According to a McKinsey & Company survey, “more than 90% of executives said they expect the fallout from COVID-19 to fundamentally change the way they do business over the next five years, with almost as many asserting that the crisis will have a lasting impact.” Additionally, 71% of the surveyed healthcare executives said the crisis provides an opportunity for growth. However, few are confident that they are well positioned for growth, as organizations have reduced emphasis on innovation to focus on responding to the immediate crisis.
As the burden of the COVID-19 pandemic continues to place unprecedented challenges on our healthcare system, Community Health Centers are looking for data to support operational decisions and reform. In order to measure how clinics have performed during the pandemic, EqualizeRCM conducted a study of all our Community Health Center Clients compiling Key Performance Indicators (KPIs) between January and June 2020. The KPIs featured in the study include: Charges, Payments, Adjustments, Encounters, Accounts Receivable, Percentage of AR over 90 Days, and Denial Rate.
The intent of the study is to give Community Health Centers feedback on the impact of COVID-19 as compared to other facilities. With this data, Community Health Centers would be able to assess whether changes made to operations had a meaningful impact (i.e., Telemedicine, billing staff working remotely, etc.). In addition, the data will be helpful in lobbying local, state, and federal governments for more COVID-19 relief packages. The results and findings of the impact of COVID-19 are presented by Production and Accounts Receivable Data.
In order to determine the impact of COVID-19 on Community Health Centers, the data was compiled for all of the Federally Qualified Health Center and Rural Health Center clients of EqualizeRCM. The data was blinded and aggregated to an average across the entire population. According to Medical News Today, patients are foregoing routine primary care visits due to fears relating to the spread of COVID-19. In the United States, Community Health Centers began experiencing this reduction in March. To determine the pre COVID-19 impact, an average of the January and February data was computed. This average was then compared to the months of March to June to determine the impact on the production data.
The Charges and Visitsa per month began to decline in March, but they reached their lowest point in April. The April Charges were 40% of the pre COVID-19 levels, and the April Visits were 27%. From April, the Charges increased by 9% in May and 33% in June. Utilizing a trend line, the July Charges should be within 4% of pre COVID-19 levels with a near normal production from August forward. As expected, there is a correlation between the Charges and Visits; the Visits are within 4% of the norm by July. However, the trough for Visits was only 27% of the norm in April compared to Charges at 40%. Telemedicine and other lower priced services may be an explanation for this gap.
The Payments for Community Health Centers have also declined during the height of the COVID-19 impact, but the lowest month of Payments was reached in May at 46% of the pre COVID-19 benchmark. Payments often track 1-2 months behind Charges and Visits because of the standard 31-60 Days in Accounts Receivable. Logically, it holds that the low point in Payments was one month later than Charges and Visits. Additionally, the trend line projections show that Payments will be within 5% of pre COVID-19 levels by September and more normalized thereafter. The graph below represents the impact on Charges, Visits, and Payments when compared to the pre COVID-19 baseline. The 0% axis represents the average production in the pre COVID-19 environment. While the production levels are moving toward the norm, the impact on Community Health Centers has been significant as evidenced by 5-7 months of substantially fewer patients and collections. The loss of medical services income in 2020 is significant, and the downstream impact on cost reports will be felt by Community Health Centers into 2021 and beyond. With a decrease in Charges, Visits, and Payments, the total operating cost of providing medical services will decrease resulting in a lower encounter rate for fiscal year 2021.
Accounts Receivable Impact
Part of the research study was to examine the impact of COVID-19 on Account Receivable and to determine if there were any correlations with the production data. The findings include some expected outcomes such as an overall reduction in Accounts Receivable as the Charges declined. As of June, the Accounts Receivable dropped to 26% of the baseline. However, the Days in Accounts Receivable also shrunk by 7%. In correlation with the Days in Accounts Receivable, the Denial Rate was 54% below the pre COVID levels as of June. With a drop in production, it was expected that the total Denials would be reduced; however, the Denial Rate should be relatively flat. The reduction in claim volume resulted in a net decrease in the amount of staff required to service the revenue cycle. This data suggests that the additional staff was utilized to uncover additional revenue, refine processes, and reduce the denials. Therefore, the Community Health Centers in the study will have a more streamlined revenue cycle post COVID-19.
The impact of COVID-19 can be immediately observed in the production data. The Charges and Visits reached a low point in April, 40% and 27% reduction respectively. The Payments were at a low point of 46% in May. While the patient volume will recover to pre COVID levels, the impact on the 2020 financials is apparent while the long-term impact of revenue will be less apparent upon the completion of the 2020 cost reports. There are silver linings with the Accounts Receivable as the Denial Rate and days in Accounts Receivable are reduced.
One key to success in the COVID-19 environment is to retool staff and processes to address key issues in revenue cycle. Community Health Centers that not only succeed, but thrive, will find new ways to engage patients. COVID-19 has accelerated the adoption of Telemedicine, and many are adding new lines of business such as Chronic Care Management. Some Community Health Centers are turning towards new technologies that reduce revenue leakage by identifying patients that are covered by Medicare, Medicaid, or other payors. While our environment has changed, Community Health Centers that find alternate sources of income and improve processes will continue to thrive.
For the purposes of this study, Visits include all encounters at a Community Health Center.
^ McKinsey & Company, “Innovations in crisis: Why it is more critical than ever,” June 17, 2020, Jordan Bar Am, Laura Furstenthal, Felicitas Jorge, and Erik Roth
^ Medical News Today, “How the pandemic has affected primary healthcare around the world,” May 15, 2020, Maria Cohut, Ph.D.
Matt Thompson is Executive Vice President of EqualizeRCM Services. Prior to joining EqualizeRCM, Matt was the President and Chief Executive of Medical Management Solutions, and he has over 23 years of experience in healthcare management. Mr. Thompson has served as an adjunct faculty member at St. Edwards University and the University of Mary Hardin-Baylor. Further, Mr. Thompson is a Certified Medical Practice Executive (CMPE) in the American College of Medical Practice Executives, and he is active in the Medical Group Management Association (MGMA) previously serving as the President for the Austin and Texas chapters. Additionally, Mr. Thompson is a Fellow in the American College of Healthcare Executives (ACHE). Mr. Thompson is also very active in the community serving on various advisory boards and civic associations including the Seton Fifty. In addition to a Bachelor of Arts degree in Mathematics from the University of Arkansas, Mr. Thompson has a Masters of Health Services Management degree from the University of Mary Hardin-Baylor.
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