Healthcare is among the top three industries most impacted by the “Great Resignation.” Recent data from the American Medical Association suggests that 1 in 5 physicians and 2 in 5 nurses intend to leave their current practice within two years. That same study noted that the expenses related to replacing just one physician could reach $250,000 and may even exceed $1 million. The cumulative cost of turnover and reduced clinical hours due to physician burnout in the U.S. is estimated at $4.6 billion annually.
Throughout the coronavirus pandemic, we’ve seen many dramatic numbers like these, along with metaphors and colloquialisms to help us wrap our arms around their true impact. At some point over the past year, hospital leaders in the country may have collectively paused and asked themselves: Looking beyond the numbers, what’s the long-term impact of this influx in staffing need on our healthcare system?
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In the early days of the pandemic, rising stress and staffing shortages refocused the public’s attention on the issue of provider burnout and the sacrifices of exhausted medical professionals—a longstanding issue that was only exacerbated by Covid-19. Recently, high patient volumes during the Omicron surge caused hospitals to pause nonemergent procedures, which caused operating margins to decline, according to Kaufman Hall’s National Hospital Flash Report. Earlier surges led to similar outcomes, resulting in a volatile environment that frontline workers and healthcare administrative teams have been weathering for years.
This dynamic, coupled with workforce shortages, has resulted in a healthcare system that’s on the precipice of massive change. As the old adage goes—something has to give.
Eyes on bottom lines
The U.S. government has stepped in to support hospitals, introducing a variety of relief funds since 2020. For example, the U.S. Department of Health & Human Services (HHS) expects to distribute another $6 billion to providers in early 2022 as part of the Provider Relief Fund. Surprisingly, hospital bankruptcies actually hit its lowest point since 2010 in the second quarter of 2021, according to Polsinelli-TrBK’s Distress Indices Report. A spokesperson for the firm linked to “substantial and continued government support for the most vulnerable of health care industries during the pandemic.”
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While it’s clear that government support has made a major impact on hospitals fighting bankruptcy during the pandemic, providers are still toeing the line when it comes to financial solvency—it’s merely a Band-Aid on a larger problem. The American Hospital Association continues to request additional funds to support hospitals and health systems, and many still report not having the cash liquidity to afford more than a few days of resources at a time. In short, a long-term solution is needed at the revenue cycle level.
As patient need continues at an all-time high and practices cut staff amidst the financial pressures of the pandemic, employees who remain increasingly find themselves overloaded as they struggle to fill the void left behind. In most cases, these staff are taking on additional administrative responsibilities and working in office environments with an elevated risk of infection.
Healthcare leaders are committed to rising to the challenge, and investing in new processes and technologies to alleviate administrative pressures is a key way they’re leading the charge.
Third-party patient financing emerges
It’s critical to get non-clinical administrative staff the support they need to be successful in their daily work. This includes processing claims, collecting unpaid bills, and optimizing revenue-cycle management and cash flow.
Insurance cost-shifting has resulted in consumers taking on a larger share of healthcare payments. Out-of-pocket health expenses for Americans now surpass $400 billion annually, according to the Centers for Medicare and Medicaid. In fact, medical debt is America’s leading cause of bankruptcy, according to the National Consumer Law Center. In 2021, research published in JAMA found that Americans owe a total of $140 billion in unpaid medical bills to collection agencies.
In the past, hospitals offered in-house financing to patients. But increasingly, it has become unsustainable for many organizations to manage in-house financing. That’s resulted in decreased margins that ultimately impact how resources are allocated for patient care due to the lag time before the final payment is made. The current environment demands that providers evolve to offer more options so the onus is not put on time-strapped administrative staff to issue scheduled invoices, collect and process monthly payments, and—in some cases—engage with collections agencies to clear delinquent accounts off the books.
Meanwhile, patients have become true consumers of healthcare and often prefer to shop around for different financing options, driving demand for providers to offer a greater variety of solutions. As a result, the trend for more flexible financing solutions is gaining traction, but the ability to meet that need can prove challenging without the right infrastructure or a reliable financial partner.
So, what is the solution for medical practices and health systems? Insurance claims and billing must continue, regardless of the environment.
Medical practices may be increasingly turning to third-party patient financing to help cost-conscious health consumers prudently plan their medical expenses, while also bolstering their revenue cycle management with immediate patient payments and no-recourse financing from a trusted partner.
As Covid-19, cost-shifting and staff shortages challenge providers in new ways, third-party financial partners can provide the support patients and billing specialists need. This is especially true as insurance companies introduce new policy models and reduce coverage, and patients pull back on discretionary health spending.
This surge in healthcare financing need has driven a variety of organizations to enter the sector. Hospitals and health systems should consider whether third-party financing partners’ background and commitment to their business—from electives to specialized care like OB/GYNs and even broader general health and wellness needs to being able to meet evolving needs and priorities. These solutions are, in many ways, just as simple for a provider to offer as taking a general purpose credit card payment, with the added benefit of counterbalancing debt incurred from unpaid care.
Patients and hospitals alike need more than financial support and flexible financing solutions—they need human support. Hospitals should seek out third-party partners that come to their offices—in person or via Zoom—to discuss the process, distribute collateral materials, answer staff questions, and provide the high touch so important to administrative staff who are managing the complexities of the pandemic and work-life balance.
For patients, having a reliable, flexible healthcare financing solution helps address their increasing desire to pay for health and wellness care in a way that fits their budget. At the end of the day, the result can be increased patient confidence in their ability to afford medical expenses, and a reliable financing option for providers who are seeking to improve their revenue cycle management as they recover financially from the pandemic.
Photo: PeopleImages, Getty Images
Shannon Burke is an industry veteran with more than 25 years of experience in the healthcare industry, particularly with technology startups, health insurance, pharmacy and managed care organizations. She joined Synchrony in December 2019 as Senior Vice President and General Manager, Health Systems. As the leader of the of the Business Development and Strategy teams for Synchrony’s Health and Wellness Platform, she helps lead the development and implementation of strategic and tactical imperatives to expand Synchrony’s offerings to health system clients, practitioners, and healthcare technology partners.
