Revenue Resiliency: Mitigating the Financial Impact of COVID-19

The impact of COVID-19 placed financial pressure on health systems, with some now facing an unexpected reimbursement decline of up to 30% YoY (based on the Iodine Software Study from May 2020). As a result, Chief Financial Officers need to build resilience plans – not only to weather the current impact, but also enable their organizations to emerge financially and strategically stronger.

During the peak of the pandemic, increases in respiratory and infectious disease patients of 90%* and 70%*, respectively, drove the recovery of reimbursement at hospitals with high COVID-19 admissions. However, as COVID-19-related admissions decline, an immediate increase in other surgeries, which have dropped by about 12%*, is unlikely. Therefore, long-term revenue accretive projects are vital to keep hospitals afloat.

While most hospitals have stalled non-COVID-19 projects, experts from McKinsey suggest reevaluating investments and spending resources on the projects that can produce the most long-term value. To mitigate increasing downward pressures on margins and evaporating revenue streams, many hospital leaders are focused on:

  • Debt collections
  • Point-of-service collections
  • Denial management
  • Payer contract negotiations
  • Managed care

The challenge with these strategies is that they all require tradeoffs between time to impact and revenue yield. The ideal components of a resilience plan are investments that deliver short- and long-term returns.

Focusing on Clinical Documentation Integrity (CDI) can drive revenue accretion for hospitals. The hospital mid-revenue cycle is plagued by uncertainty as payor mixes shift away from commercial coverage due to rising unemployment, lucrative elective surgeries have been delayed to free up capacity for COVID patients, coding guidelines have changed, and CMS regulations have been relaxed. Documentation is critical as hospitals navigate these financial challenges. CDI creates resiliency through greater integrity in the patient record, which in turn improves revenue integrity, both in times of hardship and normalcy.

As hospitals build a resilience plan, the following thoughts and questions may offer some guidance:

  • Historically, revenue cycle teams have tried to review all charts to ensure no documentation opportunities (revenue or quality) are missed, and the traditional solution was to employ more clinically trained clinical documentation specialists (CDS). However, as staffing challenges are magnified during the current health crisis, are there solutions that can help ease the burden on CDI teams?
  • Is your CDI team able to review every chart – not just once, but every day and for every payer – to ensure correction of all emerging documentation issues foundational to underpayment, poor quality representation, and overall documentation integrity?
  • Given cash constrictions coming out of COVID, not to mention coding, reimbursement, staffing, and other challenges, are there technologies that can help CDSs select the right cases to focus on?
  • How can I accurately measure uncaptured mid-cycle return at my institution?

Iodine Software has pioneered a new machine learning approach called Cognitive Emulation to help healthcare finance leaders build resilient organizations. Our approach considers the entire scope of the clinical record, patient experience, and physician intervention to predict likely conditions and identify gaps between evidence and documentation for review. For more information, email info@iodinesoftware.com 

*Based on The Iodine Software Study from May 2020, available here

¹ https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-cfos-role-in-helping-companies-navigate-the-coronavirus-crisis

² https://www.kaufmanhall.com/ideas-resources/article/monitoring-financial-implications-covid-19-hospitals-health-systems