This article was written by Lisa Miller.
As the healthcare sector continues to navigate its way through the global crisis, hospitals are seeking ways to take steps to financial recovery during COVID-19.
According to one report from the American Hospital Association, revenues and volumes “have fallen off a cliff.” Hospitals are predicted to lose approximately $323 billion in 2020. Around a third of those losses are expected to arise from July through December. One-third of health systems also saw year-over-year operating margins decline more than 100% from Q2 2019 to Q2 2020.
Hospital leaders must focus on recovering lost revenue, creating sustainable cost savings initiatives, and reimagining the future of cost management in their health system.
Creating a financial recovery strategy
Maintaining financial viability during the pandemic is critical. A further study found that cost reduction is one of the top three priorities for 85% of health leaders to address the impact of COVID-19 on their health system.
Financial recovery needs an approach that has structure, rigor and discipline. Multiple themes should characterize a hospital’s planning for a financial recovery strategy, including:
- Implement a culture of cost awareness.
- Continuous cost improvement.
- Consider analyzing all areas of spend.
In some cases, hospitals are looking at areas where they never really wanted to look for cost opportunities before. The focus of healthcare leaders should be on pricing, utilization, internal supply chain sourcing and achieving department cost savings.
Some of the ways VIE Healthcare® can help you achieve this are:
Ensure you are maximizing your funding solutions. In October 2020, the Department of Health and Human Services (HHS) announced a third distribution of CARES Act Provider Relief Funds to all hospitals and other healthcare providers. This amounts to $20 billion from the Public Health and Social Services Emergency Fund. At the time of writing, there is still time to apply. Eligible hospitals can apply for additional funding related to the COVID-19 cost impact through November 6, 2020.
VIE Healthcare® can help your hospital to maximize and accelerate funding solutions. Schedule a call with Lisa Miller today.
Incorporate Social Determinants of Health: Hospitals need full insight into their communities to keep them safe during the pandemic. A study in the New England Journal of Medicine suggests a number of approaches, including the development of virtual health offerings and capabilities to improve care for the chronically ill. These rely on a social determinants of health strategy, which should be included in any cost management system – a need which has been emphasized during the current crisis.
At VIE Healthcare®, we optimize cost management by applying four different data points to make up “Project CROS.” Costs, Reimbursement, Outcomes and Social Determinants of Health (SDOH). We include SDOH as part of the constant innovation that all hospitals need in order to maximize cost savings and enhance patient care.
Understanding SDOH is also vital to create a “patient first” culture.
Implement supply chain excellence: COVID-19 has dramatically highlighted and exposed existing weaknesses in the US supply chain. But the lessons learned from the pandemic can help to create a more resilient and adaptable supply chain. The first step is to understand your organization’s vulnerabilities through a post-pandemic supply chain audit. VIE Healthcare® can help your organization in this critical area.
Leverage spend data analytics: Data, not opinions, must drive decisions. Measure everything to objectively determine what needs to be done to achieve desired results. You cannot manage the vast amounts of information each day without effective digital technology. Leveraging spend data analytics to get in front of your cost savings is also vital.
Data, not opinions, must drive decisions. Leveraging spend data analytics helps your hospital to get in front of cost savings. Click To Tweet
I mentioned above that hospitals are looking to drive margin improvement in areas they would not typically explore. One of these is your outsourced agreements. VIE Healthcare’s automated patented Invoice ROI™ can help you to get in front of your cost savings by analyzing the line item details in your purchased spend.
A good recovery does not mean settling for achieving the status quo that existed before the pandemic. Now, all health systems are presented with an opportunity to explore ways to improve their systems and emerge from this crisis in a stronger position than ever.
For more insights and cost management strategies download our Hospital Resource Guide To Post Pandemic Recovery
COVID-19 Resources For Hospitals from VIE Healthcare® – a comprehensive list of resources for all health systems including ways to maximize and accelerate funding solutions.
Schedule a call with Lisa Miller to discuss how to implement a financial recovery strategy for your hospital.