CLA professionals discuss the updates of financial plans in light of COVID-19 and it's impact and re-engaging with consumers in our current state.
- Jen Rohen, Principal, CLA
- Dave Schuh, Principal, CLA
- Curt Mayse, Principal, CLA
- John Henningsgard, Managing Director, Piper Sandler
In case you missed it:
What you missed:
Jen Rohen: Good afternoon to our CLA Family, friends, colleagues and community partners! Welcome back to our livestream! Today we have Dave Schuh and Curt Mayse with us to discuss the impact of COVID-19 on health care, from the financial planning side of the business to patient activities and experience.
By way of introduction, Dave has more than 30 years of experience and currently serves as a principal. In addition, he leads CLA’s efforts in the development of CLA Intuition planning tools for clients in multiple industries. Professionally, he specializes in serving providers across all health care sub-industries by providing strategic, operational, and finance services.
Curt is a health care principal with more than 30 years of experience serving health care clients. Curt has been a consultant and advisor driven to improve revenue, productivity, and efficiency since 1996.
Before we dive into our topic of the day, we have some housekeeping items and an update on the new proposed legislation that was introduced in the Senate this week. Let’s start with housekeeping. As usual, we have consultants including Jack and Leslie working in the inbox to respond to your questions live throughout the session. I’ll be directing those questions to our guests as well. The address to use is Livestream@claconnect.com. Please keep the questions coming and also feel free to reach out to us through our COVID-19 landing page at claconnect.com using our contact us button.
Although we don’t have a new law to discuss today, the Senate proposal from Monday has a few key points that we want to share with you.
- As discussed last week, the Small Business Administration (SBA) forgiveness portal is still scheduled to go live on August 10, 2020 for Lenders to submit approved Paycheck Protection Program (PPP) loan forgiveness applications. This should cause some lenders to start accepting forgiveness applications soon
- Program in its current form is set to expire August 8; there are still nearly $130 billion available under the existing allocation
- Senate proposal for a “next version” of PPP that seems to have bi-partisan support
- Impact on current PPP
- Forgiveness for loans under $150,000 with a borrower attestation that borrower made a good faith effort to comply with program terms
- For loans between $150,000 and $2 million, documentation and certification submission requirements are reduced; lender review requirements also are reduced
- Three year document retention requirement (down from six years)
- Expands uses eligible for forgiveness
- Personal protective equipment or other capital expenditure incurred to meet new COVID-19 operating standards
- Certain operations expenditures
- Property damage costs due to civil unrest not covered by insurance
- Supplier costs
- Group insurance payments beyond health care (i.e., STD, LTD, Life Insurance, etc) are part of payroll
- New loans for eligible businesses
- 300 or fewer employees
- Demonstrate at least a 50% reduction in gross receipts in Q2 2020 relative to same 2019 quarter
- Meet the size standards (considering affiliates)
- New loan limited to $2M
- If borrower has already received PPP or other SBA loan (EIDL), total loans, including the new loan, may not exceed $10M
- Retains the requirement for 60% of forgiveness amount to be spent on payroll
- Program preferences for farmers and business located in small business low-income census tracts
- Expands nonprofit inclusions to certain 501©(6) orgs
- Impact on current PPP
I’d like to pivot now to our main event and start the conversation with Dave talking about updating financial plans in light of COVID and the impact that’s had on our healthcare clients.
Dave, related to COVID-19, what were organization’s expectations of financial impact in early April?
Dave Schuh: CLA worked with hundreds of clients to access the potential short term financial implications of COVID-19. We’ve seen the following:
- Dip of 2 to 3 months; not back to “normal” until 4th quarter at the earliest
- Health care significant revenue losses in all health care segments
- Hospitals: $130B+
- Skilled nursing facilities: $9B+
- Physician offices largely “shut down”
- Massive cost of treating inpatient hospital COVID-19 surge ($50B+ nationally)
- Significant revenue losses in many industries that CLA services (retail, real estate, dealerships)
- Uncertainty about size and timing of potential federal and state assistance
- Labor/workforce management uncertainty
- Substantial balance sheet devastation; as an example hospitals were contemplating at 30 to 60 days cash on hand loss from operating losses and investment market corrections
Rohen: How have these financial expectations changed as we approach August (4+ months into the COVID crisis)?
Schuh: Revenue losses have stayed consistent in terms of the dip — the timing and recovery varies nationally. It is heavily impacted by state & local policies. Additionally:
- Significant and timely federal and state assistance has closed a portion of the revenue gap
- Inpatient COVID-19 surge was significantly lower than initial forecasts
- More certainly on labor/workforce needs — significant layoffs and furloughs
- Health care days cash on hand hit was much less than expected — better operations and less market correction (so far)
- Fear of 2nd and even 3rd dip
Rohen: What advice would you give decision makers as they consider updating financial plans?
Schuh: A few things:
- More uncertainty = greater need to plan
- Focus on the possibilities less than a single forecast: which possibilities can I survive?
- Increased pressure on cost performance
- Temporary changes in operations becoming permanent (e.g. telemedicine, self-sufficient senior living campuses)
- Simplify — focus on the big stuff (the true heart of your business), not getting all the details right
- In health care — More serious consideration of value-based or population-based/risk revenue models
Rohen: Before we move to the next segment, our Livestream inbox received the following question from Paul: What are ways that you see organizations altering prior financial plans in light of COVID-19?
Schuh: There is significant uncertainly around “new normal” in terms of volume levels — old volume trends don’t apply. Pull back on future major capital commitments and focus more on balance sheet strength and rainy day funds.
Rohen: Thanks, Dave! I want to pivot our conversation to the topic of re-engaging with patients. Curt, thinking about the ways that we need to re-engage with our consumers and patients, what would that look like from your perspective?
Curt Mayse: I think, overall, the main theme is being great at all forms of communication and maintaining confidence in the safety precautions.
- Deliver a coordinated patient experience that meets consumer expectations for convenience and regains the community’s confidence.
- Diversify offerings to make it easy for consumers to access care, such as online scheduling options and through telehealth.
- Treat all patient access points as part of a consistent strategy, whether consumers seek care online, call to make appointments, or walk into the health care facility.
- Make accurate patient access information available to patients through the various digital channels including providers’ clinical expertise, appointment wait times, and other criteria are important to both new and existing patients.
- Consistent messaging to the broader physician’s panels of patients regarding safety and environmental updates.
Specific to these times with COVID-19, providers should keep the following points in mind.
- Screen patients appropriately for health risks with upfront questions and texts and re-route patients to the appropriate care setting as needed
- Prioritizing patients based on acuity and type of service by specialty to utilize limited resources efficiently
- Reduce unnecessary contact between patients and staff, even when completing what used to be manual or paper processes
- Revise other high contact situations as best possible — surgery or procedure scheduling, waiting for lab or radiology
- Analyze pre-payment and point of care collection efforts to reduce the aftercare hassle
Rohen: How will technology impact re-engagement?
Mayse: Technology should be used when it is more convenient, reliable and more efficient:
- Seek first call resolution in scheduling appointments and implement real-time verification as part of a self-service scheduling process
- Introduce contact center, incorporating chat on website, telehealth, medical triage
- Optimize patient intake system with pre-visit intake forms and consents delivered by visit type
- Automate the prior-authorization process — several new tools available in the market
- Investigate payment apps that send payment reminders, manage transactions and provide payment plan option
Rohen: Are there particular financial considerations of re-engaging?
Mayse: As patient financial profiles have deteriorated, reaching them through electronic platforms of patient portals, email, and texts, organizations are addressing these items to assist in addressing financial considerations:
- Offer consistent information to patients whether contact is by phone, on website, or within the facility – e.g. provider profiles, appointment availability, service information, prep for procedures.
- Pre-treatment call or contact to provide awareness of services being delivered and price estimation
- Implement a patient estimator tool that can be loaded by payer
- Financial counseling and payment planning options
- Extensive staff training for appropriate language with patients and new processes
Rohen: Unfortunately that’s all we have time for today. This has been a great session with a lot of information for our physician practitioners and those of us who are patients and consumers. Until next week, we hope that you stay safe and healthy, and we look forward to seeing you next Thursday.