Concluding our series for healthcare services companies with net revenue under $40 million, I highlight some operational and compliance considerations. In 2020, many companies adapted well by doing whatever it took to safely deliver patient care. To that end, some of the temporary solutions deployed are simply not sustainable without putting the organization at risk.
Here are five things to consider, and some common observations and challenges we’re seeing with companies:
1. Are employees working remotely, and if so, how secure is that environment?
- Employees are using personal computers that are also used by other family members.
- Companies issue work stations for home use, but what controls are in place for personal use?
- How is accessing HIPAA-protected information controlled? As an example, can employees print patient information on home devices?
2. Are there any gaps in your risk management process?
- New remote work settings highlight the importance for Cyber / Crime insurance.
- Workers compensation policies need updated for changes in headcount and work setting.
Some companies are missing discounts and refunds being offered.
3. Have you prepared a budget, and if so, does it have contingency plans for business interruptions?
- Most common, management teams prepare static budgets assuming revenues return to ‘normal’ levels. As a result, there can be significant budget misses if further interruptions occur.
- Other times we see run-rate budgets assuming status-quo based on recent operating results. Again, this doesn’t forecast growth and assumes that any upside will be done with current staffing levels.
- How closely does your budget align headcount increases / reductions based on certain milestones?
- For best practices, I recommend management teams have a budget for at least 3 scenarios, often referred to as “Best Case”, “Base Case” and “Down Case” budgets.
4. Is your staff staying current on changing documentation and coding requirements?
- Most often, I see this topic come up around the new E&M documentation and coding requirements. Over the past year, training may have been deferred. What is the cost of not having regular coding and compliance training?
5. How comfortable are you with your liquidity going into the first quarter of 2021 – do you have visibility to your cash flow?
- After a tough first half of 2020, many companies are ending the year with a better cash
position. At the same time, I’m hearing companies say their bank is requiring a partial paydown of debt. Does your management team have the right tools in place to demonstrate the impact should your bank require a paydown of your debt? Simple tools such as tying in a 13-week cash flow forecast to your 2021 budget can help with these discussions.
If you’re a business owner, we encourage you to consider how your team is addressing the items we highlighted in this series. Does your team respond, rather than react, to a changing environment? Do you have a trusted advisor working inside the business, asking the right questions around the future health and growth of the Company?
We applaud our business owners and employees in Healthcare Services for working through a tumultuous year. Thank you for continuing to provide care in our communities, and we wish you continued success heading into 2021!