For health systems, the COVID-19 crisis doesn’t stop outside the doors of the emergency room and patient rooms. It extends to the offices of the financial leaders as they navigate the uncertain financial future of their hospital. Across the country, surgical volumes are slow in returning to previous levels, and increased projections in bad debt and charity care are anticipated. A discussion among health system financial leaders reveals that pre-COVID-19 financial forecasting methods and budget projections have been thrown out the window. What’s needed now are very different, more agile approaches that factor in significant business disruption variables.
For presentations to their board, many executives are providing quarterly projections and scenario planning in lieu of budgets. Projections change on an almost-daily basis, unlike the static budgets that could be relied on just a few months ago.
With many reporting March and April numbers with almost incomprehensible losses, May is expected to be more of the same. Given many states’ continued work-from-home, stay-at-home and social distancing orders, the financial distress of prolonged large-scale operating losses is expected to continue through the better part of the summer. And while many are attempting various new methods of financial forecasting, the biggest questions remain: Will a new wave of the virus hit, and if so, when? How can hospital finance execs adjust their forecasting and operating performance so they’re ready for it?
Grant Thornton’s Healthcare practice professionals facilitate biweekly discussions among health system CFOs, controllers and finance vice presidents from across the country. The forum offers executives an opportunity to share best practices, challenges and solutions in real time.
For more on COVID-19 concerns and action steps, visit Respond. Restore. Together
and the COVID-19 resource center
. You’ll find information and insights, including Economist Diane Swonk’s Breaking economic news podcast series
and an offer to receive the Weekly briefing: Responding to COVID-19 together
Principal, Health Care Transaction Advisory Services
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