Post-Cyberattack Recovery, Converting Aged A/R to Payment Plans Will Drive Needed Cash

The recent cyberattack on UnitedHealth Group’s Change Healthcare has sent shockwaves through the healthcare industry, leaving many hospital operating margins financially crippled amidst claims processing disruptions. The consequences have been dire, with hospitals facing delayed payments, substantial cash flow disruptions, and significant impacts on patient care.

The Financial Impact on Hospital Operating Margins

A collection of reports from various sources, collected in a March 20, 2024 article by Becker’s Hospital Review, underscores the severity of the financial impact on hospitals:

• An AHA survey revealed that 94% of hospitals experienced financial repercussions, with over half reporting significant or serious impacts, directly affecting patient care.
• The Florida Hospital Association anticipates a monthly cash impact of $1.3 billion on 106 state hospitals, highlighting the severity of the situation.
• Massachusetts hospitals are losing a staggering $24 million daily due to the cyberattack, as reported by the state hospital association.
• Analysis by Kodiak Solutions estimates a total cash flow impact of $6.3 billion in delayed payments for hospitals nationwide through March 9.
• Larger health systems are reportedly losing over $100 million daily due to claims processing interruptions, further exacerbating the financial strain.

To make matters worse for providers, the rate of patient collections fell from 54.8% in 2021 to 47.8% in 2022 and 2023, according to a February 2024 report by Kodiak Solutions.

Recourse Strategies for Recovering Hospital Financial Stability Post Attacks

The financial landscape for healthcare providers has become increasingly dire, with mounting cash flow challenges exacerbated by a decline in patient collection rates and the lingering impact of the recent cyberattack. Effective strategies for recovering hospital financial stability post-cyberattacks are essential.

These may include implementing efficient revenue cycle management processes, optimizing reimbursement strategies, and exploring alternative recourse financing options. By focusing on revenue cycle efficiency and maximizing collections, hospital financial losses can be mitigated and stability restored.

Attacks Leveraging Aged A/R Solutions to Bolster Balance Sheet Liquidity

Amidst this financial turmoil, hospitals are seeking innovative solutions to mitigate hospital financial losses and restore financial stability. One effective approach is to convert Aged Accounts Receivable (A/R) that have been non-responsive to enhanced engagement efforts, or internally managed payment plans, into a patient financing program.

By transferring aged AR or internal payment plans to an experienced and robust patient financial engagement program, hospitals can experience an immediate and impressive net cash lift.

In fact, one health system’s recent payment plan conversion project resulted in an 85-90% gross collection rate when those payment plans were converted to CarePayment’s zero-interest patient financing program. This ensured a substantial increase in near-term cash and bolstered balance sheet liquidity.

Exploring the Benefits of Earned Revenue Collections for Hospital Operating Margins

Moreover, patient collections play a crucial role in hospital operating margins. By implementing patient-friendly billing practices and offering zero-interest financing options, hospitals can improve patient collections and reduce bad debt.

Additionally, fostering strong provider-patient relationships through transparent communication and support can enhance patient satisfaction and loyalty, as well as keep providers compliant with existing and new regulatory requirements.

Unlocking Financial Resilience with CarePayment

While hospitals navigate the aftermath of cyberattacks and strive to recover financially, CarePayment offers a tailored solution to alleviate financial strain and restore stability. CarePayment’s Aged A/R and payment plan conversion solutions provide hospitals with the tools they need to enhance cash flow, reduce accounts receivable, and mitigate the impact of delayed payments.

Need cash quick? We’re ready to convert payment plans in less than 30 days to bolster balance sheet liquidity. By partnering with CarePayment, hospitals can safeguard their financial health and ensure long-term sustainability in these challenging times.