The pandemic has required healthcare organizations to take stock of their financial technology.
As the United States prepared and responded to the COVID-19 pandemic, healthcare patient volumes drastically decreased, beginning in the second half of March. Elective procedures were postponed and telehealth skyrocketed resulting in record low healthcare visits.
Operating room minutes fell 61% compared to April 2019, which is more than triple the declines seen in March. And, surgery room volumes saw the biggest declines, which was expected given the halting of elective procedures.
With the exception of New York City and San Francisco – two of the largest COVID-19 hotspots – health systems across the country experienced an average decline in patient volume of 56% between March 1, 2020, and April 15, 2020.
The COVID-19 pandemic could cost Medicare between $38.5 billion and $115.4 billion over the next year, according to a new analysis from the National Association of ACOs (NAACOS). Officials at NAACOS noted that the final number will depend on factors such as severity of disease and hospitalization rates.
A recent analysis from Strata Decision Technology found that hospitals, on average, will lose about $1,200 per COVID case and up to $6,000 to $8,000 per case for some hospital systems, depending on their payer mix.
A big reason for the estimated loss in revenue is due to the margin lost from elective inpatient services deferred as hospitals make room for more COVID-19 patients. Elective cases are the primary source of revenue for many hospitals, allowing them to take a loss on certain other services while remaining profitable.
This reality is troubling for all healthcare institutions, but is especially worrisome for rural hospitals that were already facing financial hardship before COVID-19. Recent research from the Chartis Center for Rural Health found that more than 450 rural hospitals are vulnerable to closure. This will be a serious issue for state legislators because if these hospitals close, not only will they will lose the ability to respond to future pandemics, they’ll also lose an economic anchor because businesses typically won’t locate in an area without a hospital.
Digital transformation may boost waning margins. A Black Book survey from 2019 showed that most CFOs and senior finance leaders (86%) who automated key financial processes at their hospital or health system reported a “substantial” return on investment.
According to a 2020 Black Book Research Survey, all of the healthcare CFOs asked said they expect their organizations to experience a significant revenue decline this fiscal year, which will prompt them to adjust budgets and spending in 2020. However, only 12% of senior finance leaders said they will need to reduce or defer spending on digital transformations for their financial systems.
“It would seem most CFOs understand what the pandemic has proved is the need to speed up digital transformation initiatives to not only survive but to prosper in the new normal,” stated Doug Brown, president of Black Book Research. “For CFOs eager to expedite their organization's digital transformation, the standardization and simplification leaders want in their back-end processes are allowing for less complicated, faster adoption despite the times.”
Since the pandemic, healthcare organizations have taken stock of their financial technology. In recent months, 84% of hospital finance leaders and 79% of leaders at large physician practices have confirmed they performed audits on the state of their digital transformation.
A majority (93%) of those respondents identified missing capabilities, redundant technology, or conflicting systems. Optimizing the digital transformation of financial systems, however, could drive rationalization and acquisitions, the survey stated.
About 81% of responding healthcare CFOs and senior leaders said the absolute and immediate need for technology implementation and optimization is essential for the long-term survival of their organization.
Despite these statistics, in 2019, only about 20% of healthcare CFOs and senior finance leaders said hospital financial automation has reached a quarter of their processes.
If you work in one of the majority of healthcare institutions that hasn’t fully automated manual revenue cycle processes, now is the time to start evaluating.
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Ken Magness is a focused healthcare professional with more than a decade of experience in helping clients understand the true value of automation in the revenue cycle management process. As the Strategic Initiatives Leader at Quadax, Ken and his team are passionate about connecting with healthcare providers to help them create and leverage the appropriate technology solutions to optimize the revenue cycle process and improve the experience of their patients and staff.