By Richard Doss and Mike Hickey
In pressing times like these, it is important for the health care community to come together. The immediate urgency that the COVID-19 pandemic has placed on our delivery system’s infrastructure is both mounting and innately unpredictable. Across the nation, hospitals are seeing short-term cash deficits escalating, with very few exceptions. But there are innovative operational strategies any hospital can implement to meet these challenges.
Strategy 1: Use Leverage with Commercial Payers
Open dialogue with commercial payers is critical during this time. Hospitals must have an informed understanding of their contract baseline to have educated conversations with payers. That means understanding where the contracts compare within the market—to each other and to Medicare. Collaborating with payer partners on aligned response efforts and market-specific projections will help to better serve the community and provide much needed guidance for patients.
The ask for payers includes, but is not limited to:
- minimizing revenue cycle administrative friction;
- one-time or annual rate increases;
- forgivable loans earmarked specifically for pandemic response; and
- investment in expanded clinical delivery, such as telehealth development.
“We won’t be getting as much help as other areas of the country as it relates [Coronavirus Aid, Relief, and Economic Security Act] dollars, so we are going to have to rely on the payers for immediate cash flow, renegotiating contracts, and suspension of value-based requirements,” says Mark Doyle, CEO of association member Memorial Healthcare System, in Pembroke, Florida.
It’s key to know where payers can make concessions and produce large cash infusions to invest in future Essential Hospitals market share growth, such as referral analytics (explained in Strategy 2).
Strategy 2: Increase Volumes and Market Share Through Referral Analytics
With COVID-19 paralyzing operations at many organizations, there is an opportunity for market share to shift and for systems to reprioritize service lines. Organizations that proactively pursue growth in competitive markets will have opportunities to gain new specialists and patients, while organizations that do not will be in serious jeopardy as the pandemic continues and in the coming years.
Ensuring a strong referral management system is a key component of winning the new markets for elective procedures and surgeries delayed due to COVID-19. New Centers for Medicare & Medicaid Services (CMS) waivers have changed the landscape and can encourage surgeons to maintain care within a hospital’s network.
Hospitals winning market share with strong referral management do six important things:
- examine profitability or margins by service line to know what volume to expand versus negative contribution margin to manage;
- use CMS accountable care organization (ACO) or commercial risk participation to establish a CMS waiver for network retention incentives;
- analyze CMS ACO, commercial value, or risk-based claims data sets to evaluate existing patient flows and network retention drivers;
- understand genuine opportunity versus out-of-network referrals to geographic or service access the network doesn’t provide or include;
- establish new network retention expectations and incentive models; and
- implement industry-leading scheduling capabilities and same-day access with end-user friendly scheduling tools.
While a pandemic might not feel like a moment of opportunity, that’s exactly what it is. Change is happening faster than any of us can keep up with. Hospital teams can embrace that change to lead their institution and community in this time of unprecedented public health needs.
Richard Doss is a senior advisor for breakthroughs and strategy at LifeWings, a Memphis, Tenn.-based patient safety and process improvement consultant. Mike Hickey is a LifeWings senior advisor with more than 15 years of experience and extensive background specializing in strategy, operations, and analytics.
