Cost accounting and COVID-19 financial recovery: 5 takeaways

As health systems develop plans to recover from financial challenges caused by the COVID-19 pandemic, they need to establish more agile enterprise decision support tools and processes to achieve stability now and in the future.

This was what industry thought leaders concluded during an Aug. 25 webinar hosted by Becker's Hospital Review and sponsored by Syntellis.

During the webinar, Jay Spence, vice president of industry solutions for Syntellis Performance Solutions, and Catherine Savage, assistant vice president and industry practice lead for Syntellis Performance Solutions, discussed the importance of costing — the system used to determine expenses associated with workforce, service lines and other operational areas. Additionally, they talked about the need for trusted costing and decision support tools.

Five takeaways:

1. Use "now, near, far" framework for recovery planning. This framework involves understanding how the health system is performing financially right now, managing resources in the near term to support long-term strategies, and creating a strategic path for the future. "The ability for us to analyze the business and plan effectively across these three time horizons has never been more important," Mr. Spence said.

2. Incorporate additional COVID-19 expenses into costing models. Costing historically involved looking at a time period that recently passed, according to Ms. Savage. But she believes the pandemic has highlighted the need for greater proactivity. Therefore, she recommends models that incorporate costs around testing, social distancing and other pandemic-related expenses. "I think about it not just in terms of this pandemic but also other things that might happen in the future, such as regional competitive threats, where you might want to readjust your costing model," Ms. Savage said. "The goal here is always around accuracy and reliability and ultimately buy-in from your stakeholders. You want to make sure the data is meaningful and that everyone is on the same page as far as how it's calculated."

3. Use a three-pronged approach to create a plan for COVID-19 costing. When creating a plan for COVID-19 costing, organizations should understand how cost and revenue related to the pandemic is recorded and ensure their costing strategy is in line with existing reporting needs, according to Mr. Spence and Ms. Savage. They also recommend evaluating the cost option that best fits the health system's situation.

4. Use existing cost categories for addressing direct costs such as labor and supplies. Many health systems have seen significant increases in costs due to personal protective equipment supplies, drugs and ventilator expenses. Ms. Savage recommends organizations not complicate costing by setting up new cost categories for these areas. She explained: "You're going to do your reporting at a service line level, and you'll be able to clinically identify those COVID cases."

5. Be thoughtful about costing strategy. Mr. Spence recommended being thoughtful about costing as well as continuously looking for ways to improve on costing accuracy. He said this involves using modern tools to support strategic decisions. " The old model of costing where we wanted to get more accurate always involved a tremendous amount of extra effort and more resources," Mr. Spence said. "Today, there are a lot of ways we can bring in new sources of data, increase the accuracy but also automate all of those processes. We can do both today. We can be more efficient in our costing, and we can also increase the accuracy of all the data that's coming in and the reliability and the trustworthiness of that data."

To view the webinar, click here. To learn more about Syntellis, click here

 

More articles on healthcare finance:
10 recent hospital credit downgrades
Essentia pitches $1B plan to add 2,500 ICU beds nationwide
OIG tags Arizona hospital for erroneous billing

© Copyright ASC COMMUNICATIONS 2021. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.