Effective leadership is critical during any crisis, but navigating one in healthcare requires balancing patient care and scarce resources. It takes strong leadership and wise counsel to deal with everything from treatment shortages and funding issues to procedure backlogs.
Crises are all too common in the healthcare space. Whether it’s a natural disaster, a disease outbreak, or an unexpected surge in demand, these crises significantly impact the financial stability of healthcare organizations. These are likely only to continue growing: the number of disasters increased five-fold over the past 50 years.
A strong proactive approach is crucial when managing a crisis. It should include assessing the financial impact of the situation, implementing cost containment measures, generating new revenue streams, collaborating with payers and other stakeholders, and managing risk through insurance and different strategies. A strong foundation of effective communication with stakeholders is critical to mitigating financial repercussions.
Read on to explore the strategies for managing the financial impact of a healthcare crisis with a focus on proactive approaches that can help healthcare organizations weather the storm and emerge stronger on the other side.
Understanding the financial impact of a crisis is an essential first step to managing it effectively. For example, research shows that in the days after a natural disaster, hospitals see hundreds of additional admissions and longer hospital stay lengths than during normal times. By conducting a comprehensive assessment, providers can better understand their economic challenges and develop strategies to manage them effectively.
Healthcare organizations should conduct a comprehensive financial impact assessment of the crisis to determine its impact on revenue, expenses, cash flow, and overall financial stability. This assessment should consider a range of factors, such as the duration and severity of the crisis, changes in patient demand and payer mix, and the availability of resources. Review current financial statements and projections to identify areas of vulnerability and potential revenue losses, including analyzing the impact on specific service lines, contracts, and other revenue streams.
Leaders should also analyze their reimbursement rates and payer mix to determine how the crisis will impact revenue. Changes in payer mix or reimbursement rates can significantly impact revenue, so it’s essential to identify these changes early on.
Once organizations understand the true financial impact of a crisis, the next step is implementing strategies to balance patient-centric care with current resources. Some effective strategies to manage impact include:
Cost containment measures. Leaders need to steer resources where they are needed most and contain costs on lower priorities. It often requires balancing what’s best for a single patient and the overall availability of services and treatments.
Organizations must determine non-essential spending and reduce it as much as possible. Depending on the length of the crisis, they may want to renegotiate contracts with vendors and suppliers. For example, the extended nature of the COVID-19 pandemic enabled leaders to reduce contracts for non-essential supplies.
Reducing inefficiencies is also critical during this time. That may mean organizations must engage with other vendors to reduce staff burden. For example, technology and automation can reduce the time staff spends on inefficient and redundant processes in the revenue cycle management and medical coding process, freeing them to work on higher-value tasks. Also, outsourcing unnecessary tasks, such as appointment setting, helps contain costs and reduces the need for additional staff.
Revenue generation strategies. Implementing revenue generation strategies increases revenue and helps offset losses during a crisis. For example, expanding telehealth services and diversifying revenue streams allow organizations to provide vital patient care more effectively.
Collaboration with payers and other stakeholders. Healthcare organizations can work collaboratively with payers, regulators, and other stakeholders to mitigate the financial impact of a crisis. Collaboration can include negotiating payment terms, applying for government grants and loans, and leveraging community partnerships to secure additional funding.
Insurance and risk management strategies. Implementing insurance and risk management strategies can help protect organizations against financial losses during a crisis. By acting proactively before a crisis, providers ensure they can maintain services and a high level of patient care no matter the circumstances.
An effective risk management strategy can include ensuring adequate business interruption insurance coverage, developing disaster recovery plans, and developing a crisis leadership team comprising representatives from an organization’s vital departments.
Strong leadership during a crisis requires transparency and effective communication with the public, patients, staff, and all stakeholders. Information should be shared broadly and reinforced through multiple communication channels to ensure employees, stakeholders, and people maintain trust and confidence in the organization’s ability to manage the crisis.
Leaders should be transparent about the crisis’s impact on operations and finances. Transparency may include providing regular updates to stakeholders on the organization’s financial status and being open and honest about the organization’s economic challenges.
Beyond transparency, leaders need to provide timely and accurate information to stakeholders about the crisis and how it is impacting the organization. Such information includes sharing patient volume updates, staffing levels, and other operational metrics. Healthcare organizations should tailor their communication strategies to specific audiences, such as patients, staff, and the community. This can involve using different communication channels and messaging for other groups, such as social media, email, or traditional media outlets.
Communication during the crisis should be a two-way conversation. Organizations should engage with all stakeholders, such as patients, staff, and community leaders, to solicit feedback and input on the organization’s response to the crisis. This can involve conducting town hall meetings, focus groups, or other forms of engagement.
Implementing effective communication strategies is vital during a crisis. Open and honest messaging and conversations will help build trust and confidence in their ability to manage the financial impact of a healthcare crisis.
Managing the financial impact of a healthcare crisis is a complex and challenging task. Assessing the economic impact of an emergency, implementing cost containment measures, managing risks, and implementing effective strategies help organizations mitigate the effects of a crisis and emerge stronger on the other side. Proactive planning is the most effective way to successfully navigate and minimize a crisis’s financial impact.
In addition, leveraging technology can help providers manage costs and improve patient care, such as using automation technology to streamline administrative tasks and outsourcing to third-party providers to reduce labor costs while maintaining high-quality patient care. Implementing these strategies enables organizations to navigate a healthcare crisis’s financial challenges while still providing the best possible care to their patients. To see how automation can help contain costs without compromising care, contact a GeBBS expert today at gebbs.com.