6 Principles to Help Healthcare Providers Improve Banking Operations
While transforming healthcare delivery can be complicated, transforming your financial operations doesn’t have to be. Here are six principles to follow.
Today's healthcare providers are facing headwinds that are significantly impacting the roles they play in their communities and their ability to grow. From responding to the pandemic to deploying their business continuity plans in a remote environment, their resources are being taxed significantly.
These challenges have forced treasury teams to reevaluate their current banking relationships and structures with a desire for improved visibility, simplicity and liquidity.
Here are six principles for fortifying banking operations in today's environment:
1. Make the Case for Change
It’s been a decade since the Affordable Care Act was signed into law. However, many healthcare providers have been slow to make changes to their banking operations, and some have kept them status quo. As acquisitions are made, the banking operations are often brought under the umbrella of the acquiring entity. Years later, through a series of M&A activities, providers are finding themselves with an abundance of bank accounts, lockboxes and merchant IDs that require rationalization and improved visibility. While the COVID-19 pandemic has served as an accelerant toward telehealth on the clinical side, administrative staff has been affected by reduced patient volumes and elective surgeries in the form of furloughs and layoffs. This has forced many providers to bring their digital transformation strategy to the forefront in a new and more immediate way. The current environment offers organizations an opportunity to redefine what transformation looks like.
2. Define the Transformation Framework
Transformation is often brought up within the context of care delivery, revenue cycle and artificial intelligence, but when it comes to transforming a banking operation, it doesn’t have to be complicated. Taking inventory of banking relationships, taxpayer identification numbers (TINs), accounts and lockboxes doesn’t carry the same pizzazz as say, improving a system’s digital presence, but it is a critical first step for a provider’s financial ecosystem and audit. Many systems, for example, still utilize a single account for both receivables and cash concentration. By considering an optimized framework, providers can isolate receivables, payables and concentration which in turn will allow them to digitally integrate and maximize the capital-heavy investments in their electronic medical record (EMR), enterprise resource planning (ERP) and treasury workstation systems, respectively.
3. Identify Efficiencies Across All Lines of Business
As providers continue to expand and grow, they often do so by acquiring business lines in new markets and specialties that come with their own set of TINs, accounts and lockboxes. Some providers look to expand into the health plan space while others look to grow their clinical joint ventures. Many finance and treasury teams opt to centralize finance functions while others remain aligned to their legacy lines of business. Nevertheless, they often share the same ERP and accounting teams who are ultimately responsible for ensuring everything ties back to the general ledger timely. Since they play a considerable role when it comes to the audit, it is imperative these lines of businesses look for ways to operate as efficiently as possible.
4. Move from Manual to Digital Processes
With the continuing threat of COVID-19, providers are facing additional risks. Recent layoffs and furloughs were necessary to help offset reduced revenues in the early days of the pandemic, but some providers have now found themselves mired in manual and paper-heavy processes because of social distancing and a distributed work-from-home environment. Providers are managing multiple tokens in order to transfer funds among various banks and stand-alone accounts from home, while accounts payable team members are having to go into the office to print checks for vendors and patient refunds. Finance teams can minimize the risk associated with paper with a digital approach that saves dollars and protects data. Given the challenges associated with PPE during the pandemic, providers can use this strategy to re-engage distributors in mutually beneficial digital transactions.
5. Prepare for Another Wave
As furloughed staff begin returning to work, health systems are realizing that they must prepare for the potential of another wave of the virus that could trigger another round of furloughs and continued work-from-home orders. To get ahead of this, finance teams must maximize their investment in current technology to limit the financial impact. For revenue cycle teams that are not weeks behind in cash posting, the new normal has introduced a new wrinkle; HIPAA compliance when cash posting from paper at home. The key is to address the paper assets on the front end by moving them to an electronic platform before the cash posters ever see them. This is done by converting both explanation of benefits (EOB) forms and correspondence into a digital format which includes a daily postable file into the operation’s EMR or patient accounting system. This equips revenue cycle leaders with the ability to reduce paper assets, level-load and distribute work digitally based on revised staffing levels, regardless of the staff’s physical location.
6. Focus on the Bigger Picture
Once finance leaders have optimized their banking operations and layered in the corresponding digital tools for the accounts receivable, accounts payable and accounting teams, they can shift their focus to the future. This streamlined approach will allow them to free up time and resources to address critical goals and objectives associated with their health system’s strategic plan. Providers are establishing innovation labs and, in some cases, venture capital groups to advance their digital reach that will impact their care delivery models and patient experience in the communities they serve. As future acquisitions and joint ventures are completed, finance leaders can integrate these new entities in an already optimized and established banking structure that will serve for years to come.
A Path Forward
Financial institutions continue to evolve and play an integral role with today’s healthcare systems and providers. Many systems, for example, are upgrading their ERP from on-premise to cloud-based platforms and are using this upgrade as an opportunity to revisit and redesign their banking structure.
There are several tools available to help identify ways to rationalize bank accounts, lockboxes and merchant IDs based on TINs and ownership structure. The goal is to equip health systems with the right balance and mix with room to edit the business as the organization grows. Too many accounts require multiple sets of signers, annual audit confirmations and manual transfers; too few can negatively impact the accounting team with prolonged reconciliation.
The optimized banking operation serves as the finance teams’ first line of defense for all things patient and non-patient cash. The right foundation will allow finance leaders to better engage with their cross-functional revenue cycle, patient access and accounts payable teams. In the end, this should provide health systems the right level of financial visibility, optimized resources and reduction of risk.