COVID-19 is impacting the financial health of nonprofit hospitals. What’s next?
Just a few months back, COVID-19 took the world by storm. It’s no secret that the global economy is struggling under the weight of the virus as virtually every sector is at risk and continues to grapple with present and future ramifications. Given the current situation, hospitals are on the front lines and are vulnerable to this economic disruption across the globe. But unlike many other countries, the U.S. has a fragmented health care system where hospitals rely heavily on elective procedures to generate revenue. From a revenue standpoint, the loss of non-essential services adds up to hospitals operating in a financial squeeze. In other words, the U.S. health industry is in for a large headache due to the effect COVID-19 is having on liquidity.
Non-essential or elective care is defined as not being time-sensitive for medical reasons as opposed to being urgent or an emergency. However, non-essential services provide a substantial revenue boost for health systems across the U.S. Based on recommendations from organizations such as the CMS, healthcare organizations have delayed elective and non-essential medical, surgical, and dental procedures during this time. And even those without suspended services are experiencing a decrease in patient volume. Fewer people are heading to the emergency room or requesting procedures as they abide by CDC recommendations and call their providers before attending a hospital. This protocol is helping hospitals cope with the surge in COVID-19 patients, but also represents a loss in revenue.
A recent survey of 323 hospitals across 46 states found that increased costs and a loss of revenue were rapidly depleting hospitals’ cash reserves and could be detrimental to proceeding hospital operations. While some intensive care units have seen an influx of coronavirus patients, other hallways remain empty as everything from cataract surgeries to knee replacements has been canceled. According to an analysis by J.P. Morgan, revenue at non-profit hospitals dropped by half in just a few weeks in March. And ER visits are down at many hospitals with patients fearing exposure. All of this has hospitals in a liquidity crunch.
Given the extremes, how are health systems and hospitals able to protect themselves from future losses and provide financial stability? …
As of right now, hospitals are focused on one thing: caring for patients during this crisis. But from a financial perspective, the immediate fiscal stress hospitals are facing will most likely cause long-term devastation and push many hospitals into the red financially.
Thus far, the early focus for hospitals has been around commercial banks and trying to set up various amounts of credit. But there’s a disconnect between healthcare finance and traditional operational cash flows. The financial side is continuously collapsing with revenue decreasing while expenses remain the same or increase. U.S. hospitals and nonprofits, in particular, are burning through liquidity, which is likely to create future turmoil.
Healthcare CFOs must analyze their liquidity pools and implement an infrastructure for cash and liquidity forecasting. And when this is behind us, health systems will need to adapt to the new normal and utilize modern technology to strengthen cash flow. Finding patient-centric solutions, ways to capture patient payment efficiently and effectively, and resources that blend into current RCM workflow are going to be imperative. The good news is that this is possible with Curae™. Curae’s non-recourse patient financing solution enables providers to offer a revolving line of credit for patients exclusive to their Health System. With CURAE™, providers can get back on track to liquidity and patients have a financial instrument that assists with the increasing costs of healthcare.
The reality is that healthcare organizations’ corporate financial resources have been strained, but there are ways to rejuvenate revenue and overcome this financial distress amidst an economic downturn. Leverage the flexibility of Curae’s proprietary technology platform and determine the optimal and most beneficial financing terms for your Health System and patients. To learn more about Curae™, please visit https://aquinahealth.com/curae/.