The impact of cost resilience on management decision to respond to the COVID-19 crisis in healthcare companies

This study examines cost resilience in the healthcare industry during the Covid-19 pandemic. For a sample of healthcare firms from 2009 to 2022, we document that healthcare firms' managers become more responsive to cost-resiliency during uncertain economic environments. The results of this study suggest that managers for healthcare firms adjust SG&A expenses based on the cost resilience level to optimize financial performance goals. Further, we document that when considering managerial decisions, they focus on employee cost instead of asset cost. Especially in a weak economic environment like the COVID-19 pandemic, management in healthcare companies adjusted resilient costs (i.e. employee costs) by laying off employees instead of adjusting sticky costs (i.e. asset costs) by selling or trading assets.