The COVID-19 pandemic created a financial burden on the healthcare industry. Not only did providers feel the pressure on care delivery and supply chain, but on revenue as well. The cancelation of elective procedures, which many providers rely on consistently for revenue, put additional pressures on the balance sheets of many.
The Financial Burden of COVID-19
According to an MGMA survey from April 2020, 90% of practices have experienced a negative financial impact directly or indirectly related to the pandemic. On average, practices report a 55% decrease in revenue and a 60% decrease in patient volume since the beginning of the COVID-19 crisis.
A Decrease in Healthcare Revenue and Utilization
Based on the analysis from a study of private insurance claims, healthcare utilization is down year over year comparatively from 2019 to 2020. Nationally, from April 2019 to April 2020, utilization decreased by 88% and revenue decreased by 48%. The greatest decline was in the northeast, which has been a hot spot for the virus.
When looking at utilization and revenue across specialty, oral surgery was hit the hardest, with an 81% decrease in utilization and a 92% decrease in revenue between April 2019 and April 2020.
Unemployment in Healthcare
Unemployment increased significantly in the U.S. as a result of the lockdown measures for COVID-19, and the healthcare industry was not immune to job loss. According to the U.S. Bureau of Labor Statistics, the healthcare industry lost 1.4 million jobs in April 2020, with ambulatory services seeing the biggest impact. While healthcare employment increased by 312,000 jobs in May 2020, job losses continued in nursing and residential facilities and hospitals.
A Financial Strategy for Reopening
As the country begins to reopen, healthcare organizations should have a strategy in place to be sure they can collect payments faster and manage that money more efficiently. There is also an opportunity to improve the consumer experience and meet the demands that consumers have asked of healthcare for a long time.
Here are four considerations for provider organizations building a financial strategy.
Open More Payment Channels to Collect
Providers should be able to collect payments from as many payment channels as possible. The more interaction points you offer patients, the more likely you are to meet the needs of all your patients. Focus especially on payment channels that help you collect faster and with fewer costs and effort, such as self-service online channels.
Providers should also be set up to collect from “non-traditional” payment channels, such as a health plan member portal or bank bill payments. These channels give patients the ability to manage their payments in one place, which is something we are hearing consumers demand more often: 85% of consumers say they want to make all of their healthcare payments in one place.
It is also important to eliminate paper as much as possible, to streamline the collection process and reduce manual steps. By registering for electronic remittance advice/electronic funds transfer (ERA/EFT), providers get payments from payers faster without relying on paper.
Here are a few best practices to consider when rolling out digital payments:
- Drive Adoption: Invite patients to visit your online payment portal and create an account
- Go Paperless: Look for opportunities to cut paper at every step in the payment process (e.g., deliver eStatements instead of paper statements)
- Make it Self-Service: Put controls in the hands of your patients, including the ability to manage bills across family members, not just one-to-one for each balance
Automate as Much as Possible
Automatic payments are a great tactical example of what you can do to collect payments more efficiently. Automation refers to the ability to enroll your patients for automatic payments upfront before they even have a bill and establishing an agreement that once a patient has a balance, the payment will be automatically collected. This is the best way for a provider to ensure they get paid, deliver convenience to patients, and manage billing and payments in an effortless and contactless way.
Here are a few best practices for automatic payments:
- Establish a Policy: Make it a standard to save patient payment information upfront for payment assurance
- Train Staff on Your Policy: Give staff the tools to enforce your policy in a positive and effective way
- Set Controls Upfront: Give patients the option to set a maximum amount for a payment
Offer Payment Plans to Collect High Balances
COVID-19 has had a financial impact on your patients, as shown by the 13.3% unemployment rate in May 2020. Healthcare costs have been on the rise for the last decade, leaving 73% of consumers concerned about their ability to pay medical bills.
Payment plans are a great way to help providers get paid while giving patients the flexibility to manage healthcare costs. Self-service payment plans give patients simple choices to pay off a bill. Instead of directing patients to a third party or sending many bills to collect a high balance, payment plans let you give patients control and convenience.
Here are a few best practices for payment plans:
- Communicate: Think about all the ways you communicate with your patients and maximize those non-human interaction points – such as your website, appointment reminder emails and billing statements – to communicate flexible payment options to your patients.
- Leverage AI: Make smart payment plan recommendations to patients based on data. Work with a payment partner like InstaMed that uses AI and third-party data to make recommendations to your patients on a payment plan that will work best for them.
- Report and Analyze: You should have full visibility into payment plans and where patients stand on their payments. This way, if a patient ever calls with a question, your staff can easily pull up that patient’s plan and see exactly what the patient is seeing and address any questions or concerns the patient may have.
Get Your Funds Faster
In times of uncertainty, fast access to your funds is critical. Work with a payment vendor that can offer you accelerated funding options to help you quickly realize receivables as revenue and free up working capital. Learning how to manage working capital can help healthcare organizations gain control over the financial ups and downs of business operations and make their money work for them.
Here are some best practices for managing your working capital:
- Get Advice: Work with an expert to review the way that you allocate funds and ensure you are managing the working capital that you have freed up
- Identify Savings Opportunities: Analyze your current treasury structure and operations to find opportunities for cost savings and performance optimization
- Optimize Cash on Hand: Manage your working capital as efficiently as possible to drive improvements and achieve recurring financial benefits
This article was originally published on InstaMed and is republished here with permission.