by Darcey Trescone, RN, BSN
The Home Care & Hospice COVID-19 Town Hall Part 3 Webinar that NAHC hosted this week was full of information regarding financial impacts for which organizations should actively be making plans. It featured a discussion of different financing options and how to choose among them. It is a must listen if you can make the time!
There was some key information that all organizations and leadership teams need to be thinking about when reviewing revenue and costs.
Some organizations may have already seen an impact on revenue; others are just beginning to feel it. The full impact of a crisis comes in two distinct waves. First, expect a decrease in volume of services, which, naturally, impacts revenue directly. The second wave of the crisis will bring unplanned and unexpected costs and may likewise negatively affect cash on hand.
In home care and hospice, we are seeing a decrease in visits, often caused by patient refusals to allow staff into their home, or by employees who are concerned about exposure, or both.
We spoke with Mark Sharp, Partner, BKD LLP. He pointed out, "We are already seeing evidence of LUPA percentages doubling when we review the data for the month of March. This is an unplanned dip in revenue that most organizations were not anticipating and have not accommodated in their business plans."
Health systems and hospitals all over the US are holding off on any non-urgent matters of care and many elective procedures are not being scheduled or have been cancelled.
Business Focus and Day to Day Operations
Business development and marketing teams work hard to build relationships and promote your brand in the community. Depending on the geographical area, this effort can be highly competitive. The organizations that business development teams meet with for referrals are as distracted and focused on the COVID-19 crisis as we are.
Additionally, Sharp notes, "Getting the signed documentation we need in hand to bill from these distracted referral sources could be problematic. If we can't bill, our cash flow is impacted."
There are many costs related to crisis management efforts that most have not planned for. Below are a few common ones:
The first $30 billion of the $100 billion Public Health and Social Services Emergency Fund was released Friday, April 10, 2020.
The Department of Health and Human Services will be distributing the first payments to providers that received Medicare fee-for-service reimbursements in 2019 based on 2019 fees billed to Medicare.
BKD cautions that funding relief like this comes with additional scrutiny on how funds are spent and accounted for. Within 30 days of payment receipt, providers are required to sign an attestation confirming receipt of the funds and must agree to the terms and conditions. The current understanding is that a provider's qualified expenses and lost revenues need to equal the amount received and be in line with the guidelines outlined in the terms and conditions.
Sharp continues, "There are even costs related to crisis management efforts we did not plan for. When management teams are focused on the crisis and not the day to day needs of the business, it adds costs at the upper management level and decreases focus on efficiencies and productivity. It is a disruption of the business for an extended period that impacts productivity, people and overall operations. With these impacts we can anticipate lower revenues and the need to have more cash on hand."
We are in a time period where, once revenue and cost concerns are compiled, we may very well need access to capital. "Most For-Profit organizations don't hold a lot of excess investment dollars within their operations to accommodate times like this" added Sharp. "Not-for-Profits may have access to additional monies. However, if they rely heavily on money from donations, they should be cautious. When you look at the stock market and consider the real concern of employees about future earnings (across many industries) there may likely be fewer donations in the future. Plan for this."
Sharp concludes, "It's tough. Traditional financing can be very difficult if an organization has very limited assets to collateralize a loan. In the For-Profit world, we may be looking to our owners to make loans to the business or make equity contributions to help mitigate the cash shortfall. Luckily, our government sees this as a crisis, and they are continuing to make more options available to us under COVID-19 relief."
This article addresses only some of the areas that are having an impact on the revenue and sustainability of our organizations during the pandemic. As COVID-19 continues to evolve, we should remain agile and be planning to accommodate required changes in order to achieve our primary goal, to stay in business.
©2020 by Rowan Consulting Associates, Inc., Colorado Springs, CO. All rights reserved. This article originally appeared in Home Care Technology: The Rowan Report. homecaretechreport.com One copy may be printed for personal use; further reproduction by permission only. firstname.lastname@example.org