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We spoke with Brian Sanderson, National Healthcare Leader at Crowe, regarding the financial impact of the COVID-19 pandemic on hospitals and health systems and the steps they may consider taking to recover quickly.
How has COVID-19 impacted hospitals' revenue cycle?
We've calculated that most hospitals will need to operate at 110 percent of their previous volumes for six straight months to offset the volume declines we saw from mid-March through April. For most organizations, this will be a significant throughput challenge combined with the need to prioritize the pent-up demand of elective surgeries.
We've seen revenue cycle metrics actually improve over the course of April, primarily because of the lower volume – less accounts, more focus on collections. But, we're concerned that late May and all of June will show very volatile performance.
What steps are you recommending hospitals take to limit the negative impact of the pandemic?
We're recommending hospitals focus on three main priorities:
- Institute an "acceleration mindset" by condensing schedules and increasing hours of operation.
- Focus on coding and capture precision – capture every procedure, CC, etc. that they are entitled to. It's not time to be sloppy with documentation.
- Introduce more automation to their business models. Labor has become severely impacted by flexing and furloughing of staff and is an inhibitor to differential success. Hospitals should use the chaos of the crisis to reinvent how they operate.
How can clinical documentation improvement and coding teams help hospitals rebound?
The spotlight on coding documentation has intensified as the country attempts to understand and quantify the impact of the pandemic. Securing additional federal reimbursement will depend on a hospital's ability to document and code COVID-19 cases accurately.
Organizations that have the tools, methodologies and sufficient focus on coding and documentation are in a much better position to respond and will be quicker to capture the pent-up demand for the remainder of the year. This skillset will be the differentiator for hospitals when it comes to achieving margin, and in many cases, bond covenants and cash flow metrics.
What programs and initiatives should hospitals be implementing now to maximize cash flow?
We see five key elements of revenue recovery for hospitals:
- Recapture patient demand in a strategic way using three levers:
- Assure patients that they will come back to a facility free from contamination.
- Reconfigure operations for more throughput.
- Assist physicians with the acceleration of the consult/schedule/operate process.
- Segment operations distinctively between contagious and non-contagious areas – e.g. inpatient wards, outpatient tracks, etc. Part of the issue with the cancellation of electives was the government looking negatively at co-mingling all patients, and therefore more space was procured (at the expense of other services).
- Become experts at revenue cycle operations – revenue projection, service mix analysis, capturing, processing, billing and collecting.
- Challenge the clinical operating model. Now is the time for hospitals to move aggressively towards telehealth and the digital gatekeeping it can provide. Included in this shift are dispersed sites of care, touchless patient access, risk tolerance for value-based contracts, etc. The business of "one foot on the canoe, one foot on the dock" straddling of old and new models should be abandoned and hospitals should use this pandemic experience to charge solidly ahead in one clear direction.
- After mastering the first four elements, hospitals must focus on the patient experience. Many hospitals will not be able to rapidly pivot and capture pent-up demand, and patients will seek care elsewhere. To the degree that other hospitals can provide a better experience, patients and their families could become their new market share.
How is Crowe helping your hospital partners?
Crowe simplifies the business of healthcare through revenue and risk lenses. We help hospitals capture and account for revenue to keep them solvent. Crowe's Revenue Recovery Program focuses on the elements hospitals need to accelerate and achieve to return to financial stability while improving their risk profile. Our key solutions include: revenue cycle operations, outpatient charge capture, finance and reimbursement services, as well as internal audit.
Would you like more information?
Connect with Brian at Brian.Sanderson@crowe.com.