The COVID-19 crisis has hit hospitals and other healthcare providers with an unprecedented “financial triple whammy” from which some may not recover. As the downturn has laid bare many of the industry’s most ineffective systems, it also presents a remarkable opportunity to embrace digital contactless innovations to survive now and thrive later.
Hospitals large and small, rural and urban, for profit and nonprofit all find themselves in the center of what NPR describes as a Financial Triple Whammy. High costs for COVID-19 treatment and equipment, suppressed revenues for elective procedures and growing numbers of uninsured, financially distressed patients are leading to billions of dollars in losses, furloughed employees, physician dislocation and closures. For healthcare providers, COVID-19 continues to be a financial nightmare. The billions in rescue money coming from the federal government will cover only a fraction of the losses being incurred.
Aggravating this challenge, there is no playbook for healthcare’s financial recovery from this crisis. Unlike past recessions, which were driven by demand-side economics and have historically demonstrated a U or V-shaped pattern for deepening and recovering, the COVID global health crisis is unprecedented in its scope, with no clear picture for when or how it may end. Still, and in spite of the uncertainty, past events can provide useful information for how to proceed.
As more and more healthcare providers begin resuming nonessential services, the profound financial damage wreaked by the crisis will likely persist. The lost revenue that precipitated pay cuts, furloughs and closures – both temporary and permanent - will take a great deal of time to return to pre-crisis levels. Many providers’ recoveries will be frustrated by uncertainty about future disruptions and their dependence on traditional, labor-intensive “paper” billing methods at a time when consumers have placed a high premium on “contactless” digital engagement throughout their care journey. Those who fail to respond will face severe ongoing revenue challenges.
Like other sectors of the U.S. economy, The U.S. Healthcare industry has faced economic recessions before and emerged intact, some much more successfully than others. In a Becker’s Hospital Review interview, McKinsey’s Aneesh Krishna pointed to an article titled, “Bubbles pop, downturns stop”, which calls out the most successful healthcare providers, labeled “resilients.” These hospitals stood out among their peers because of the speed with which they recovered and their growth rate since. The common characteristics among these “resilients” are:
- Flexibility - By strengthening balance sheets and reducing debt to help facilitate mergers and acquisitions in the early stages of recovery when conditions were most advantageous.
- Cost Management - Reducing operating expenses early in the curve, focusing on areas where reductions in spending could be made without degrading patient care (more on that later), and
- A focus on growth - Usually considered “counter cyclical” healthcare has experienced more than its share of the negative effects of the COVID-19 phenomenon. Like other sectors, healthcare providers have been hit by revenue losses attributable to forced disruption in consumer demand.
There’s no denying that the COVID-19 financial triple whammy has made recovery planning more challenging than past events. Depleted cash reserves and higher debt loads have reduced or eliminated flexibility. And a focus on growth seems like wishful thinking when so many organizations are searching for ways to keep the lights on. Cost management, a strategy that has already received so much attention, is one area where meaningful progress can be made toward restoring operating margins.
After so many years of looking for ways to reduce costs and improve efficiencies, one might ask how much more can be done. The answers lie in part in our experiences dealing with the COVID-19 crisis. Forced by state and federal mandates and medical necessity, some hospitals have rapidly expanded contactless patient solutions like telehealth, which, according to MGMA offers, “cost savings, higher productivity, less windshield time driving between locations, better work-life balance and other benefits. Additionally, contactless patient interactions align with consumers’ interests - both by maintaining personal safety and by responding to their growing preference for care that’s more convenient, accessible and affordable.
Contactless Digital Solutions Cut Costs and Grow Revenues
Contactless, digital solutions enhance productivity by reducing work and its associated costs. At the same time, their on-demand capacity for rapid deployment (proven in providers’ rapid digital responses to COVID-related problems) and scalability make them ideal for an industry struggling to repair economic damage at the same time they are preparing for a surge in pent up demand for nonessential procedures. Case in point: Patient Financial Engagement.
Long before the COVID-19 crisis, we at Loyale Healthcare joined with other organizations like the Healthcare Financial Management Association (HFMA) in pointing out the need for healthcare providers to radically transform the way they engage with their patients financially. The reasons why are complex and interwoven, but they fall into four key categories:
- Patients have become the third largest source of provider revenue overall - Driven largely by the growth in high deductible health plans, patients directly account for more than a third of hospital income. Here, it is critical for providers to remember that patient choice also drives performance from the other two revenue sources, Medicare/Medicaid and private insurers.
- Patients are unhappy with their financial experiences - Surprise medical bills, a lack of price transparency and too few payment options have caused healthcare consumers to avoid care because of concerns about cost. More and more these deficiencies have been criticized by consumer watchdogs and legislators, with hundreds of bills pending to regulate objectionable financial practices. For millions of newly unemployed consumers, concerns about the ability to access care they can afford now are more acute than ever.
- Hospitals and other providers are poor bill collectors - The roles, processes and systems healthcare providers use to code, bill and collect payment from patients and payers are highly antiquated, expensive and do not respond well to change. Additionally, they have not provided healthcare managers and executives with the important consumer analytics needed to effectively manage this essential revenue source (not to mention valuable patient relationships).
- Healthcare has not kept up with changing consumer demand and behavior - Over the last decade, consumers have increasingly expressed a preference for online engagement - a trend that stay-at-home has only accelerated. Even before the crisis, millennials and younger were shifting away from the traditional primary care operating model to retail and digital health solutions because of their improved convenience and affordability.
The Post COVID-19 Digital Path to Improved Operating Efficiency and Margin Growth
As health systems, hospitals and other providers plan for their emergence and recovery from the COVID-19 crisis, Patient Financial Engagement (PFE) will be a critical core asset, operationally and competitively. Effective PFE will accelerate a return to revenue-positive financial performance and enable providers to compete more effectively with surging retail and digital providers. When applied as an end-to-end patient solution, it will reduce costs through automation and self-service and improve patient payment behavior by delivering personalized service at scale - thereby enhancing revenue.
Our experiences with some of healthcare’s largest nationwide providers have given us insight into best practices in the deployment of end-to-end Patient Financial Engagement. It encompasses every touchpoint in the patient journey, including:
- Payment planning - beginning with reliable cost estimates that include what the insurer and the patient are likely to owe, the system automatically offers up multiple payment scenarios that have been customized to suit the requirements of each patient. Options may include discounts for immediate payment, short-term interest free plans or longer-term plans using a third-party lender.
- Digital statement presentation and online payments - Loyale clients have been surprised by the numbers of patients who have opted out of traditional paper billing. Driven in part by consumers’ growing comfort with online interactions, patients express a high degree of satisfaction with bills that combine all the relevant billing entities into one, easy to understand presentation - and to pay it on the spot according to their plan or when they’re ready.
- Robust provider-facing functionality - The productivity of patient access, billing and collections staff and management is dramatically enhanced by “same view” presentation of patient billing information for problem solving and trouble shooting. At the same time, deep analytics extract data from every point in the patient financial portfolio to identify best practices and uncover opportunities for improvement.
- Personalized digital communications - Patients respond differently to different communication channels and styles. Using the Loyale PFE platform, our clients use data-driven, automatically generated workflows to drive patient communications by text, email or chat - and to adjust those communications as patient behavior is observed.
- Leading-edge interoperability - Loyale clients depend on their PFE platform’s seamless integration with all other Revenue Cycle systems and related clinical systems such as the Electronic Health Record (EHR) system. They also rely on the ability to deliver the same patient experience in every care delivery setting regardless of the systems in use there. Acting as the core of the patient’s end-to-end financial journey, this provides patients with unfettered access to their financial information from any touchpoint in the system at any stage. Critically, it also illuminates financial stresses for caregivers who are increasingly likely to consider a patient’s financial circumstances when considering a course of treatment.
By leveraging a technology platform like Loyale’s Patient Financial Manager™ to optimize the systems associated with a patient’s financial experience, providers have the unique opportunity to cut costs and improve outcomes - in patient satisfaction and in operating performance. We’re pleased to be in discussions now with several health systems that have already identified PFE as a key strategy in their recovery plan. We’re grateful to have the opportunity to help.