Even after the curve has flattened and things in our communities begin to normalize, the lingering effects of COVID-19 will manifest in staffing, medical and financial challenges. While perhaps more notable in the months ahead, the effects of this pandemic will continue for the rest of 2020 and beyond. No one is certain of what’s yet to come, but it’s abundantly clear some hospitals and health systems across the country have been significantly impacted. For example, at least 150 hospitals have had to furlough or lay off employees, reduce physician’s salaries and cut back benefits.1
Below are my predictions of what we can expect in Q3 and Q4, along with strategies of how to prepare:
Hospital volumes in Q3 will spring back with deferred elective visit and procedural volume
Per the Advisory Board2, on average, providers’ volumes will slip 51% in the wake of the COVID-19 spread. As we start to see state and national level virus curves begin to plateau, you can expect elective procedures and appointments to return by this summer and into fall. This will vary and depend on the provider and patient comfort levels, as well as the organization’s ability to take on more capacity. Some patients may be more hesitant to reschedule appointments, and some providers may not have the staff or resources needed for patient outreach.
Toward the end of 2020, I expect supply level and hospital volumes to mostly return to normal. Fluctuations in both will still be occurring in Q3, which is primarily based on region and a hospital’s ability to reorganize workflows and operations.
Payment disruption to providers will be higher (denials, underpayments)
Short-term challenges involve identifying the correct payer and guarantor(s) for COVID-related care, which has been harder to do due to new patient volume and the influx of uninsured or underinsured patients. In hotspot areas, organizations have had staffing challenges and are reallocating staff to manage the patient surge. As higher volumes of patients present all at once during a pandemic such as this, the content and accuracy of insurance information is diminished. This can lead to more problems further down the claim lifecycle, such as an increase in underpayments and denials hitting your revenue cycle offices. The stimulus bills help cover testing of COVID-19 but may have payment gaps in overall treatment.
If you don’t have a sound accounts receivable recovery process in place — one that automates the process and gives you a breakdown of type of denial and underpayment — I highly recommend one. This will help relieve your staff’s workflow and allow them to better focus on the claims that can actually be reimbursed. Efficiency gains will be more important than ever.
Profit margins at not-for-profits will remain in -2 to +1% range until FY 2021
Many hospitals or health systems will not be posting margins similar to last year, but not-for-profit hospitals in areas of high COVID-19 cases will be hit the hardest, and it will take time to recover. The impact of fewer elective procedures and surgeries performed, along with costs associated with staff and temporary staff is contributing to this. Beaumont Health — a large non-profit system in Michigan — expects revenue to drop between 20–40%.3 This projection is likely to resonate with other not-for-profit systems too.
Federal assistance will offset some provider losses
As mentioned in my post about legislative assistance, more than $100 billion in various provisions specific to healthcare will paid out to hospitals. These funds will help in a variety of ways, including free testing and treatment, assisting with COVID-related costs and lost revenue, capacity expansion and response, infrastructure-related expenses and much more. When broken down, the Coronavirus Aid, Relief and Economic Security (CARES) Act amounts to nearly $110,000 per hospital bed.4 The additional amount will certainly help, however, it will only offset some of the losses associated with the virus. Especially when you consider the average cost of a COVID-19 patient is more than $73,000.5 All that money welcomed, but hospitals (and our government) must quickly get those dollars where they’re most impactful — to the front line. The latest guidance from CMS outlines applications and a seven-day turnaround from the Medicare Administrative Contractor (MAC).6 As of this writing, there’s a potential 4th relief bill package being put forth to distribute an additional $100 billion for COVID relief.
What does all of this mean?
The months ahead may not be easy, but rest-assured, you can weather them. Thinking strategically about this now can have long-standing impacts. Some of this may involve ensuring you have the right tools and partners in place to help drive efficiencies and realize your earned revenue.
Don’t be afraid to try new things. This may include shifting resources to areas where previously they may not have been involved. Cross-training billers to become registrars (or vice versa), or reception to intake triage traffic control is not outside the realm of possibility. Allocating resources where they’re needed most by cross-training will afford flexibility with staffing and throughput.
I hope you are all stay well and safe as we navigate this together. If we can be of any assistance in this unprecedented time, please don’t hesitate to reach out to me or TransUnion Healthcare via the form below.