The following is a column from Vachette CEO Mick Raich:
As we work our way through the COVID-19 crisis, some of our practices and health systems are bracing for a tough fall season.
First, many sources say the general population is not ready to go back into health care. Elective surgeries are clawing their way back slowly, yet many health systems are losing revenue as their occupancy is still very low. Trinity Health, a 92-bed, not-for-profit system in Michigan, recently laid off even more staff after their initial cuts in April. Many emergency departments are still running at 50% capacity and most emergency physicians are looking at a lowered income this fall.
Next, we are seeing many hospitals, health systems and practices facing higher costs. It is not easy to see patients at this time; the increase cost of PPE and testing is not something that can be passed directly on to the consumer. These costs are mandatory and the bill is coming due.
Third, many groups took the CMS advance payments. These recoupments will be taking place soon for those who haven’t seen them already.
Fourth, we are seeing a decrease in revenue from failed and halted revenue cycle issues in April and May. The issues caused by billing staff and services closing are just now showing up in the bottom line for many of our clients.
In summary, we are seeing fewer patients in general using health care, thus the volume is down. Second, many practices are seeing the invoices come due for PPE and other COVID-related costs. Third, the CMS advance payments are due also and these takebacks will further decrease cash on hand. Finally, there were many issues with the revenue cycle process which are starting as a loss of revenue.
These issues all combined makes this fall an interesting time to be in health care. Now more then ever, it is imperative to understand both your revenue cycle and the cash flow of your business. Start now, review your revenue cycle intensely and build a cash flow model for this fall looking at all the factors including … the next possible shut down.