With COVID-19 presenting unprecedented challenges, health systems are struggling to financially survive. With little data about the novel coronavirus, traditional financial approaches that rely on historical information are not sufficient. However, organizations can get back on the road to financial recovery and well-being by practicing three key strategies centered around data: Prioritize access to real-time data. Understand data at a deeper level. Realize margin and cost by service line. Leveraging data allows financial healthcare leaders to effectively manage the COVID-19 challenges and prepare their health systems for future obstacles.

1. An Effective Financial Response to COVID-19:
Three Ways to Leverage Data

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An Effective Financial Response to COVID-19
In a stable healthcare environment, financial
leaders generally use historical data to
create a financial strategy, forecast volumes,
and predict community needs.
For example, a chief finance officer would
use data from previous years to predict next
year’s budgets, as well as which services to
offer and where to provide them.
With a novel coronavirus challenging health
systems like never before, it is time for a
new financial response to COVID-19.

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An Effective Financial Response to COVID-19
The pandemic has made the traditional, historical-
data approach obsolete and highlighted the
imperative for health systems to create a new,
effective financial response to COVID-19.
Using past financial data to predict the future
can’t sufficiently reflect a health system’s
financial needs in a pandemic.

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An Effective Financial Response to COVID-19
As the coronavirus continues to evolve and
threaten financial sustainability, health systems
cannot rely on government funding or a rapid
end to the pandemic.
They must take a more strategic, data-driven
approach to financially survive COVID-19.

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The Past Is No Longer Indicative of the Future:
A New Financial Response to COVID-19
Past data will prove valuable in the long run
when operations return to a steady state, but
it lacks relevancy in the current environment
of unprecedented changes.
For example, with the surge of COVID-19
cases, health systems put non-essential
procedures on hold to help increase ICU
bed availability.

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The Past Is No Longer Indicative of the Future:
A New Financial Response to COVID-19
New payment codes and an acceleration in
payments from CMS also impacted many
health system’s revenue cycle.
Additionally, a portion of co-pays and co-
insurance stopped abruptly when previously-
employed individuals suddenly lost health
insurance coverage, making it even more
difficult to formulate a financial response to
COVID-19.

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An Effective Financial Response to COVID-19:
Three Ways to Leverage Data
With a rapidly changing coronavirus,
health systems face new financial
challenges every day.
And, while financial leaders implemented
cost-cutting tactics (e.g., layoffs) in
response to COVID-19, they didn’t
eliminate fixed costs, such as administer-
ative overhead, building leases, utilities,
and maintenance contracts.

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An Effective Financial Response to COVID-19:
Three Ways to Leverage Data
So, while revenue took a hit from halting
elective procedures and regular office
visits, health systems have continued to
pay fixed costs in the short term and
now need to evaluate how to adjust in
the longer term.

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An Effective Financial Response to COVID-19:
Three Ways to Leverage Data
Despite cost-saving strategies and federal
stimulus money, health systems still struggle
to develop a strong financial response to
COVID-19 on already-thin operating margins.
However difficult these new hardships may
be, organizations can make progress towards
financial recovery by implementing three key
strategies.
1. Prioritize Access to Real-Time Data
2. Understand Data at a Deeper Level
3. Realize Margin and Cost by Service Line

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An Effective Financial Response to COVID-19:
Three Ways to Leverage Data
#1: Prioritize Access to Real-Time Data
COVID-19 has changed the way health
systems use data to understand their
financial well-being.
Organizations in a stable market haven’t
had to react quickly to world disasters
or pandemics, like COVID-19.
With a lack of historical data to predict
the future ramifications of the novel
coronavirus, healthcare leaders must
have access to real-time (or near real-
time) data.

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An Effective Financial Response to COVID-19:
Three Ways to Leverage Data
#1: Prioritize Access to Real-Time Data
Real-time data helps health systems react
effectively to first-time situations like COVID-19.
Organizations need the latest data to guide
scenario planning, a process in which a health
system uses up-to-date data to plan and
prepare for multiple COVID-19-related scenarios
(e.g., worst case, middle case, best case)
Without real-time insights, health leaders
must add their best guesses to an already
uncertain market.

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An Effective Financial Response to COVID-19:
Three Ways to Leverage Data
#2: Understand Data at a Deeper Level
With operating margins entering negative
territory for many organizations, leaders
need a detailed picture of their current
financial situation.
A thorough analysis allows leaders to
understand their organization’s revenue
and expense structure, including which
procedures and cases contribute most
towards margins.

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An Effective Financial Response to COVID-19:
Three Ways to Leverage Data
#2: Understand Data at a Deeper Level
Deep understanding also facilitates negotiating
contract arrangements with payers.
When financial leaders dive into the nuanced
data combined with an organization’s fixed
costs, they understand the true cost of
providing care—a critical insight for effecting
real change.

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An Effective Financial Response to COVID-19:
Three Ways to Leverage Data
#2: Understand Data at a Deeper Level
Regularly reviewing revenue, cost, and
quality data at a deeper level also allows
leaders to understand how to better utilize
each area of the hospital.

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An Effective Financial Response to COVID-19:
Three Ways to Leverage Data
#2: Understand Data at a Deeper Level
For example, detailed data demonstrates
needs within an ICU. Then, in the event of
a planned scenario, the hospital is
prepared with the right number of
ventilators, beds, and staffing.
Granular data, coupled with a capacity
planning tool that balances demand with
resources, such as the Health Catalyst
COVID-19 Capacity Planning Tool (see
Figure 1), also helps leaders prepare for
multiple scenarios at the same time.

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An Effective Financial Response to COVID-19:
Three Ways to Leverage Data
#2: Understand Data at a Deeper Level
Figure 1: The COVID-19 Capacity Planning Tool

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An Effective Financial Response to COVID-19:
Three Ways to Leverage Data
#3: Realize Margin and Cost by Service Line
The pandemic has highlighted the value
of understanding margin and cost by
service line (e.g., cardiovascular,
neurology, or oncology) as healthcare
systems struggle with overall margins.
A deeper understanding of data by
service line helps leaders quickly react
to COVID-19 and make data-driven
changes within that service line to
contribute to overall margin.

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An Effective Financial Response to COVID-19:
Three Ways to Leverage Data
#3: Realize Margin and Cost by Service Line
Service line leaders need to be armed
with underlying line item details to identify
ways they can financially adapt to
COVID-19-driven changes on their
specific service line’s procedures and
delivery of care.

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An Effective Financial Response to COVID-19:
Three Ways to Leverage Data
#3: Realize Margin and Cost by Service Line
For example, a leader could decide
to expand bariatric gastric bypass
procedures, but if she only has
access to the average costs (spread
over multiple service lines or multiple
procedures) for all the different type
of bariatric surgeries (e.g. gastric
bypass, sleeve, or lap band), she
might make a poorly informed
decision.

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An Effective Financial Response to COVID-19:
Three Ways to Leverage Data
#3: Realize Margin and Cost by Service Line
She might think the health system is profiting
from certain procedures when it’s not.
Accurate, detailed cost information reveals
specific areas of profitability, enabling
changes to the appropriate areas or
procedures, instead of assuming all
procedures are profitable based on the
high-level data.
Service line leaders can help implement
these changes with the support of frontline
staff if they understand the profitability
within their service line.

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An Effective Financial Response to COVID-19:
Three Ways to Leverage Data
#3: Realize Margin and Cost by Service Line
Because decision making occurs at every
level within an organization, all leaders need
access to this detailed, real-time data.
Usually only high-level leadership has
access to in-depth reports, if at all, leaving
mid-level service-line decision makers
without critical insights.
Service-line or department leaders generally
have only the previous month’s overall
revenue and expense data.

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An Effective Financial Response to COVID-19:
Three Ways to Leverage Data
#3: Realize Margin and Cost by Service Line
With just general and often outdated data,
service-line leaders have had to make poorly
informed decisions with significant cost
implications.
Instead, access to granular, up-to-date data
for every level of leadership within a service
line supports more timely care, correct labor-
with-volume prediction, and appropriate
ongoing responses to rapid market changes.

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Data Lays the Framework for An Effective
Financial Response to COVID-19
Although health systems can always
learn from historical trends, financial
leaders need to realize that even when
the market returns to a steady state,
another crisis is inevitable.
COVID-19 is an opportunity to learn
and prepare financially for future
emergencies.

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Data Lays the Framework for An Effective
Financial Response to COVID-19
Health systems can manage financial
challenge by prioritizing access to real-time
data, reviewing data at a granular level, and
examining service-line-level data.
Leveraging these three data strategies will
help leaders better understand payment
models and profitability, guide scenario
planning for COVID-19, and prepare their
health systems for future challenges.

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For more information:
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– Robert Lindeman MD, FAAP, Chief Physician Quality Officer

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Steve Vance joined Health Catalyst as a Senior Vice President, Professional
Services after nearly 25 years’ experience at Intermountain Healthcare where he
most recently served as the Regional Chief Financial and Compliance Officer for
Intermountain’s Southwest Region. Vance also served as the Director of Strategic
Planning in the same region and has worked with advancing numerous financial and
clinical process improvement efforts during his career at Intermountain Healthcare.
He holds a Bachelor’s degree in Accounting from Brigham Young University and an
MBA from Oregon State University.
Other Clinical Quality Improvement Resources
Click to read additional information at www.healthcatalyst.com
Steve Vance, MBA, FHFMA

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Other Clinical Quality Improvement Resources
Click to read additional information at www.healthcatalyst.com
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