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Healthcare Industry Briefing: Short-term Predictions in a Time of Uncertainty

Jonathan G. Wiik
Blog Post04/13/2020
Business
Healthcare Industry Briefing: Short-term Predictions in a Time of Uncertainty

Our healthcare industry has been — and will continue to be — significantly impacted by the COVID-19 pandemic. The effects extend beyond medical care and present unprecedented challenges for providers. Unfortunately, many of you are already seeing the financial and operational ramifications of this outbreak.

While none of us can predict the future, I have some thoughts on short-term expectations. (And I’m working on another piece covering the rest of the year and beyond.) My intent is to highlight where impacts may occur specifically, and get us all thinking about what we can do now to better weather this storm.

From now through June 2020, I expect the following to take place:

  • Overall patient volumes will be lower in Q21,2
    I suspect acute hospitals’ overall volumes will be 25–30% lower and ambulatory clinics will be 50% lower. This is due in part to elective, well-visits and pre-scheduled appointments being postponed or cancelled so hospitals and health systems can prepare for any virus-related surges. This decrease also reflects those, who despite being sick, are opting to manage from home. Hospitals typically operate at 60–75% capacity depending on size and variations in seasonality.3 To create immediate capacity, elective visits have required rescheduling to following months. Additionally, hospitals around the country are creating plans to expand capacity beyond their walls to account for any COVID-19 surges in their areas. However, even with increased virus cases, volumes lost from deferred elective procedures will likely not be offset. Lower levels of volumes will vary from region to region throughout the quarter and may have latency into Q3.
  • Hospitals will waive collection efforts for 30–90 days
    Many organizations are taking a conservative approach to their collection efforts. Several providers are choosing to waive, or at least delay, patient payment efforts and outreach throughout the lifecycle of a claim — from internal and external resources. Just as model and virus updates are fluid on a daily basis, the financial situation and well-being of your patients may be too. Providers are carefully evaluating the unique financial impacts to consumers while they weigh patient liabilities and/or requesting payment.

    In a TransUnion survey conducted the week of April 6, 2020, 61% of consumers indicated their household income has been impacted — up 3% from the week prior. From a revenue cycle best practice perspective, it’s best to inform and educate not push to collect. While collections are deferred, it’s best to keep billing. Many patients will only have one episode of care at your organization, leaving you with just one opportunity to inform them of costs. Understandably, this is a delicate time, so ensure conversations around costs are empathetic and compassionate. It’s important these discussions take place now, as it will detrimentally impact patient bad debt going forward if the opportunity is missed.
  • Increased disruption in coverage from uninsured and newly insured patients
    As of April 10, a record number of individuals — more than 16 million — filed for unemployment benefits over the 3 most recent weeks reported.4 If patients were previously insured through their employer, coverage may have shifted. Coverage disruption is also creating concern for Millennials. Per our recent study, this generation appears to be the most worried about screening and treatment costs, likely due to rising job losses along with insurance coverage.
  • Increased payment disruption from payers, especially CMS (Medicare and Medicaid)
    There’s been confusion amongst patients, payers and providers on what will and won’t be covered, and who’s responsible for payments related to COVID-19. Additionally, with the recently passed laws surrounding COVID-19 relief, increased Medicaid enrollment will elicit a large pool of newly insured patients. Some healthcare provisions in the new laws provide guidance, but you should expect lingering questions and claims over bill responsibility.
  • Profit margins in most not-for profits will be at or below “0” for Q2–Q3
    The influx of high-cost, high-acute COVID-19 patients coming through will dramatically impact hospitals — especially not-for-profits. Strata Decision recently calculated the average loss per case will be around $1,200, and depending on payer mix, could be up to $6,000 to $8,000.5 This is all while typically commercially insured, high reimbursement, elective cases (especially surgeries) have been deferred. The uncertainty of reimbursement and payment on these claims, in combination with shifting revenue, will make it very hard for many hospitals to remain profitable.

What does all of this mean?
More than anything, as an industry we’re going to have to get creative. We’ll need to think of new ways to do business; how to reallocate staff, resources and equipment, capture lost revenue, and better serve our patients and communities. And while there’s comfort in knowing we’re all in this together, there’s still a lot that’s uncertain.

I’ve been in your shoes at the provider level and heard firsthand from many of you how this is significantly impacting your organizations. If there’s anything I or TransUnion Healthcare can do to help ease this uncertainty, please reach out. Don’t lose sight of revenue cycle processes and best practices you’ve put in place — they’ll serve you during this storm. All the hard work and progress should be reinforced with your teams to best position your organization financially.

I look forward to providing another update again soon. Until then — thank you for all you’re doing to keep our communities safe and healthy.

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