Written By: Michael Koory, RVP of Sales- Mid America
To all people working in healthcare – Thank you!
Recently, I read an article and listened to some audio relating to PWC’s recent survey on what is keeping CFO’s up at night amidst COVID-19
Find the link here: https://www.pwc.com/us/en/cfodirect/multimedia/podcasts/covid-19-pwc-cfo-survey-findings.html
The survey included several non-healthcare industries, but I could not help but recognize how applicable all this is for our healthcare clients as well. I am struck by how much this parallels the recent strategy conversations I’ve had with a few major GPO’s and U.S. hospitals about post-COVID-19 planning.
The key bullet points from the article and podcast were:
- Liquidity & Cost Savings
- Workforce Issues
- Government Programs (CARES Act)
From my perspective, these strategies reflect steps I am seeing health system executives undertake to minimize losses and begin to find a way forward. Healthcare providers have a more difficult job since they are on the front line caring for patients while trying to re-orient their budgets and revenue plans for 2020.
It is during times of crisis and disaster we realize what a gift it is to have a healthcare community like we do in the United States. After the initial shock of mobilization to prepare for an onslaught of patients, finance and supply chain leaders quickly began to pivot toward stabilization and optimization. Simultaneously caring and preparing for the massive impact this crisis will have on the healthcare system.
Liquidity & Cost Savings
As soon as elective surgeries were canceled and shelter in place orders placed, health system providers absorbed a massive revenue hit. Layoffs in the healthcare market were a leading indicator of what would follow for other businesses in the United States. As of April 22, Becker’s Healthcare is reporting layoffs at 171 health systems across the United States. Adding to the challenge, some of these layoffs are occurring in COVID-19 hotspots like Detroit and New York.
With the topline revenues cut due in part to the loss of elective surgeries, leading executives are looking for cost-cutting strategies to protect their bottom line. In the past week, we have seen a spike in interest for our Recovery Audit services from our GPO partners and leading health systems.
Beyond the fast influx of cash (25 days on average), the best reason to implement this strategy is the increased visibility into the supply chain costs. The increase of purchases of Personal Protective Equipment and other pandemic preparedness items create the opportunity for pricing issues and duplicate payments. The increase in visibility offers healthcare leaders greater control over the entire supply chain and creates a position of strength when negotiating with vendors.
SpendMend deploys our workforce remotely to preserve our health and that of our community. Many of our clients have been dealing with setting up remote work operations for the administrative teams in the health system. It can be challenging to manage a remote workforce, but undoubtedly it will be more common as we move into our new normal.
One of the challenges with remote teams is communication. Team leaders need to begin thinking about information sharing and communication in a remote environment. Also, policies for remote work and data security need to be set up or updated. We could see a net increase in productivity by enhancing the remote work capabilities of administrative teams.
Government Programs (CARES Act)
The CARES Act has provisions that add $100 billion to the Public Health and Social Services Emergency Fund. Eligible healthcare systems can seek reimbursement for lost revenues and healthcare-related expenses incurred due to COVID-19. There are also accelerated and advance payment programs within the CARES Act. These funds are intended to supply a bridge between any disruption between claims submission and claims processes. These provisions will need the ability to account for the costs and track the available payments. Not an easy task while trying to battle the virus as well.
There are many challenges seen and unseen associated with this current crisis. At SpendMend, we are continually amazed by the innovation and desire to serve within the United States health systems. Our mission is to stand with our clients and help drive cost savings back to their organization to fund patient care.