COVID-19: Cash Management Strategies to Implement Now
For the typical health system, approximately 80 percent of its procedural volume is considered elective. Currently for most providers, these procedures — which drive 30–40 percent of net revenue and a considerable portion of net operating income — have been eliminated to create capacity for the incoming surge of COVID-19 patients and reduce risk of transmission. Furthermore, it is not yet entirely clear what reimbursement will be provided for COVID-19 care and associated costs. On the cost side, the current crisis is both driving up supply and resource costs and adding unanticipated costs such as standing up alternative care locations.
With revenues declining and costs increasing, cash will quickly be in short supply. It is important that organizations take steps now to conserve cash to deal with immediate demands as well as for future financial health and sustainability.
Maximizing cash flow at this critical time is a priority. A targeted effort focused on cash acceleration and conservation can help organizations get through this time of severe financial strain. Key action items include:
Optimize cash acceleration strategy for aged A/R over 60 days — for example: revision to work drivers (i.e., factors that trigger account review), A/R vendor management, and account stratification and prioritization.
Resolve unbilled accounts aged greater than 10 days.
Secure availability of LOC (line of credit) capacity with primary and/or secondary lenders.
Conserve cash — delay or suspend non-strategic, non-priority capital projects.
Implement immediate extension of normal accounts payable (AP) cycles with vendors by an additional 30 or even 60 days.
Reduce threshold for single signature authority for purchases and contracts across the organization.
Target Revenue Cycle and Finance Interventions
Confirm new services (COVID-19 testing and treatment, telehealth) are being billed correctly across the organization.
Enable automation to drive cash and maintain service levels at lower costs (e.g., cash posting, refund processing, claims resubmission, claim status, payment variance analyses and productivity analyses).
Collaborate with payors to remove or amend more stringent restrictions, such as authorizations and filing limitations, and explore all options to accelerate payment cycles.
Monitor activity by payor and ensure resources are aligned with changes in payor mix.
Evaluate current financial exposure associated with short-term and long-term financing and create a mitigation plan.
Flex Staff Where Possible
Bolster patient transfer and triage support and coordinate closely with centralized access center to align fluctuating capacity with incoming demand.
Implement robust position review and control process; consider suspension of certain recruitment activities.
Utilize self-quarantined clinicians to stand up telehealth capacity to the community.
Centralize clinical, administrative and provider staffing resources and functions — to coordinate the need for, availability and reassignment of staff and develop protocols for redeployment of staff to conserve resources.
Define a set of tiered workforce strategies to address staffing levels (such as PTO use, furloughs, etc.). Understand the changing demands on different departments and functions and develop new staffing plans that align with the current environment.
Develop plans and tactics to address high-income and reduced productivity physician specialists, as financial pressures balloon for the physician practice and the hospital.
Coordinate or centralize recruitment activities across the health system or medical group
Prepare for Demand Rebound
Most organizations are not yet sure when they will see the surge of COVID-19 impact. However, as the immediate crisis begins to dissipate, health systems must prepare to accommodate previously deferred elective cases.
Expand ambulatory and procedural access and capacity to ensure the organization has the capacity to accommodate patients who deferred or delayed visits and procedures.
Review OR and procedural block utilization and block schedules to optimize access to the OR and other procedural areas.
Increase float pools to proactively manage future surges and reduce dependency on travelers and premium pay.
Refine inpatient cohorting plan and service assignment processes to optimize patient flow and ensure capacity for elective inpatients while maintaining beds as needed for COVID-19 patients.
The COVID-19 pandemic is disrupting life — and healthcare delivery — as we know it and the financial exposure will be significant for providers. Staying focused on cash management and conservation is essential for all health systems to keep pace with demands now and to return to a strong financial position after the crisis.