With COVID-19, Hospitals Need Every Financial Advantage

As hospitals in some areas face a new and devastating round of COVID-19 surges, the financial impact on those hospitals is not yet known. This new spike in cases comes on the heels of more than 16-months of instability caused by the pandemic and just when hospitals were starting to make gains financially. According to a report released in February 2021 by Kaufman Hall and commissioned by the American Hospital Association, “Hospitals could lose between $53 billion and $122 billion due to the lingering effects of COVID-19, depending on the speed of vaccine distribution and complete recovery of patient volumes.” ¹ On top of the financial losses is staff shortages across the country that has doctors taking on nursing duties and hospitals delaying non-emergency procedures in spots across the country. 

The Kaufman Hall February report stated, “Under an optimistic scenario, hospitals would lose $53 billion in revenue this year. The loss would primarily come from a $27 billion decline in outpatient revenue and $17 billion for inpatient as well as $9 billion in emergency department revenue.” And that was before the most recent spike in cases. A Flash Report in June issued by Kaufman Hall said hospitals were beginning to see some gains but still well below pre-pandemic numbers.²

This August,  the University of Mississippi Medical Center open a 20-bed field hospital in its parking garage³ while Ochsner Health, Louisiana’s largest health system, broke a record for hospitalizations with 1,074 patients.⁴ Just two examples of how hospitals are continuing to struggle to handle the pandemic clinically. And in such situations, finances take a back seat. In order to survive, some hospitals have had to, and continue to, cut budgets from valuable departments such as utilization review services and payer denials management services whose role it is to recover millions of dollars in potential lost revenue. This is a temporary solution that will prove a precipitator of continued lost revenue in the long run and may result in payer denials being accepted by default. The result is significant loss of appropriate hospital reimbursement. “Whether recovery from COVID-19 in 2021 is relatively rapid or relatively slow, America’s hospitals will face another year of struggle to regain their financial health while providing necessary care and services to a nation that is continuing to experience the effects of an unprecedented pandemic,” the KH report said.

One approach to help this dire situation is maintenance of appropriate revenue through intensive utilization management. Strong utilization management involves open lines of communication between clinical and payer interfaces to ensure cases not meeting criteria receive secondary review and reconsideration. In addition, denials by payers should continue to be counteracted in peer-to-peers by the payer and a treating or advisor physician to attempt to recover revenue. Unfortunately, denials and write-offs are too often accepted without communication between the clinical and insurer interfaces. In 2019, “Navigant research shows up to 60 percent of hospitals never appeal denials, which, for a mid-sized hospital with 350 beds currently adds up to about $3 million in losses per year.” ² With strain from the pandemic, clinical utilization review was further reduced as treating physicians were engrossed in frontline work and the denials team lessened.

Although hospitals recognize the importance of utilization management even during these trying times, it is difficult to put emphasis here while the pandemic continues to drain so many of their resources. Saving lives rightly trumps working to reverse inpatient admission denials. Having a trusted partner in utilization review who can assist with the revenue cycle can be a lifeline for hospitals. Secondary clinical review that can go through the keen eye and judgement of a physician advisor, an expert on evidence-based national guidelines is just as, if not more, proficient than reviews done by non-UR physicians. Relaying the process of communication with insurers for peer-to-peers to a third party is beneficial as the conversation receives an expert opinion and expert leverage over insurer guidelines.

It is obvious the burden the COVID-19 pandemic continues to place on hospitals throughout the country no matter their size or location. As hospital CMO’s and CFO’s fight to keep the doors of the hospital open in the face of the financial losses, hospital staff fight for the health of our population. Recognizing the importance of utilization review services during these unknown times and even partnering with a utilization review partner can help fight against severe loss hospital revenue down the line and pick-up the revenue cycle’s vigor while hospitals can perform their best for their patients.

Contact AppriseMD to learn more about utilization review management services for hospitals and healthcare providers.

1. King, Robert, “Hospitals could lose between $53B and $122B this year due to pandemic.” Fierce Healthcare, Feb. 24, 2021. https://www.fiercehealthcare.com/hospitals/kaufman-hall-hospitals-close-between-53-and-122b-year-due-to-pandemic
2. “National Hospital Flash Report.” Kaufman Hall, June 2021. https://www.kaufmanhall.com/sites/default/files/2021-06/june-2021-national-hospital-flash-report.pdf
3. Harte, Julia and Mann, Anurag, “Mississippi hospital puts beds in parking garage to cope with COVID-19 surge.” August 13, 2021. https://www.reuters.com/world/us/mississippi-hospital-puts-beds-parking-garage-cope-with-covid-19-surge-2021-08-13/
4. Woodruff, Emily, “Inside New Orleans hospital’s COVID units, ‘rows and rows’ of coronavirus patients fight to survive.” The Times Picyaune/The New Orleans Advocate, August 11, 2021. https://www.nola.com/news/article_703397f4-fabf-11eb-92ea-5b717490c974.html