Despite the coronavirus outbreak, healthcare finance leaders are working tirelessly to ensure their hospitals and health systems have the resources they need to navigate through the current health crisis.
Deservedly, the spotlight has shone brightly on the selfless clinicians and support staff who are involved in day-to-day patient care and put their lives on the line during each shift. We will forever be indebted to these brave men and women for their endeavors.
Operating very much behind the scenes are healthcare finance leaders who support this important clinical work by helping keep healthcare organizations functioning while guiding the business through these unprecedented times.
Recently, finance leaders from healthcare provider organizations across the country met virtually to share their COVID-19 plans and exchange ideas on how to best support their communities, caregivers, and patients.
They graciously agreed to let us share the highlights of conversations about planning and tracking COVID-19 efforts, and what they expect post-pandemic.
Planning for the uncertainty ahead
Given the clinical profile of COVID-19 cases, most organizations proactively cancelled all elective surgeries to ensure there was sufficient capacity to care for patients suffering from the virus.
Uncertainty around the length of time these cancellations will last, and slow down of other outpatient case volumes means financial teams must effectively simulate the financial impacts across multiple scenarios.
“We use Rolling Forecasting, and it’s really helpful to quickly adjust volumes and projections, based on how everything is flowing,” said Lynn Lowrie, Director of Decision Support & Business Analytics, at Appalachian Regional Healthcare System in Boone, North Carolina. “Last week we re-projected volume, reimbursement, and expense drivers for January through March to denote the current drop. Then we adjusted for what we expect April through June, and July through September. We also modeled what happens if the outbreak goes the way that we think it's going to go. It took about a day and helped us understand possible scenarios in ways we hadn’t before.”
Others who did and didn’t use rolling forecasting models reinforced the importance of planning across alternative scenarios to help understand and plan for what’s coming. Many focused efforts on understanding potential short-term and long-term cash flow needs. Some organizations were proactively engaging banks and capital markets to support the needs of the business, and everyone is closely monitoring liquidity.
“We’re also estimating net revenue per day, based on the gross charges and the payers,” said Loucas Koutoufidis, Corporate VP, Controller at Scripps Health. “Then we’re projecting revenues through the end of the month and the next three months. And we’re tracking all the COVID-related expenses to make sure we're able to get reimbursements from payers or any other opportunity that we may have down the line.”
Structuring systems to track COVID-19 impacts
Setting up the business to track the operating capital and expenses as a result of COVID-19 was a broad priority.
“We don’t have historical data or run rates for things like COVID-19-related supplies or additional labor that’s set up for testing kiosks or tents outside our facilities, but those things need to be captured as quickly as possible to understand the impact,” said Koutoufidis. “It takes time, but we have to talk to people on the ground to gather as much information as possible about all these incremental costs we’re incurring so we can get it in the system, understand it, and adjust projections.”
Related to enterprise resource planning (ERP) and payroll tracking, the group shared examples of setting up unique departments, project codes, and payroll codes to better track key COVID-19-related data in their back-end systems —this setup will be important for accurate reporting and government reimbursement.
“One of our priorities was identifying in our general ledger which expenses are part of COVID-19, so we set up this activity and then adjusted our system to be able to track all this information at the vendor level and at the timecard level,” said John Wong, Director of Financial Planning and Reporting at Scripps Health. “The data set is still very small at this point, but it’s ramping up quickly and will help with our projections.”
Setting up codes effectively today will also benefit how future planning tools can reflect costs and plan for normal business operations when the outbreak subsides.
Guiding the organization into a post-COVID-19 era
The group also shared how they’re planning for the future and framing possible future business realities— an incredibly challenging yet critical task.
“We have to be extremely agile as we move through the budget process for 2021,” said Jeff Blankenship, Chief Financial Officer, at West Tennessee Healthcare.“It’s difficult to get a budget over the finish line right now.”
Budget challenges will likely increase even as COVID-19 diagnoses drop due to a likely surge in elective surgeries. There’s also the potential for another wave of coronavirus in the fall, so rather than developing a static budget, finance leaders are looking at budget models that accommodate frequent adjustments.
But even amid the uncertainty and constant adjustments, there is good news: adoption of telemedicine services has skyrocketed— one health system measured a few hundred visits per month in January and several thousand in both February and March.
“We have seen a tremendous spike in telemedicine visits as a result of COVID-19,” said an Associate Vice President of Financial Planning at a health system in the Northeast.“While this was an area of growth and investment for us already, I expect this will be an even higher priority as we plan investments in our post-COVID-19 business. We’re getting a lot of positive feedback from patients.”
Although it may feel like the pandemic has been going on forever, the immediate crisis will pass. What the post-pandemic future looks like for a healthcare organization depends on what it’s doing now to manage through the crisis.
We appreciate the healthcare finance leaders who shared their plans and strategies for what that future looks like in their organizations.