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Steps for How Healthcare Organizations can Maximize Cash Flow During COVID-19 Print E-mail
Written by Richard Walker and Venson Wallin   
Wednesday, 27 May 2020 19:29

With revenues declining and costs increasing because of COVID-19, cash is in short supply. Thus, it is important healthcare organizations take steps now to conserve cash to deal with immediate demands, as well as to secure future financial health and sustainability.

Maximizing cash flow at this critical time is a priority. A targeted effort focused on cash acceleration and conservation and a rigorous revenue cycle optimization plan can help organizations get through this period of severe financial strain.

Three Pandemic-Driven Pressure Points on Organizational Cash Flow

1. Patient Volume Decreases: COVID-19 has necessitated stay-at-home mandates and as a result, many states have placed bans on elective surgeries. Some, however, have begun phasing elective surgeries back in, but have experienced significant blows to their cash flow in the interim, with some seeing no new visits during the crisis.  As a result, cash flow in many cases is completely dependent on the accounts receivable generated before practices were closed or significantly curtailed and may be at considerably low levels.
2. Patient Pay Management: Collecting on patient-pay accounts (i.e., co-insurance, deductibles, etc.) may become more challenging as unemployment rates continue to rise. With reduced household incomes, families may be forced to prioritize mortgage or rental payments and other daily necessities, with medical bills falling further down the priority list. Though some providers may have accounts receivable from services performed prior to closure or scaling back of operations, collections of those receivables may prove challenging.
3. Operational Sustainability Challenges: Cash flow challenges do not automatically render obligations null and void— vendors still expect to be paid for products and services rendered on a timely basis. Mortgages or rental payments, salaries (even if to a skeletal staff), utilities, insurance and other regular expenses continue to be due and payable on a regular basis even if operations have been temporarily halted. The organization may likely face a situation where cash demands exceed cash sources.

To navigate these pressure points, healthcare organizations must take action to conserve and maximize cash flow, optimize their revenue cycles and secure their patient revenues to the best of their ability...

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