With the loosening of Covid restrictions in most parts of the U.S., many Americans have regained some sense of normalcy in their lives. These are hopeful signs, but when it comes to hospital finances, the impact of the pandemic won’t disappear any time soon.
Entering 2022, many healthcare organizations were in a better position compared to 2020, but overall financial performance remained below pre-pandemic levels. After Omicron hit, hospital margins were negative for the first time in 11 months. According to Kaufman Hall’s National Hospital Flash Report, hospitals and health systems nationwide were “caught in a vise of rising volumes and ballooning expenses, as COVID-19 cases climbed to new highs and critical labor shortages and supply chain issues continued to plague providers.”
In response, the American Hospital Association and seven other organizations wrote a letter urging Congress to provide additional resources to help address ongoing financial pressures—including rising costs for supplies, equipment, and staff.
These challenges have compounded the financial struggles many health systems faced prior to the pandemic. Since 2000, hospitals of all types have provided almost $745 billion in uncompensated care.
Given these alarming trends, it’s clear that financial recovery from the pandemic will require innovative solutions.
Here are three ways hospitals and health systems can harness technology to rebound in these uneasy times:
1. Leverage a digital network to improve financial health—for patients AND providers.
In recent years, the rise of high-deductible health plans, soaring healthcare costs, and skyrocketing rates of medical debt have had a devastating effect on both patients’ finances and hospitals’ bottom line. In fact, for every dollar billed, hospitals have historically failed to collect 65 cents.
The pandemic has made it even clearer that hospitals cannot remain viable unless they ensure patients have the capacity to pay their bills. This is especially crucial in the era of healthcare consumerism, in which patients are responsible for a greater share of healthcare costs—and therefore, a higher percentage of providers’ revenue.
Just as it takes a village to solve any major challenge, hospitals must join forces with pharmacies, life science companies, charitable foundations, and other parties in a coordinated effort to remove financial barriers to care. Technological innovation can play a crucial role in bringing these parties together into a cohesive digital network. For example, using predictive analytics, providers can proactively identify patients who may be at risk of financial distress. By leveraging a digital network, hospital staff can tap into a connected consortium of partners working together to alleviate financial hardship. These partners may include:
– Drug manufacturers offering co-pay cards and free and replacement drug programs;
– Charitable foundations providing disease-specific grants;
– Specialty pharmacies offering financial assistance programs for patients needing high-cost, specialty prescriptions; and
– Health systems providing internal patient assistance funds.
By connecting patients with a suite of resources, the digital network presents a new avenue to address healthcare affordability. It’s a holistic, patient-centric approach that boosts financial health and reduces uncompensated care—a win-win for the patient and the provider.
2. Create positive patient experiences—including financial experiences.
Over the past two years, heightened demand for virtual care, at-home diagnostics and care, medication deliveries, and convenient access to COVID testing and vaccination sites have accelerated healthcare’s digital transformation. Just as the pandemic has increased consumer reliance on Zoom, Amazon, and other services, healthcare consumers expect a similar level of convenience and efficiency in medical care. In this climate, it’s no surprise that medication-delivery platforms like Capsule and Medly are now disrupting the pharmacy space.
To build patient loyalty—a key factor in driving revenue—hospitals and health systems must step up their use of tech to unlock medicine’s “digital front door.” The digital front door encompasses all the technologies patients use to interact with a provider. It’s critical to ensure that these digital tools create positive experiences. A recent survey found that 64% of consumers under 65 believe providers with better online capabilities are more likely to deliver better service. The obvious touchpoints, such as booking an appointment and having a telehealth visit, come to mind, but healthcare organizations should also consider how to create seamless patient financial experiences.
As patients face rising medical costs and affordability challenges, they have a vested interest in understanding their financial obligations upfront. Digital financial experience tools—from out-of-pocket cost estimation to price transparency systems—enable patients to make informed decisions about their treatment and secure the resources they need to afford care.
By investing in patient financial experience solutions, hospitals will increase the likelihood that patients become loyal consumers who help build a steady stream of revenue.
3. Build a more efficient, agile health system.
Throughout the pandemic, hospitals and health systems have faced a shortage of labor needed to meet the increased demand for care. According to the AHA, nearly every hospital in the country has been forced to hire temporary contract staff. Some staffing agencies have responded by charging two- or three-times pre-pandemic rates, contributing to a dramatic spike in hospitals’ labor costs. Increased expenses for supplies, medicine, testing, and protective equipment—coupled with administrative backlogs and denied claims—have also driven up costs and lowered revenue.
Given these challenges, health systems must build new levels of efficiency and agility. This is particularly important with the shift to value-based care, which rewards healthcare organizations that produce high-quality outcomes and excellent experiences—at lower costs.
As health systems are forced to do more with less, technology can help empower staff to work smarter with the resources they have. The rise of healthcare startups like Olive and Notable, which use AI, robotic process automation (RPA), and other technologies to tackle repetitive administrative and clinical tasks, have shown the power of digital solutions to improve operations and increase revenue.
Investment in digital solutions should extend to the area of financial navigation. At a growing number of hospitals, financial navigators provide an indispensable service by connecting patients with vital resources to afford their care. When patients are able to pay their bills, revenue also increases. However, the process of identifying and enrolling patients in appropriate cost-saving opportunities—based on their specific diagnosis, treatment plan, and financial circumstances—is often manual and reactive. Software solutions allow financial navigators to quickly find a list of relevant funding opportunities, as well as the most expedited options to enroll patients. These tools also simplify the cumbersome task of filling out enrollment forms and enhance communications among staff. By streamlining workflows and maximizing potential savings, these platforms enable navigators to reduce patient out-of-pocket spending and improve health systems’ financial performance.
Financial recovery means embracing new opportunities
Since March 2020, we’ve seen an escalation of the financial struggles hospitals and health systems faced before the pandemic. As we head toward a post-pandemic future, these organizations must embrace healthcare’s digital transformation and uncover new opportunities to cut costs and boost revenue. These opportunities include leveraging a digital network to remove financial barriers to care, unlocking medicine’s “digital front door” to improve patient experience, and investing in software solutions to boost efficiencies and financial performance. Innovation has never been more essential for forward-looking healthcare organizations who hope not only to survive, but to thrive.