Implementing COVID-19 Cost Saving Strategies
This article was written by Lisa Miller.
For many hospitals, the extent of the COVID-19 cost impact may not be fully known for some time. Meanwhile, the finances of most health systems remain precarious.
As an update to our initial COVID-19 response, we review the current situation and offer additional cost savings strategies for hospitals to help reduce your organization’s costs.
Projected financial losses: The American Hospital Association (AHA) had estimated the financial impact of COVID-19 on hospitals and health systems at $202.6 billion in losses between March and June 2020. Low volumes of inpatient and outpatient levels, coupled with increasing COVID-19 infection rates, have had a further negative impact on hospital finances. Hospital costs to treat COVID-19 patients have also exceeded projected reimbursement.
In addition, the AHA estimates an additional $120.5 billion in total financial losses from July to December 2020, bringing the total projected losses to $323.1 billion.
The AHA also states that the financial impact could be even more significant.
Concerns over CARES funding: Not all hospitals are claiming or utilizing the dollars they are entitled to. Sources suggest that early in the pandemic, some healthcare providers returned or declined funding, due to the administrative burdens and restrictions imposed on how to spend the money. While those restrictions have eased, health systems remain under pressure.
Not all hospitals are claiming or utilizing the dollars they are entitled to under the COVID-19 CARES Act, some have returned or declined funding. Click To Tweet
The impact on staffing: The loss of revenue from elective surgeries and non-emergency procedures has had a major impact on the finances of many hospitals. That fall in income has resulted in reported record unemployment among nurses and healthcare workers. A focus on non-labor cost savings strategies can help to identify hidden costs that can alleviate the pressure on staffing costs.
Hospital cost management strategies to save money
As an update to our previous COVID-19 response, we offer the following cost savings strategies:
Claim the funds your hospital is entitled to: The Department of Health & Human Services (HHS) has continued to release additional funding for specific areas, such as specialty rural providers, and is encouraging healthcare organizations to apply for this funding. For example, payments made to providers for uninsured COVID-19 patients are much lower than anticipated. Working with a cost savings partner can help your health system to review your CARES funding application and ensure your organization is claiming all of the funding it is entitled to.
Review your vendor contracts: In my previous blog, I outlined five steps to improving the management of your vendor contracts. This could prove to be a critical strategy in your hospital’s recovery from the global crisis. It is likely that your organization is paying for services that haven’t been performed due to the pandemic – or are tied to a volume guarantee structure that is impossible to achieve.
Consider a hospital Cost Savings Roadmap: As your organization begins to assess the full extent of the COVID-19 cost impact, a disciplined cost management approach is vital to promote financial recovery. Every hospital needs a cost savings roadmap for success, aligned with a bold vision for their organization. At VIE Healthcare we offer a customized Cost Savings Roadmap for hospitals.
Review our COVID-19 resources: This includes a series of exclusive webinars designed to help your hospital identify new and overlooked cost savings opportunities during your financial recovery. Click here for VIE Healthcare’s comprehensive list of COVID-19 resources for hospitals.
Schedule a call with Lisa Miller today to review your hospital’s COVID-19 response.