As they battle COVID-19 from the frontlines, today’s healthcare providers are simultaneously facing existential financial challenges. They are grappling with immediate cash flow problems and revenue declines of up to 70% due to reduced ambulatory volumes, deferred surgeries, and elective procedures. Systems are also expecting their payer mix to tilt towards less profitable Medicaid patients, due to the staggering increase in unemployment and loss of employer-sponsored insurance.

To address these financial challenges, system leaders are undertaking frequent, detailed re-forecasting and budgeting efforts to account for near-term needs and long-term uncertainty; evaluating staff-related actions including furloughs and outsourcing of some roles; and re-prioritizing capital expenditures.

Beyond these immediate actions, AVIA believes integrating a digital approach will help health systems create the foundation for a new, financially sustainable business model.

Read on for 6 key areas where digital can have an immediate and long-term impact on financial performance.

1. Virtual Health: The COVID-19 crisis has led to a massive increase in the use of virtual health solutions along the full care continuum, including initial triage, steerage to appropriate care setting, direct patient care applications, and remote monitoring. As virtual health takes off, health systems should plan for long-term financial impacts.Beyond the immediate use of digital to address the COVID-19 surge, many systems are expecting a permanent increase in use of virtual care and are planning for the resulting changes in their revenue, cost, and capital requirements. For example, several AVIA Members are including the substitution of in-person visits with virtual visits in their service line financial planning, taking advantage of expanded reimbursement and changing consumer expectations.

   Longer-term, Members are reevaluating their real estate portfolio and considering eliminating outpatient office space that may no longer be required with a permanent increase in virtual visits.

2. Clinical Operations: Digital solutions are being employed to manage capacity across a system’s entire footprint in a market, including inpatient beds, emergency departments, retail clinics, pop-up testing facilities, and outpatient offices. These capacity management solutions play a critical role in systems’ plans for how and when to re-start ambulatory and elective procedures that can begin to recover lost revenue.
3. Supply Chain: Digital solutions enable health systems to better address immediate needs for personal protective equipment (PPE) and equipment like ventilators. Having sufficient PPE is a prerequisite to ramping up revenue-generating procedures.
4. Revenue Cycle: Digital can be employed to more efficiently code and process COVID encounters, maximizing reimbursement, along with its utility in supporting economic projections of the impact of deferred encounters. Digital solutions can also accelerate authorizations from payers to perform elective procedures.
5. Workforce Management: Integrated digital solutions to address staffing, scheduling, credentialing, training, and related activities can optimize the use of labor. As labor costs typically represent 60%+ of health system costs, tight management of staffing expenses directly impacts operating margins.
6. Vulnerable Populations: A range of digital solutions are specifically focused on vulnerable populations at higher risk, including the elderly, lower income, maternity, and those with mental health and substance abuse needs. These solutions provide access to tailored support based on specific needs, connect individuals with community resources, and optimize interactions with caregivers. Given the short- and long-term expected increases in Medicaid patients due to the broader economic impact of COVID, and the fact that these are typically low-margin encounters, health systems that are more proactive using digital can improve treatment and lower costs to care for these vulnerable populations.

Progressive Systems View Digital as a Long-term Driver of Financial Performance

This wide range of digital solutions can have a significant positive impact on a health system’s finances, both now and over time. While health systems’ immediate focus has been largely on patient care, progressive systems are thinking ahead about how the recent acceleration of the use of digital can be a foundational part of a new, financially sustainable business model.

Key characteristics of this digitally enabled business model include:

• Significantly higher proportion of care delivered virtually, responding to consumer demand and lowering the cost to serve
• Optimized, enterprise-wide management of how and where care is delivered to ensure clinically appropriate care in the most convenient, lowest-cost setting
• A modernized, back-office infrastructure that employs tools and processes proven to deliver value in many other industries at a far lower cost than today
• A seamless network of partners, service providers, and affiliations, enabled by digital connections, that allows health systems to focus on those elements of care delivery that are economically viable for them to perform
• A true commitment to transitioning to value-based care, enabled by a full suite of digital solutions, ranging from predictive analytics to care coordination to commercial-grade patient communication and engagement tools.

Learn More About Digital Approaches to Address COVID-19

To learn more about activating a digital approach to improve your financial performance during the COVID-19 surge, rolling recovery, and new normal, explore our COVID-19 Resource Hub on AVIA Connect. Sign up or log in to AVIA Connect for unlimited access to our latest resources and recommendations on COVID-19.

More Resources for Your COVID-19 Response
For more information on leveraging digital to combat COVID-19, explore our COVID-19 Digital Resource Hub on AVIA Connect or contact us at contact@avia.health.