COVID-19: What is Your Action Plan? - Page 3

​COVID-19: What is Your Action Plan?

As information regarding the COVID-19 Pandemic has become more available, we wanted to alert our clients to some of the measures that others in the industry are exploring and undertaking. We understand that there is a great deal of concern and that the information available is changing rapidly. To that end, we want to share a checklist of items that each practice should consider as they plan for the next few months.

Impact on Case Volume and Revenue Potential

We are hearing from most of our clients that their facilities are canceling all elective cases. Initially, we thought this would apply to outpatient and endoscopic cases. We are now hearing that it will include all non-urgent care. One client just wrote that only trauma, fractures, cancer cases, infections and cardiac cases will be taken into the OR. In other words, getting a case in the OR will be for life or death situations. This raises the obvious question: what percentage of cases will be lost and for how long? We suspect that for most of our clients the number of lost cases will exceed 50 percent, but obviously this number will vary considerably practice to practice.

Calculating the impact on collections may not be quite as obvious as it seems given the nature of revenue cycle management. A drop in case volume in March will have a small impact on April collections, but the real impact will be in May and June. Depending how long it takes for the virus to wind down, the ultimate financial impact may not be felt until July or August. Another variable that we need to consider is the ability of essential partners in this process to remain open. Will carriers be able to process claims and will banks be able to process payments?

Many of our clients have been asking about their accounts receivable. What they really want to know is how much revenue potential they can count on from the current receivables. A more detailed assessment and cash flow projection may well prove far more useful for planning purposes. The ability to collect from patients may also slow down as many of the patients that we will be trying to collect from may be out of work themselves and, therefore, may not be able to make payments for prior services owed.

Impact on Manpower and Staffing

Right-sizing the staff of a practice is probably the greatest challenge our clients are reporting. Since staffing must be proportionate to the volume of work, this virus poses a huge problem on two levels. First, what is the right staffing for anticipated case volume for the next few months and how does one change the staffing model so quickly? Nothing is more painful than having to lay off staff, especially if they will be needed later in the year. Unfortunately, not many practices can carry unneeded personnel for more than a few weeks.

To this end, many of our clients are exploring various options to avoid mass lay-offs. Here are some of the options being discussed:

• Asking staff to use their accrued PTO time
• Giving staff the option of shifting from salaried status to hourly with reduced hours
• Extensive furloughs
• Exploring other options within the facility, such as ICU care and respiratory management

The consensus is that communication is the key. The staff should know what the plan is and what is expected of all providers to get through this crisis. Practice managers will be working with all their clients to formulate a plan.

Maximizing Available Cash Flow

In an effort to minimize the disruption to staff, to avoid mass lay-offs and to shorten the long term impact to the business due to these sudden changes, many clients are exploring financial mechanisms that will allow them to weather this current storm.

In cash flow projections, many groups are connecting with their accountants, third-party administrators and legal counsel to understand the following specifics for their practice:

• What profit sharing or 401k contributions is the group required to make, and can that timeline be extended? Many groups fund generous profit sharing contributions early in the year. With appropriate tax planning, this deadline can often be extended into the fall.
• Can the group obtain or expand a line of credit? While available cash may only sustain the groups for a couple of weeks, a line of credit will help many groups continue to fund some payroll when the reduced cash flow is realized.
• What provisions exist in their hospital contracts that will be trigged by this predicted reduction in volume? Many client contracts contain revenue guarantees that are reviewed periodically throughout the year. Understanding what triggers these clauses and working with the hospital during these challenging times could allow the group to collaborate with the hospitals when and if emergency funds become available.

Other Clinical Options

In some facilities there is a discussion of anesthesia staff helping manage an increase in COVID-19 patients suffering from respiratory complications. This would essentially represent ICU level services. These involve a very different billing mechanism for that applicable to anesthesia. Physician providers can bill either ICU codes (99291 and 99292) or subsequent hospital visit codes. Payment for these codes is less than for anesthesia services. Providers exploring such an option should carefully evaluate the specific requirements and clearly understand the documentation issues before proceeding.

Stay Calm and Plan

At the end of the day, we will get through this. Those who take the time and initiative to think through the above issues will be in a much better position to ride out the current crisis and remain in reasonably good shape at its conclusion. You are not alone, either. We will continue to be here to assist you in any way we can. Please reach out to your account executive if you have a question or concern.