Optimizing the revenue cycle in the time of coronavirus (COVID-19)

In the wake of the coronavirus (COVID-19) pandemic, many healthcare organizations find themselves in a unique position: Hospitals and other provider organizations are desperately needed on the front lines to provide care to patients who have contracted the virus, yet are having to significantly reduce overall patient volume in order to do so. This includes regular appointments and elective procedures that are their primary sources of revenue. As such, COVID-19 has dramatically changed the financial picture for the industry – and organizations are having to quickly adapt current workflows and processes in order to better mitigate mounting financial distress.

"Hospitals across the country are having to adapt to this situation where there is severely limited revenue", said Ben Foster, an advisory principal at KPMG who works primarily with healthcare clients. "Healthcare organizations that are located in virus hotspots are busy managing patients. But the vast majority of hospitals that were ordered to shut down all nonessential surgeries and procedures are experiencing unprecedented excess capacity. They are losing tens of millions of dollars during this time. Without revenue, there is no revenue cycle to manage. Its a huge challenge for providers."

Health systems need to start thinking about patients not only as consumers, but as payers. We also know that patients who are engaged, who are more informed about cost of care and have a good experience with the billing cycle and billing office, are more likely to pay their bills.

Rebekah Angove

Vice President of Patient Experience and Program Evaluation, Patient Advocate Foundation

Over the past few years, as patients have grown increasingly responsible for healthcare costs, they have exercised more choice in where they go to receive their care – and healthcare organizations have recognized the importance of patient engagement and education to their revenue cycle optimization efforts. In the short term, however, patients may not have that same luxury of choice. Consequently, they, too, will likely bear financial challenges as the result of the pandemic.

"With the pandemic, we will see a lot more surprise billing," said Rebekah Angove, Vice President of Patient Experience and Program Evaluation at the Patient Advocate Foundation. "COVID-19 treatment involves a lot of emergent and emergency care, so patients won't necessarily have the option to shop for a provider. The people who need care will likely find themselves being treated by out-of-network providers, maybe without even realizing it. That has serious cost implications for those individuals."

A review of recent surveys and headlines highlights those serious cost implications for providers and patients – and suggests that healthcare organizations understand there is no going back to "normal" once the current crisis passes.

• Healthcare Finance News discussed the financial plight of primary care physician practices, demonstrating that hospitals are not the only types of healthcare organizations feeling a financial pinch, thanks to COVID-19. Many practices have seen a 40% drop in case volume – and are relying on experienced billers to identify and recoup every possible dollar during this time.¹
• A recent USAToday story discussed how many hospitals across the United States were working on razor thin margins long before the pandemic took hold. With the loss of elective procedures and regular appointments, those organizations, particularly those in rural areas, are even harder hit. The lack of cash reserves not only makes it more difficult to operate in good times, but also adds extra challenges in serving an organization's patient community during an emergency such as this one. As such, many of these smaller and more rural hospitals are expected to shutter before the end of the year.²
• Uninsured patients hospitalized for COVID-19 may be facing bills upwards of $75,000 after release, reported CNBC Make It. But individuals with insurance coverage are not immune – they may find themselves with out-of-pocket costs in the tens of thousands of dollars after hospital care. When patients are unable to pay these high bills, it affects a hospital's revenue cycle, as well.³
• A recent PwC survey gauged how health system CFOs across the country see the potential financial effect of the pandemic. More than half of the respondents stated COVID-19 will have a "significant" impact on their business operations. Their greatest concerns include a potential global recession (80%), a decrease in consumer confidence and reduced consumption (48%), and effects on operations, future periods, liquidity and capital resources (48%). In addition, the survey noted that financial leaders are already thinking long and hard about what the healthcare business will look like post-pandemic – and where they can best cut costs while protecting their workforce and patient community.⁴

With such extraordinary financial repercussions, both now and in the future, healthcare organizations need to create a strong revenue management foundation in order to survive today – and thrive in the future. That foundation, said Angove, needs to put the patient front and center.

"Patients are increasingly bearing more of the financial burden of healthcare – in insurance premiums and out-of-pocket costs for care and medications," she said. "Health systems and providers need to adapt their revenue models to meet their needs. The organizations that can offer more engagement, more up-front cost information and less surprise billing are going to be the ones that retain their patients. It's just good for business."

Responding to the pandemic amid revenue losses

Hamilton Todd, Senior Revenue Analyst – Revenue Cycle at Mayo Clinic said that his institution has made several adjustments in order to respond to the pandemic – and the decreased volume of non-urgent procedures and appointments.

All the revenue cycle work areas on site look like a ghost town," he said. "The staff are either working from home or have joined the labor pool to be reassigned to help out in other areas. Our providers are shifting to sites where they are needed the most."

Mayo Clinic is not the only organization making such moves. Given the current crisis, some organizations are even having to consider furloughs or lay-offs of back-office employees. In terms of revenue-cycle staff, Foster said many hospitals quickly moved these workers to work-at-home status and tasked them with liquidating existing accounts receivable (A/R) payments.

"It was quite amazing how quickly so many hospitals were able to get their staff connected virtually and start them working from home," he said. "But with such decreased volume, their focus had to change. With significantly less claims being sent to payers, staff were shifted to targeted A/R liquidation efforts to increase days of cash on hand and supplement and federal and state funding sources. Largely, organizations have been successful at doing that, but obviously this strategy is unsustainable without patient volume growth as the recovery begins."

Preparing for the future

That said, healthcare organizations, after weeks and weeks of decreased volume, are having to take a hard look at how, where and why to put their resources in the future. As noted in the PwC survey, financial leaders do not expect operations to return to what they were prior to COVID-19. Rather, CFOs developing revenue cycle optimization strategies in the post-pandemic world will need to reconsider everything from staffing to real estate. Todd said hospitals can better position themselves for future financial success by putting strong technologies in place.

"There needs to be greater readiness in revenue cycle management and electronic health record systems to respond to surges in healthcare demand as the patients who couldn't be seen over the last few weeks start scheduling their appointments and procedures," he said.

Foster added that patients may not want to consume healthcare in the same way. Organizations that are investing in enhancing their "digital front door" may benefit, enabling them to be more proactive with revenue cycle management efforts byimplementing innovative programs that will differentiate them from competitors in the future.

"More consumer-centric organizations are using chat bots and other technologies to do outreach and patient engagement," he said. "Those efforts can be accelerated in the recovery phase after this pandemic to help triage patients through new technology platforms and make sure they are getting the care and experience they want and need."

In addition, Foster said that healthcare organizations will need to rely heavily on data and analytics solutions to not only find places to reduce costs, but also support volume and reimbursement recovery moving forward.

"Some organizations are looking at tens of thousands of appointments that now need to be rescheduled," he said. "Using technology as a platform to figure out the medical needs of your community – and how to meet them – is important. But those same platforms can be used to do the kind of productive patient outreach to reschedule patients in a way that makes them feel comfortable. It's not just about reconfiguring your capacity model but building trust with your patient population, so they want to keep coming back to your hospital."

Angove wholeheartedly agrees – and said that the pandemic is starting to uncover gaps that need to be filled so that insurance and healthcare systems can more effectively work together to engage patients – and, as a consequence, optimize the revenue cycle. More sophisticated billing systems that consider the patient as an important part of the revenue cycle can help with that.

"Twenty years ago, billing systems were set up to interface between the insurance company and the health system – that needs to change," she said. "Health systems need to start thinking about patients not only as consumers, but as payers. We also know that patients who are engaged, who are more informed about cost of care and have a good experience with the billing cycle and billing office, are more likely to pay their bills. It is not just about deploying technologies to further patient retention. It is also about having systems that support recouping costs for care. That's what we need in the future."

Q&A with Beto Casellas, Executive Vice President & CEO of CareCredit

Why do I need to accept the CareCredit credit card if I already accept general-purpose credit cards?

With CareCredit, your patients or clients can count on a dedicated health and wellness credit card, products, and services they want and need. They can use it to pay for out-of-pocket expenses not covered by medical insurance, and special financing options for purchases of $200 or more are available that they may not be able to get with other cards.

Financial considerations are clearly important right now for patients and providers alike. What impact are you seeing from out-of-pocket costs?

Even in the best of times, patients may delay or decline care when cost is a concern. Today, patients are not only navigating how to pay for the treatments they want or need but also determining whether doing so is safe.

This can lead to challenges with providers receiving payments. Seven in 10 providers CareCredit surveyed estimated that 20% of their billings go uncollected, and 71% of primary care providers had concerns about the time it would take to collect payments.⁶

People should be able to get the care they need without the health system assuming the payment risk or collection expense.

How can providers engage with patients differently, knowing their patients are shouldering more of the costs?

Patients crave honest conversations about healthcare costs and payments, especially as they manage other stresses like job loss or business disruption.

Rather than covering the cost of care upfront, patients may be relieved to know there are third-party financing solutions they can use to manage payments within their budget. By accessing a credit card with a line of credit dedicated to their health and wellness, they can lessen the immediate impact on their bank accounts and general-purpose credit cards while making monthly payments.

With so much uncertainty to navigate during this pandemic, providers have an opportunity to become a trusted resource to patients right now.

A pioneer in healthcare financing for more than 30 years, the CareCredit health, wellness, and personal care credit card gives patients a way to pay for out-of-pocket healthcare costs while fitting payments into their monthly budget.^* Providers receive payment within two business days, with no liability if the cardholder delays payment or defaults.^** Today, more than 12.4 million CareCredit cardholders can use their card to pay for care at 240,000 U.S. locations. For more information, visit carecredit.com/himss.

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