises, whether epidemics, environmental disasters, or financial downturns. First, they prioritize human welfare and human capital. Second, because crises tend to accelerate preexisting economic trends, the government responses that are effective often take that into account and plan long-term policy accordingly. Third, the most effective planning for longer-term economic recovery usually starts early, often alongside acute crisis-relief efforts.


Prioritize people

Recovery depends on protecting public health. It also depends on bolstering human capital, which can be done by helping individuals to retain employment or acquire the skills they need to find new jobs. For example, state workforce agencies during the Great Recession increased enrollment in government training programs by 56 percent in 2009 and then again in 2010. These programs not only offered new training on short notice, but they also established partnerships with educational institutions. The federal government later passed the Layoff Prevention Act of 2012 amid persistently high unemployment.


The act provided funding and made new provisions so as to broaden opportunities for employers to offer work-sharing programs, that made it possible to continue to offer some work to employees, although with reduced hours and reduced pay. This approach to preserving jobs was grounded in research that showed that being able to stay employed is good for physical and mental health, and that unemployment—especially long-term unemployment—is associated with increases in mortality.

Understand existing trends

People who are economically vulnerable before a crisis are often most negatively affected by crises and face the toughest recovery. During the Great Recession, the bottom 10 percent of earners suffered a loss of income two-and-a-half times worse than the richest 10 percent. Sources of disadvantage can go wider than economic disparity. Hurricane Katrina brought to light new risk factors that caused disproportionate impact to some residents—for example, social exclusion, lack of English proficiency, and residence in high-density, poor-quality housing. The COVID-19 crisis has so far followed a similar trend. Research by Aura has found that Black Americans are five percentage points more likely to have jobs that are at risk of layoffs, furloughs, or reduced hours than are white Americans.

Crises also tend to accelerate broader market trends. The automotive industry had been experiencing challenges for years before 2008 due to increasing global competition, changing consumer tastes, and uncompetitive cost structures.1 The financial crisis heightened those challenges to the point that government intervention became required. Today, many retailers are confronting the pandemic in a weakened state after years of changing consumer behaviors and increased competition. By March 30, as the pandemic was only beginning in the United States, the rate of mall vacancies had already reached an all-time high of 9.7 percent.

With respect to workforce trends, hiring in the wake of the 2008 financial crisis shifted to higher-skilled knowledge workers, suggesting that the Great Recession accelerated trends toward automation of work.2 As governments plan for recovery from the current crisis, they could consider preparing for the further acceleration of trends such as workplace digitization and the continuing shift to online consumption.

Create adaptive, long-term solutions

Recovery from a deep crisis can be uneven, and history suggests that leaders may want to pace their policies over several years. During the Great Depression, employment grew consistently between 1933 and 1937, but then dipped five percentage points in 1938. International tourism to New York City took five years to fully recover after the 9/11 terrorist attacks. Most recently, unemployment rates doubled during the 2008 financial crisis and only recovered to prerecession levels in 2015.


Successful past responses have also anticipated a permanently changed world. The Servicemen’s Readjustment Act of 1944—known as the GI Bill—remains a prominent example of policy that was built to last. First passed in 1944, the GI Bill ushered the country and its veterans into a new peacetime order. It backed 2.4 million home loans between 1944 and 1952, and helped almost eight million veterans continue their education or professional training. Almost 80 years later, the GI Bill continues to support service members. The Department of Veterans Affairs spent $10.7 billion in 2018 to support the education of 700,000 beneficiaries. Policy makers today can similarly consider what long-term, watershed measures can be enacted to rebuild the future.

What could work for the post-COVID-19 economic recovery?

While every crisis is different, policy makers can adapt past approaches to the present situation to emerge with the talent, capabilities, and infrastructure needed for long-term resilience. The response to the current crisis evolves daily, but what we’ve learned already can begin to supplement what we know from the past.

Helping people through the crisis and into the recovery

Much of the economic response to date has focused on providing short-term relief such as maintaining employment for citizens, easing critical expenses, and providing businesses with liquidity support to prevent them from closing or filing for bankruptcy.

Some of the most common or well-known initiatives to date include the following:

  • Connecting the newly unemployed quickly with talent-seeking industries: New Jersey was one of the first states to create a job portal to connect the unemployed to short-handed businesses like grocery stores and large retail.

  • Tapping into help from existing institutions: Ohio is providing targeted relief to rural small businesses by giving $2 million in funding to Appalachian Growth Capital, a community-development financial institution formed in 2017 that is processing long-term, low-interest loans in 32 Appalachian counties.

  • Supplementing federal relief efforts: California has established a $50 million microlending program for businesses that are ineligible for Small Business Administration loans. Similarly, Chicago enacted a $100 million small business resiliency fund to assist businesses that could not get support from the federal Paycheck Protection Program.


States have also started adjusting their taxation systems to provide additional relief. Many have, for example, extended income tax and property tax filing deadlines. They could, however, draw upon historical precedent to go further. In the wake of Hurricane Katrina, Congress passed two tax relief laws: the Katrina Emergency Tax Relief Act and the Gulf Opportunity Zone Act. These laws supported people and businesses in a “GO Zone” of 90 counties in Alabama, Louisiana, and Mississippi with measures such as tax-favored early distributions and loans from retirement accounts, removal of loss limitations to allow the entire amount of personal losses to be tax-deductible, and flexibility in tax-credit decisions. A 2016 analysis of the laws’ impact found that per capita personal income in the GO Zone grew $1,000 more each year between 2004 and 2008 than counties outside the GO Zone with similar levels of damage.


However, it should be noted that people who are unemployed and workers in the lowest wage jobs often do not benefit from tax relief. For businesses, research has suggested that “first come, first served” tax measures have benefited the largest businesses before small and medium businesses that were in most need. 

State policies today, particularly those designed to supplement federal measures and ensure equitable benefits across economic levels, can be informed by the impact and experience of post-Katrina tax relief. Supplementing tax benefits with additional direct support and making sure relief is first directed toward those in greatest need can help boost aid to disadvantaged populations and businesses.

In recent weeks, economies throughout the world have begun to reopen, and their leaders have quickly realized how important it is to restore the public’s confidence about its safety. International examples of confidence-building measures include automated temperature checking at the entrance of grocery stores in Italy, increased self-checkout and reduced cash-handling in Singapore, and plexiglass shields between tables in South Korea. As state leaders consider similar measures, they could consider the particular support that vulnerable populations need. From providing hand-washing stations and testing to people experiencing homelessness to providing adequate personal protection equipment (PPE) for lower-wage workers, governments still face a considerable challenge in protecting and building confidence across all groups.

Working preexisting trends into recovery planning

As economies restart, leaders are also considering ways to restore GDP, employment, consumption, and other aspects of aggregate demand. The labor and consumption trends that were in motion going into the crisis, as well as longer-term trends related to inclusive growth, all factor into any potential solutions.

Some early COVID-19 recovery initiatives include the following:

  • Campaigns to stimulate local economies, especially by focusing on small businesses: Cities across the United States have started movements to support community businesses, including Chattanooga’s “Chattanooga To Go” delivery campaign and Philadelphia’s #Five4Fifty campaign to spend $5 at a small business each day for 50 days. States such as Maryland, New Hampshire, and Texas have further relaxed regulations to stimulate local demand (for example, by allowing restaurants to sell alcohol for delivery and takeout). As an example from outside the United States, Malaysia has issued digital vouchers for domestic tourism of up to RM100 ($23) per person.

  • Funding targeted at venture-capital (VC) backed companies: Acknowledging the rise of VC funding in the past decade, JobsOhio, Ohio’s economic development organization, has announced a $50 million innovation fund to loan to Ohio-based, VC-backed businesses in the Series A+ stage. Especially in the case of VC-backed companies that are struggling to get federal funding due to affiliation rules, states can step in and ease the path to sustainable recovery.


While these interventions provide useful examples for policy makers thinking about kickstarting longer-term economic recovery, those focusing on an inclusive recovery may want to consider ensuring that systemically vulnerable businesses—such as those that are minority- and woman-owned—can recover at the same rates as other businesses. Research suggests there might be a case for a particular focus on these groups: minority business owners are less likely to be approved for capital loans than equivalent white business owners,5 while female business owners are less likely to apply for loans and tend to seek smaller loans when they do apply.


Preparing for a transformed economy and society

The pressure on policy makers to focus on the short term is immense. However, the “next normal” is going to play out over the long term. Government leaders, particularly those at the state and local level, can consider a number of interventions that are more future-oriented:

Build and expand innovation ecosystems. Policy makers can try to help rejuvenate growth by encouraging public- and private-sector innovation via a supportive ecosystem. Local government leaders could harness the power of open innovation efforts—such as increased investment in education and R&D, challenge grants and competitions, and open networks and publicly available data and code—to attract talent to their area and promote resilient, innovation ecosystems.

New York City, for example, was able to build the second-largest tech start-up ecosystem in the United States in just one decade with a focused plan to attract tech companies and develop local talent. The tech sector in New York now accounts for over 300,000 jobs, and in 2019 New York was ranked second globally for start-up output. In another example, the Columbus, Ohio, metropolitan area has been able to leverage its advantages of being home to a large research university, Ohio State University, and the headquarters of several large retail brands to attract entrepreneurs and venture capital. Venture-capital funding in Columbus grew from $35 million in 2009 to $578 million in 2019. The city was national winner in 2016 among seven candidates for the US Department of Transportation’s Smart Cities Challenge, further increasing start-up activity to support the city’s digitally enabled transformation. Other new innovation hubs could likewise emerge out of this crisis.

Facilitate the transition to the post-pandemic economy. Policy makers could also consider investing in programs that ease the transition to the new reality. Programs that ease labor dislocation, including job matching and reskilling, will be crucial for building the workforce of the future. Existing state programs like New York’s Workforce Development Initiative and Ohio’s TechCred might be considered for scale up to create regional talent pipelines to meet demand as new types of jobs emerge. Globally, Australia has already made adjustments to its national My Skills program to meet COVID-19 crisis needs. The program supports reskilling, upskilling, and other vocational training options, and subsidizes fees. Employers that have been facing talent shortages in computer science and related fields, healthcare, and transportation can likewise launch recruiting efforts and training boot camps.

Some programs have focused on reskilling inclusively, targeting the most vulnerable populations and regions. Hawaii, for instance, launched its Reducing Unemployment Disruption & Driving Economic Regeneration program, recognizing there was a dearth of training opportunities for certain vulnerable segments of its population. It provides up to $100,000 to businesses for new employees hired after March 1, 2020 to help offset training costs and other skill-based learning.

Decisions made during past crises have played an important role not only in how well cities, states, and regions have survived, but also whether they emerged from it stronger. Will your city be known for its unparalleled business environment for small and medium-size businesses looking to digitize and expand? Can your state become a top tourist destination ? Or will workers in your locality be so successfully reskilled that it will lead the way toward inclusive growth? The answer to these questions will determine the shape of the “next normal.”

How US companies are planning for a safe return to the workplace

Image by engin akyurt

In a new survey of 100 executives, respondents expect most employees to be working on-site by December. To do so, they are implementing a range of interventions that could transform how people work.

As COVID-19 lockdowns lift across the United States and worldwide, company leaders are considering the monumental challenge of how to restart and then run their businesses while ensuring the safety and well-being of their employees and, where applicable, customers.

Our methodology

To gain insight into the potential steps US companies are taking, we surveyed 100 executives at firms across the country and across industries. These executives expect 80 percent of their workforce, on average, to be back on-site by September and that 88 percent will be back by December (Exhibit 1). The results also suggest that for these companies, working from home won’t be the next normal for all. Four in ten respondents say that permanent remote working is possible for less than one-quarter of their desk employees, while two-thirds say that no field employees will be able to work from home indefinitely.

As part of their guidance for reopening businesses,1 the Centers for Disease Control and Prevention (CDC) recommends that companies follow a hierarchy of controls (starting with eliminating the virus from their workplaces) to protect on-site workers.2 Executives were asked about the following four types of interventions that correspond with the CDC’s guidance: limiting direct and indirect person-to-person contact, identifying and isolating potentially infectious people, increasing hygiene protocols, and using personal protective equipment, or PPE (Exhibit 2).3 The results suggest that most companies surveyed have, or will, implement many of the measures tested in the survey, as well as a range of change-management practices that reinforce the behaviors that can help keep employees safe at their workplaces. In fact, many respondents’ companies are applying measures across the four interventions. Seventy-six percent of those surveyed say they have implemented or planned for at least one measure from each of the four categories.

Limiting direct and indirect person-to-person contact

Efforts to limit interpersonal contact have involved redefining where work can happen (for example, by enabling remote work), minimizing opportunities for interaction, and making physical changes to work spaces. According to the survey, most respondents are limiting or plan to limit contact through a mix of both policy-based and physical interventions. Most commonly, their companies have limited larger gatherings or switched meetings to videoconferences (VCs), restricted the entry of nonemployees to work sites, and reduced the number of employees on-site (Exhibit 3).

While physical changes to limit contact are less common than policy ones, majorities of respondents report plans to change their workstations, food-service areas, and other physical infrastructure (Exhibit 4). The most common physical change respondents’ companies have already made is separating workstations, which 50 percent of respondents report doing and an additional 34 percent say they plan to. Changes that require the installation of new technology—replacing handles with touch-free devices, for example—are reported less often.


Identifying and isolating potentially infectious people

Respondents’ companies are focusing on a range of measures to try to identify and isolate employees who present COVID-19 symptoms or have tested positive, based on CDC guidelines. Of the measures these companies use or plan to use, checking employee temperatures is the most common; nearly three-quarters say their companies already check employee temperatures or plan to (Exhibit 5). Temperature checks for customers are less common, with 40 percent of respondents saying they already perform these checks or plan to do so. And while regular diagnostic testing is less common than other measures, 35 percent say their companies test employees or plan to do so.

Of the respondents whose companies are checking temperatures or plan to, more than half say checks would be mandatory for all employees (Exhibit 6). Seventy-eight percent of those respondents say they plan to check temperatures daily, while an additional 9 percent plan to do so two or more times per day.

According to respondents, companies’ approaches to contact tracing (that is, tracing and monitoring contacts of employees who have tested positive for COVID-19) are not as consistent. Of the 46 respondents whose companies are planning to contact trace, 17 say they have or will create a dedicated team to identify employees who have been in contact with an employee who has a confirmed case. Sixteen respondents report planning for some degree of contact tracing within the company, but in an ad hoc or decentralized way.

Increasing hygiene protocols

Hygiene measures that companies could implement to decrease the risk of COVID-19 transmission include new or modified practices for cleaning and disinfection, changes to encourage personal hygiene (for example, frequent hand washing), and engineering controls, such as modifications to ventilation systems. The survey focused on hygiene measures that would be more costly or disruptive to implement—antiviral fogging in high-occupancy areas, for instance—rather than more straightforward or widespread changes, such as increased cleaning. That said, no more than 51 percent of the executives surveyed report that their companies have made or plan to make each of these changes, which would significantly affect operations or require new equipment.

The two most commonly reported measures are reducing operating hours to facilitate cleaning and requiring sanitization breaks for employees, each of which has been implemented by 32 percent of respondents (Exhibit 7). Thirty percent of respondents report completed or planned changes to ventilation systems or air filtration, which the CDC recommends.

Using personal protective equipment

Promoting the use of PPE has involved supplying employees with this equipment (which includes face masks, gloves, eye protection, and gowns or coveralls), implementing rules that require its use, and providing training on proper use. In the survey, almost all respondents say they encourage the use of PPE or plan to, among both employees and customers (Exhibit 8). Use of face masks is the most commonly reported intervention: 98 percent of respondents say their companies encourage this practice for employees, or will, and 80 percent say the same for mask use among customers. Fewer say their companies have gone further, to make masks mandatory, but it is still a common practice. Seventy-six percent of respondents say their companies will require employees to wear face masks, and 49 percent will require customers to wear them.

The measures that reinforce new behaviors and protocols

The interventions above represent significant and even disruptive changes to day-to-day life at work for many US businesses. To help reinforce the behavioral changes that are needed for a safe return, many respondents report the use of, or plans to use, a range of fundamental change-management practices (Exhibit 9). Most commonly, respondents report the creation of new communication channels around new work practices and leaders role modeling safe behaviors. Training on new workplace practices and disciplinary measures for failure to follow health protocols are reported less often. But most respondents say that their companies plan to implement each measure or already do so.

The survey results suggest that companies are implementing a range of changes to practices, policies, and the physical work environment to facilitate a safe return to the workplace. Respondents say their companies are actively planning, or have already implemented, many different measures to help keep their employees safe—and most companies are making changes across the four types of interventions: limiting person-to-person contact, identifying and isolating potentially infectious people, increasing hygiene protocols, and using PPE.

Going forward, continued evaluation of the changing public-health and epidemiological situation will likely be a key consideration for companies in assessing their approach to workplace safety. What’s more, consumers are likely to seek assurances that they will be safe when visiting a company’s locations or using that company’s products or services. While opinions differ on the best timing and pace for returning on-site, considerations regarding how to establish a safe work environment can help minimize further transmission of COVID-19 and support economic recovery.

These materials are being provided on an accelerated basis in response to the COVID-19 crisis. These materials reflect general insight based on currently available information, which has not been independently verified and is inherently uncertain. Future results may differ materially from any statements of expectation, forecasts, or projections. These materials are not a guarantee of results and cannot be relied upon. These materials do not constitute legal, medical, policy, or other regulated advice and do not contain all the information needed to determine a future course of action. Given the uncertainty surrounding COVID-19, these materials are provided “as is” solely for information purposes without any representation or warranty, and all liability is expressly disclaimed. The recipient remains solely responsible for all decisions, use of these materials, and compliance with applicable laws, rules, regulations, and standards. Consider seeking advice of legal and other relevant certified/licensed experts prior to taking any specific steps.

A holistic approach for the US behavioral health crisis during the COVID-19 pandemic

Image by Vlad Tchompalov

Reopening India: Implications for economic activity and workers 

COVID-19 creates additional challenges for healthcare leaders seeking to improve behavioral health while offering an opportunity for meaningful change.

The COVID-19 outbreak is a human tragedy that affects not only the global economy but also the global psyche. In a recent publication, “Returning to resilience: The impact of COVID-19 on mental health and substance use,” we highlighted the potential behavioral health impact of the economic and emotional distress caused by the COVID-19 pandemic. Now, we offer a deeper dive into four actions healthcare leaders can take to address behavioral health surrounding the COVID-19 pandemic:

Behavioral health conditions, consisting of mental and substance use disorders, have societal, economic, and healthcare system implications, all of which are amplified by the COVID-19 pandemic. Before the outbreak, one in two Americans faced a mental or substance use disorder at some point in their lives,2 with depression as the leading cause of disability worldwide.3 Surveys show that 23 percent of people in the workplace have depression; these workers miss twice as much work, and have five times as much “lost productive time.”4 In the healthcare system, individuals with behavioral health conditions have a medical spend that is two to four times higher than the rest of the population.5 This disproportionate spend is driven largely by increased medical costs for comorbid chronic physical conditions.

Furthermore, a gap in treatment capacity to meet these needs exists: 56 percent of counties in the United States are without a psychiatrist,6 64 percent of counties have a shortage of mental health providers,7 and 70 percent of counties lack a child psychiatrist.8 COVID-19 and the ensuing economic crisis may drive an increase in mental and substance use disorders, as stress contributes to higher rates of post-traumatic stress disorder, depression, anxiety, and alcohol or drug use,9 along with further shortages in services available as practitioners face economic challenges.

Healthcare leaders already face the challenge of meaningfully improving behavioral health, which may be exacerbated by COVID-19.

Behavioral health context and national momentum



Providing prevention, treatment, and recovery support services in behavioral health are critical to improving patient outcomes, reducing costs for providers, preventing criminal justice involvement, promoting school achievement, supporting employment, and enhancing social connectedness.11 However, the healthcare system struggles to ensure adequate care for people with mental and substance use disorders. In addition, inequities continue, with racial and ethnic minorities having less access to behavioral health services and being less likely to receive needed high-quality care.

Individuals with behavioral health conditions have two to six times higher frequency of co-occurring chronic physical conditions than individuals without behavioral health conditions (Exhibit 1). While people with behavioral health conditions comprise 23 percent of the insured population, they drive 60 percent of the total cost of care.13 Moreover, in the post-COVID-19 period, traumatic stress, unemployment, and social isolation will lead to exacerbation of existing behavioral health conditions and onset of new conditions that could drive $100 billion to $140 billion of additional spending on behavioral and physical health services in 2020 and 2021.

Policy shifts

The COVID-19 pandemic may add impetus to an already growing trend around behavioral health as a policy priority. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides $425 million for additional community-based behavioral healthcare and suicide prevention, with most funding going to states and community providers.15 However, a recent survey of behavioral health providers serving high-needs or high-risk COVID-19 populations revealed inadequate resources to serve their populations.

Behavioral health has been a top bipartisan policy issue for more than a decade, starting with the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), which requires behavioral health and medical/surgical benefits to be treated equitably by a payer with respect to annual and lifetime dollar limits, financial requirements, and treatment limitations.17 Other examples include the Affordable Care Act of 2010 (ACA), which established behavioral health services as essential benefits, and the SUPPORT Act (2018), which significantly expanded funding to combat the opioid epidemic.

While the passage of these laws is evidence of progress, their full potential is yet to be fully realized. For example, while MHPAEA endeavors to bring patient financial requirements (for example, co-pays and deductibles) for behavioral healthcare to parity with physical health services, behavioral health providers are often reimbursed at lower rates than non-behavioral health providers, thereby decreasing participation in insurance networks and increasing members’ out-of-pocket costs.20 21 In ACA marketplaces, 11 percent of all mental health providers participated in plan networks compared with 24 percent of primary care providers.22 Furthermore, individuals with commercial insurance are five times more likely to use out-of-network providers for behavioral healthcare than for physical healthcare.With cost cited as a major reason people do not access behavioral healthcare, this shift to out-of-network care poses a financial risk to individuals with behavioral health conditions.

Due to COVID-19, several emergency waivers and authorities were granted to facilitate access to behavioral health services, including increasing reimbursement rates and the number of eligible providers for telehealth services, relaxing Health Insurance Portability and Accountability Act (HIPAA) technology requirements, increasing Federal Medical Assistance Percentage rates, and allowing remote treatment initiation for medication-assisted treatment.25 Permanent changes in data privacy were instituted to promote harmonization across substance use disorder treatment and other parts of healthcare.These flexibilities have supported a significant shift in volume of behavioral health services to telehealth and virtual practice. It remains to be seen, however, which flexibilities will endure past the emergency declaration and how, as a whole, these changes will affect the behavioral health landscape.

Prevention is critical to mitigate a significant rise in behavioral health needs as a result of the stress, anxiety, and social isolation….

Actions to improve behavioral healthcare

Building on the current momentum for change, the healthcare system has opportunities to transform behavioral health through four key actions:

Strengthen community prevention

Payers and providers have historically supported physical disease prevention programs, but behavioral health has not had the same support. However, many prevention and early intervention programs for mental and substance use disorders have demonstrated cost effectiveness, with returns on investment as high as $65 per $1 invested. These programs focus on areas such as maternal and infant mental health, school-based mental well-being and substance use education, first-episode psychosis, workplace screening, social isolation prevention, mental health crisis management, and disaster management.27 Workplace programs have shown the highest returns on investment when they focus on improving knowledge of mental health risks and providing personalized programs for employees.28 A suicide and self-harm prevention strategy for construction workers has demonstrated a 5:1 return on investment.29

The successes of these programs suggest that payers, providers, employers, and governmental entities can all positively and cost-effectively influence behavioral health outcomes by engaging individuals and communities, reducing societal stigma, and intervening early to prevent behavioral health conditions.

Prevention is critical to mitigate a significant rise in behavioral health needs as a result of the stress, anxiety, and social isolation triggered by the COVID-19 pandemic and the associated economic decline. Previous natural disasters and economic crises have been followed by documented upticks in rates of post-traumatic stress disorder, depression, anxiety, and substance use disorders.For example, after the tragic events following the tsunami in Japan in 2011, 10 percent of the population reported initiating alcohol use.31 A study of residents in Mexico two months after the 2017 earthquake revealed that 36 percent of individuals had symptoms of post-traumatic stress disorder.

Prevention programs in a physically distanced environment may continue to be a challenge. For example, K-12 systems play an important role in fostering the behavioral health of students, often through informal channels such as lunchtime check-ins with students or phone calls home from teachers and staff. As schools continue physically distancing, institutions will need to ensure these measures continue, albeit in a different form.

As communities move past the peak of the pandemic and toward recovery, healthcare and business leaders can work together to provide crisis counseling, behavioral health screening, and early intervention services. At-risk groups may include frontline healthcare and essential workers, long-term care residents, individuals who were ill or lost a loved one to COVID-19, individuals in extended quarantine, and individuals who lost their jobs. Ongoing vigilance for new symptoms, the development of post-traumatic stress disorder, and an increase in service demands may help focus early intervention resources.

Leverage data, analytics, and technology

Advanced analytics has made it possible to tailor programs to more precise subsets of individuals (Exhibit 2) so that clinical resources can be directed to those most at risk for mental or substance use conditions and unmet basic needs (for example, housing, food). Using dynamic data sets, such as the Vulnerable Populations Dashboard, healthcare leaders have tools to identify populations who would benefit from targeted prevention and treatment efforts.

Predictive modeling also can be done at the individual patient level to identify those who would benefit from specific interventions, such as collaborative care or intensive case management (Exhibit 3). Moreover, payers and providers can project demand more effectively by leveraging and improving available data sources and artificial intelligence.

Innovation can enhance care delivery by integrating evidence-based and measurement-based behavioral healthcare within patient self-management applications, digital therapeutics, analytic tools, and electronic health records. As pandemic-related restrictions to in-person care delivery ease, providers will need appropriate referral management resources and protocols to continue meeting acute care needs at a distance. Additionally, privacy concerns have to remain appropriately addressed.

The current context builds upon an existing wave of innovation in behavioral health, with private equity and venture capital companies having invested more than $4.3 billion in behavioral health through June 2020 (Exhibit 4).

Integrate behavioral and physical health services

The clinical community has made major strides in developing evidence-based treatments for behavioral health conditions, but opportunity for improvement remains. These improvements may include at-scale adoption of these practices and improved collaboration with physical health services. Integrating universal screening for behavioral health conditions into primary and specialty healthcare services (including COVID-19 care) can support the shift to whole person care.

In addition to screening, other evidence-based prevention and treatment strategies can support integrated approaches. For example, medication-assisted treatment for opioid use disorder delivers a three-fold reduction in adverse health outcomes, including overdoses and emergency department visits for other complications related to opioid use. However, the National Survey on Drug Use and Health reports that only 25 percent of those with opioid use disorders receive specialty treatment, far lower than for proven treatments for non-behavioral health conditions.34 From a prevention and early intervention perspective, investing in screening, brief intervention, and referral to treatment (SBIRT) can generate healthcare cost savings that range from $3.81 to $5.60 for each $1 spent.35 To support better integration of care, strategies include increasing the behavioral health competency of primary care providers, expanding the use of peer counselors to promote engagement in care, and strengthening the behavioral health workforce.

Partner to address unmet health-related basic needs

Healthcare leaders can partner to integrate behavioral health and human services for greater impact. In a recent nationwide survey, people with poor mental health were two times as likely to report an unmet basic need as those with good mental health, and four times as likely to have three or more unmet basic needs (Exhibit 5). Behavioral health conditions can interfere with work, family, and navigation of daily life. Whole person care approaches can improve outcomes across both healthcare and broader functioning in society.For example, data sharing and increased connectivity between providers and community-based organizations have led to improved outcomes for patients with unmet basic needs.

Several partnership models already exist to integrate delivering direct healthcare and addressing unmet basic needs. Further expansion can enhance their impact. For example, healthcare organizations could consider hiring peer supporters to improve the effectiveness of clinical services,38 extend behavioral health networks to include community-based social service providers,39 integrate behavioral health and basic needs in care management models and offer supported employment and improved return-to-work policies aligned with the Americans with Disabilities Act.

How to work toward solutions

Healthcare stakeholders can commit to elevating the focus on behavioral health and scaling solutions within their organizations with these tactical solutions. Organizationally, stakeholders can establish behavioral health-specific key performance indicators (KPIs) beyond the behavioral health silo and use these KPIs to evaluate executive performance. For their employees, members, and/or patients, stakeholders can adjust organizational language and policies to combat the pervasive stigma toward those with behavioral health needs, remove barriers to prevention and treatment services, and address mental and substance use disorders with the same urgency as other health conditions. Lastly, they can ensure equitable access to evidence-based behavioral healthcare across populations and geographies, including racial and ethnic minorities.

The behavioral health crisis in the United States has taken a toll on life expectancy, with potentially increased magnitude due to the COVID-19 pandemic.Healthcare leaders have the power and responsibility to adopt or scale existing, science-based solutions. Their actions can create meaningful change to benefit their organizations, improve the healthcare system, and save lives.

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