Medical practices operate profitably by being able to see commercial payor patients and perform both elective and outpatient procedures. Their practices are expensive to run with high operating costs, including costly equipment and medical supplies. The coronavirus is threatening both the supply chain and profitability as many are unable to see patients and meet operating expenses.
Amidst mounting pressure, healthcare facilities across the U.S. are being strongly encouraged, and in some cases mandated, to stop performing elective and non-urgent procedures. But surgeries represent a major chunk of annual revenues.
In fact, in a recent Harvard Business Review article, Beaumont Health CEO John T. Fox estimated that by canceling 80 percent of their surgery and imaging volume, their revenue will fall by $1-2 billion this year (20-40 percent of their annual total) as they shift from high-revenue surgical and related procedures to caring for the increasing number of medical inpatients. Peter Banko, president and CEO of Centura Health, likewise sees up to $1.5 billion of the system’s $4 billion revenue base put at risk by the cancellation of elective cases.
What’s more, a survey of 2011 hospital costs by the Agency for Healthcare Research and Quality (AHRQ) highlighted the financial importance of surgical patients to hospitals. They found that although 29 percent of all U.S. hospitalizations in 2011 included a surgical procedure, hospitalizations that involved surgery accounted for nearly half (48 percent) of all hospital costs and, therefore, potentially an even greater percent of revenues.
The CDC has provided a list of recommendations for hospitals and clinics to implement immediately, including factors that should be considered for postponing elective surgeries and non-essential medical, surgical and dental procedures. Factors include patient risk, the availability of beds, staff and personal protective equipment (PPE), and the urgency of the procedure. The goal is to redirect providers to focus on addressing more urgent cases and preserve resources needed for the COVID-19 response.
While potentially expensive for patients (more on that below), the coronavirus business is not lucrative, at all, for healthcare providers and could account for serious revenue loss for the year.
The High Cost of Healthcare is Helping to Spread the Coronavirus
Early on, the cost of healthcare in the U.S. was anticipated to be a contributing factor that would eventually help spread the coronavirus in the U.S. And spread it has.
Osmel Martinez Azcue was one of the first to incur the hefty medical bill for testing after he took himself to Jackson Memorial Hospital after returning to Miami from a work trip to China with flu-like symptoms. The flu test came back positive and two weeks later Azcue received an insurance claim for $3,270. His portion to pay was $1,400, and that was after asking for a flu test instead of the CT scan hospital staff had initially recommended.
Since speaking out about the bill, Azcue’s story has been featured in:
The Miami Herald,
The Washington Post (to name a few)
For patients and healthcare providers, the coronavirus is a financial burden, no matter which side of the table you are on.
The Coronavirus Conundrum: How Medical Providers Can Prepare
Medical providers across the country are practicing with their hands tied. As hospitals and clinics switch to provide tele-medicine in lieu of in-person visits and reduce or eliminate all elective surgeries, the forecast for this year’s profits are grim. Like other areas of the economy right now, despite the foot traffic and long hours, healthcare facilities are feeling the financial squeeze of the coronavirus.
Fortunately, there is a resource for those practices who are looking for more efficient ways to manage assets and who need cash flow now.
As part of Cherokee Funding’s medical funding capabilities, we have a Lien Advance and/or Purchase Program that provides doctors and their healthcare practices with immediate cash infusion. These programs provide for the advancement of cash or the purchase of outstanding and unpaid medical lien receivables or Letters of Protections (LOPs). By analyzing data points on tens of thousands of personal injury cases, we are able to assess advance rates and price these receivables fairly. With our strong balance sheet, we are able to offer better pricing than other, smaller companies. To learn more, go to the Cherokee Funding informational healthcare providers page, or request a quote.
The coronavirus continues to plague the American consumer and businesses alike. As we all continue to navigate these unchartered waters, we are hopeful that the medical and legal funding services we provide are a beacon of hope and an avenue of relief for those needing it most during this time.
If there is anything we can do for you and your medical practice, please reach out to me personally, email@example.com, or call us at 855-394-2274.