The Road to Recovery: Five Strategies Hospitals Can Employ to Regain Lost Revenue Due to COVID-19

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By Jonathan Wiik

Over the past few months, hospitals and health systems have faced inordinate staffing impacts, volatile shifts in volume, and clinical and financial challenges as a result of COVID-19. Patient fears around COVID-19 transmission in hospital settings may be exacerbating these challenges further. A recent survey found of patients who have had an elective procedure deferred due to COVID-19, 42% indicate they will only reschedule once they no longer believe there is a high risk of infection or once guidelines advise it is safe. 

To put the pandemic’s impact on the healthcare industry further into perspective, at least 266 hospitals nationwide have reported furloughing employees and cutting physicians’ salaries and benefits,[1] and 1.4 million healthcare workers lost their jobs in April.[2] In addition, industry estimates show hospitals with more than 100 beds experienced a decline in revenues — dropping an average of $1.44 billion in net revenue per day — in March and April.[3]

As state economies begin to reopen across the nation, hospitals and health systems must turn their attention to the long road ahead to recover lost revenue and re-engage patients. COVID-19 has had both short and long-term impacts on the healthcare industry. The below outlines these impacts and also provides strategies on how to mitigate these challenges and enhance profitability. 

Rising Unemployment and Patient Bad Debt

The overall unemployment rate recovered slightly in June though still high compared to pre-COVID-19 readings at 11.1%, and the jobs market will likely feel the impacts of the pandemic for months to come. According to a recent Healthcare survey, more than one in four consumers report their health insurance coverage has been affected as a result of job loss due to the pandemic.[4] And as of early May, an estimated 27 million patients may have seen disruptions or a cease in their employer-sponsored insurance due to unemployment.[5] 

We can expect to see economic issues impact health insurance coverage for many Americans, as the payer shifts will significantly dilute the payer mix at many hospitals. Plans may also have an increased cost share, particularly if deductibles rise as employers try to reduce their costs. This increase can hinder a patients’ ability to pay their healthcare bills — particularly among those who transitioned to ACA or high deductible health plans, or those on fixed incomes within the Medicare/Medicaid population. These issues will have significant impact to a hospitals’ ability to sustain operations as well. 

Uncompensated Care

Even before COVID-19, uncompensated care has been a rising challenge year over year for   healthcare providers. In fact, uncompensated care jumped to $41.3 billion in 2018 – a $2.9 billion increase from 2017.[6] This upward trend extends beyond COVID-19-related care and will likely only intensify due to a shift in payer mix and changes in health insurance coverage (i.e. a rise in uninsured individuals) resulting from the economic impacts of the pandemic. 

Newly Insured and Non-Traditional Visits

Federal programs, such as the Families First Coronavirus Response Act (FFCRA), were created to provide economic support to Americans in light of COVID-19, subsequently allocating funding and Federal Medical Assistance Percentages (FMAP) which will increase state dollars and incentivize Medicaid enrollment. With an increase in newly insured patient and non-traditional visits comes the inevitable fluctuations in coverage which lead to inconsistent insurance verification and payment outcomes. 

Chronic Illness/High-Risk Ambulatory Patients

Hospital volumes remain well below the levels observed before the pandemic,[7] which drives concerns that high-acuity and chronically-ill patients may be deferring necessary care for fear of COVID-19 transmission. These treatment delays not only impact patient progress and disease management, but also amplify financial challenges for hospitals.

 As non-COVID-19 illness progression continues and patients postpone treatments, costs will only increase, which in turn will decrease affordability and drive bad debt. 

Key Strategies for Revenue Recovery 

With the above impacts in mind, providers should consider implementing the strategies below to maximize revenue recovery: 

1.     Ensure payment integrity

Rising unemployment numbers and shifting health insurance coverage due to COVID-19 can result in claims and payment disruption. And with Medicare underpayments to hospitals amounting to $56.9 billion in 2018,[8] it’s more important than ever to capture comprehensive and accurate data across all patient systems. Providers should also closely examine Medicare payments, beneficiary bad debt and DSH filings for FY 2020. To maximize reimbursement opportunities, providers must ensure they are identifying dual eligible coverage and submit Medicaid claims accordingly.

2.     Reduce costs and drive efficiency

Considering the cumulative financial challenges hospitals and health systems are facing due to COVID-19, identifying ways to cut costs and drive efficiencies will be imperative in the months ahead. Leveraging productivity and staffing models can help realign labor costs, and outsourcing can provide another option to address capacity constraints. 

3.     Take advantage of federal relief

While federal programs can provide much-needed relief to providers, be aware that application deadlines move fast and the window of opportunity for these distributions is short. Turn to industry organizations — such as HFMA or HBI — for the latest information on federal relief programs as well as additional reimbursement opportunities.  

4.     Stabilize internal efforts and evaluate partners

As patients continue to reschedule/return for elective procedures, it will be critical for front-end processes to consistently perform identity, eligibility and estimation checks to minimize denials and maximize patient payments. Internally, consider outsourced solutions to clear zero balance accounts and accounts receivable backlogs as well as relieve overtaxed staff.   

Another strategy is to closely evaluate current business partnerships and consolidate only to those with holistic solutions and resources. In doing so, hospitals and health systems stand to recover tens of millions of dollars annually.[9]

5.     Engage patients proactively

The need for transparency within the healthcare industry is only amplified by COVID-19, and providers must give patients clear, accurate information about their costs as possible. Providing tailored and flexible payment plans that meet patients’ ability to pay as well as empowering them can drive patient revenue yield significantly. Patents can be armed with resources to arrange and make payments on these plans, such as an online portal or mobile app notifications, which can increase loyalty and engagement with your organization.

Further, hospitals need to increase financial assistance resources and verifications to ensure that charity determinations are holistic, accurate and compliant.  

On the Road to Recovery

Considering hospital financial performance more broadly, now is the time to look for ways to insulate margins. To do so, it will be important to capitalize on high-yield revenue cycle projects. Prioritizing expense-reduction efforts and evaluating staffing, education, travel and non-essential projects will also go a long way to helping alleviate expenses.

The effects of the pandemic will extend well beyond 2020. Hospitals and health systems must be strategic and resourceful in their approach to weathering this storm. Taking the precautions and recommendations prescribed above can help mitigate challenges due to COVID-19, without compromising care or resources.

Author Biography:

Jonathan Wiik has 25 years of healthcare experience in acute care, health IT and insurance settings. He started his career as a hospital transporter and held various roles (clinical operations, patient access, billing, case management and more) at a large, not-for-profit, acute care hospital, before serving as the hospital’s chief revenue officer. He also served in various roles at a prominent commercial payer. His cumulative expertise gives him vast knowledge of—and keen insight into—the inner workings of the revenue cycle across the continuum of care. He currently serves as a Principal of Healthcare Strategy at TransUnion Healthcare. For more patient insights and revenue cycle management strategies to address COVID-19 challenges, visit TransUnion Healthcare’s resource page: https://www.transunion.com/healthcare/covid-19.

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