Steps towards a leaner, more efficient and more agile financial strategy in the healthcare sector
Streamlining and crisis protection can help hospitals and healthcare systems forget about the impact of the pandemic.
A key lesson from the COVID-19 pandemic has been understanding how resilient, resourceful and agile many hospitals and health systems are, qualities that have undoubtedly helped many to survive the crisis.
The ability to respond to change is key to helping healthcare organizations emerge from the pandemic and begin the path to financial recovery. Part of this effort is to better use data to support decision-making and patient engagement.
It is the object of Sauk Prairie Healthcare, a 36-bed acute care hospital located in Prairie du Sac, Wis., about 25 miles northwest of Madison. In addition to the hospital, Sauk Prairie Healthcare operates four primary care clinics in surrounding communities and additional specialty practices in Prairie du Sac.
Sauk Prairie Healthcare has served these communities since 1956. The healthcare system is best known for its orthopedic surgical care, with patients seeking services across the United States, according to James Dreneyvice president of finance and operations at Sauk Prairie Healthcare.
Stronger emphasis on the value of reliable data
As part of its relaunch strategy, Sauk Prairie Healthcare has invested in a new electronic health records platform, with a planned go-live date of Nov. 1, Dregney says.
“Converting to our new EHR is our primary focus in 2022,” Dregney said. “One of the key results of the conversion will be the ability to perform more actionable reporting and data analysis. With payor policies rapidly changing, timely identification of revenue cycle process issues will be critical to ensuring that we receive reimbursement earned for services rendered.
As reimbursement models for orthopedic care transfer and value-based contractual agreements become more common, Dregney says the health system has expanded capacity for primary care and coordinated care services.
Sauk Prairie Healthcare became a member of an ACO in early 2022. With this, the EHR conversion includes a focus on workflows and data communication around value-based care delivery models and performance reporting. quality,” says Dregney.
The financial and clinical toll of the COVID pandemic
“The most significant impact on the organization was in March and April 2020, when elective procedures were suspended or significantly reduced,” Dregney recalled. “As an organization known for its orthopedic procedures, many of which were elective, the result was a significant reduction in cash flow.”
In the four years before the pandemic, Sauk Prairie Healthcare management had taken initiatives to improve financial stability and strengthen the balance sheet, including increasing available cash, Dregney says. With the impact of the pandemic on elective procedures, Sauk Prairie Healthcare quickly responded to the availability of the Medicare COVID-19 Accelerated and Advance Payments program to provide additional funds to meet short-term cash flow needs.
“The accelerated Medicare payments provided a sense of security in the event that the elective process slowdown persisted for an extended period of time,” Dregney says. “However, these procedures began to be performed again in late April and May 2020, allowing revenue to be generated to cover expenses. Additionally, following pre-pandemic initiatives to improve operational efficiency and reduce expenses, the use of accelerated payments to support operations was not necessary.”
In addition to the impact on elective procedures, labor supply and cost have been a challenge throughout the pandemic, Dregney says.
“Initially, in addition to the high level of concern for the well-being of our team members, there were concerns that staff contracting the disease might have on staff availability and the cost of care. people covered by our health insurance plan,” Dregney said. “Over time, the impact shifted more to the results of nationwide retirements and quits of people in the health sector. These challenges persist. We have and continue to seek unique solutions to meet the needs of Sauk Prairie Healthcare team members while continuing to focus on long-term financial stability.”
Pre-pandemic strategies have shown their merits
An important lesson Dregney says he learned from the pandemic was confirmation that the pre-pandemic strategies Sauk Prairie Healthcare had implemented really improved the financial strength of the organization.
“We have put ourselves in a position to weather the storm we have faced so far,” he says. “We realize that there are still many challenges ahead of us and we cannot rest. But, so far, we have succeeded.”
“The pandemic has allowed our leadership team to stress the importance of keeping our eye on the proverbial ball,” Dregney continues. “Shortly before the pandemic took hold in the United States, our bond rating was raised as a result of pre-pandemic initiatives. This increase could have been seen by some as recognition by the rating agency the financial stability of Sauk Prairie Healthcare. While it was an acknowledgment of the improvements we had made previously, the pandemic has shown that nothing is certain and that we must continue to work to improve our operational efficiency and strengthen our balance sheet to help deal with future disruptions, whatever they may be.”
About a year into the pandemic, the health system was engaged in contract negotiations with an insurance company. After extending the contract while Sauk Prairie Healthcare continued discussions, the payor has indicated that it will stop paying claims altogether until a settlement is reached.
“While this could be viewed as an attempt by the payer to capitalize on a perceived cash flow disruption during the pandemic, Sauk Prairie Healthcare’s balance sheet strength has allowed us to continue to negotiate and not be forced into accepting a deal that was unreasonable,” Dregney said.
Recovery does not mean going back to the past
Sauk Prairie Healthcare leaders understand that moving forward doesn’t mean going back to old ways. Hospitals and health systems need to learn from the pandemic and make significant changes to the way they operate and deliver care. According to some estimates, the health sector has lost up to 30% of its workforce during the pandemic. The sector simply cannot go back to past practices.
“We have faced recruiting and retention challenges during the pandemic in most areas of the organization,” says Dregney. “Our human resources team and all of our leaders have been focused on creative staffing and compensation models.”
“There have been times in the past when a workflow issue may have resulted in a request for additional full-time employees in a department,” Dregney notes. “The pandemic has forced leaders to consider workflow changes and process improvements first, to eliminate waste and ensure all work efforts produce value for the organization.”
The experiences of the pandemic have resulted in a more critical analysis of additional processes and data flow between departments, to identify and work toward an ideal LEAN state for Sauk Prairie Healthcare, says Dregney.
Become a leaner, meaner and more agile organization
In addition to labor issues, Sauk Prairie Healthcare has experienced supply chain disruptions.
“It’s the same as every organization in the country,” Dregney said. “Throughout the pandemic, our supply chain leadership has been excellent in identifying alternative products to fill gaps, as well as improving contract compliance with our GPO. About a year before the pandemic, Sauk Prairie Healthcare moved to a new GPO. immediate gains from this transition. »
Supply chain challenges made it easier for Sauk Prairie Healthcare to transition products that were not under contract to a new product or brand that was under contract.
“The pandemic has taken away individual concerns about preference items that might have been raised in the past. With labor and supplies [being] our two biggest expense items, making improvements in those areas in the wake of pandemic-related issues has definitely made us leaner,” says Dregney.
Finally, Dregney says Sauk Prairie Healthcare will continue its “relentless pursuit” of improving operational and financial performance.
“The pandemic has demonstrated the need to review transactions and contractual arrangements in light of risk and uncertainty,” Dregney said. “As a smaller organization, some of the levels of risk we experienced during the pandemic had been considered unlikely. The pandemic changed that thinking. As a result, we became ‘meaner’ in the sense that we are now focused on those risks and having tough discussions with providers and payers as we negotiate new agreements.”