Manual efforts to predict cash flow may leave you vulnerable to revenue problems that can quickly spiral out of control.
The COVID-19 pandemic has left a permanent imprint on the healthcare landscape—one that will undoubtedly follow the industry into the new year and beyond. The heightened role of technology, especially as it relates to the use of data analytics to inform operational decision making, proved a key differentiator for understanding the short-term impact and tactics required to survive. Data analytics continues to play a major role in strategic planning and decision making as the pandemic accelerates through the winter where making the wrong decisions based on feelings rather than facts could put a provider practice out of business.
Providers have not faced a shortage of revenue risks associated with the pandemic. Findings from a Physician’s Foundation report released in August suggest an 18% decline in U.S. healthcare spending during the first quarter of 2020, the steepest decline since 1959. Notably, nearly three out of four (72%) of physicians surveyed said they have seen a reduction in income as a result of COVID-19, and 8% had shut their doors.
Long-term sustainability necessitates that financial executives, providers and billing teams become proactive in understanding and mitigating financial risks. Manual efforts to predict cash flow and forecast financial health leave many organizations simply reacting to problems that surface, making them vulnerable to revenue problems that can quickly spiral out of control.
The good news is that organizations with the right data analytics tools in place are poised to stay profitable by drawing on deeper insights into the specifics of financial health that inform better workflow practices and improved revenue capture. Additionally, analytics that focus on employee productivity and effectiveness are critical for managing the cost to collect. The added complexity many physicians face with virtualized workforces—even for short intervals—can have material impact on revenue cycle performance.
Providers have faced a perfect storm of revenue hits amid national efforts to respond to the coronavirus pandemic and keep communities safe. To free up beds and resources in anticipation of significant demand, the elective procedures that make up a sizable part of income for many health systems and surgery clinics were halted for several months in most places. Outpatient visits also dropped a whopping 60% in the wake of the pandemic.
Telehealth has proved a game-changer for many physician groups across the U.S., yet within a fluid regulatory landscape, reimbursement for these visits remains largely untested. History confirms that in times of rapid change, billing errors increase—and so do claims denials.
Readiness for the unknown should be the mantra of all healthcare organizations heading into 2021. Already operating with razor-thin margins, providers cannot risk leaving money on the table. And with the pandemic still not under control, it is even more imperative that healthcare providers have the strategies and insight to weather the storm and stay in business.
Optimal strategies going forward draw on technology-enabled workflows and real-time analytics to stay one step ahead of operational losses and revenue cycle bottlenecks. Financial executives should leverage financial forecasting tactics that deliver a holistic understanding of organizational financial health. These include:
Along with real-time visibility into appointment volumes, healthcare organizations need to understand what missed visits equate to in revenue losses. This way, there is time to prepare for fixed cost reduction, such as payroll expenses or surgical supplies.
Analytics can help practices know how quickly a decline in services will impact cash flow to inform current and future decision making. In addition to year-over-year period comparisons, practices should pay attention to the dropoff in insurance and patient payments as well as changes to payer mix and its related financial impact.
Understanding the number of cancellations that have occurred compared to the number of patients rescheduled is another important forecasting metric. With the right analytics tools and approaches, practices can see these comparisons in real-time across several months. It is also important practices understand how to reschedule to maximize net revenue which could be based on a combination of factors like episode of care and payer.
A clear view of how much money a practice has and when it can expect to collect for services rendered is foundational to understanding financial health. Billing departments that draw on real-time analytics can instantly differentiate between the total balance of accounts receivable (A/R) versus the actual value, such as denials, past due patient balances, claims that have yet to be filed, and partial pays.
Providers should prepare for an increase in denials due to the introduction of new codes and care delivery models. With visibility into denied claims, billing teams can identify the categories and probability of overturn. For example, hard denials, such as no authorization or maxed benefits, will likely hold true. However, others might be resolved with a quick change to a modifier.
The coronavirus pandemic has ushered in many challenges for today’s providers. The good news is that there is no need for financial executives to get caught off guard again. Analytics tools can deliver real-time visibility into the revenue cycle, equipping healthcare organizations with the insights they need to proactively monitor reimbursement trends, forecast collections, and make informed decisions to effectively manage the bottom line and ensure long-term sustainability.