Funding Telehealth Expansions: What’s Top of Mind for CFOs?
Both providers and consumers are being forced to rapidly adapt to telehealth due to the ongoing COVID-19 pandemic. Many hospitals are seeing over 300% growth in telehealth visits, with some having surpassed their normal telehealth visits by 10,000%. The success of telehealth that has resulted from the pandemic will likely turn this short-term solution into a long-term option, positioning hospitals to deliver care through telehealth more frequently moving forward.
Telehealth is here to stay, but periodic upgrades and expansions to your telehealth program can be a big expense. The cost of upgrading or expanding can be millions of dollars for a large system; contractors may be needed to get the system up and running, employees require training, and new/upgraded hardware needs to be purchased. Based on the discussions from several virtual roundtables* that First American recently hosted, the telehealth-related items that are top of mind for hospital and health system CFOs include:
Compatibility with EHR
Telehealth is here to stay—especially for follow-up appointments so that patients don’t have to drive long distances to receive care at a major hospital. Both patients and providers are having a positive response to the efficiencies that telehealth provides; a 15-minute visit turns out to actually be just 15 minutes! But a challenge for hospitals will be determining which telehealth system to use and making sure it’s compatible with their EHR
Long-Term Care Facilities/Reduced Readmission Rates
There have been some quick adjustments to improve care for nursing home patients. Patients typically make frequent trips to providers for clinical visits, but it takes nursing home staff a significant amount of time to get patients ready for transport. The transport has been needed because reimbursement does not occur unless it is a face-to-face visit in the clinic. Now, by allowing a telehealth model in nursing homes, staff preparation time and patient travel time have decreased, and readmission rates are being reduced as a result.
There are concerns that although CMS has allowed telehealth during this time, it may revert back to the original, more stringent requirements. Looking ahead, hospitals need to determine how it will work within their business model since their providers are paid on production. If a virtual visit now pays just a third of what an in-person visit does, but hospitals are paying the doctors the same amount, the economics won’t work out. Additionally, if doctors are being paid the same but can work from their home, hospitals will need to figure out how that fits into the equation.
Relaxed Reimbursement Requirements
Prior to this situation, many patient visits could not be conducted via telehealth because reimbursement regulations required face-to-face meetings. With this requirement relaxed during the pandemic, both patients and providers are finding the virtual visits to be a beneficial and positive experience. This gives providers the opportunity to review all areas of patient care and determine what can be offered via telehealth.
Telehealth has been key to keeping revenue flowing and providers busy, and with about two months of implementation, there is now time to look for improvements.
Hospitals are looking for opportunities for new sources of revenue and for reimbursements for expenditures related to COVID. Many hospitals are applying for telehealth grants and relying on state and government funding, but are also looking outside the box to recover costs. Some of these efforts include reviewing prior year cost reports, applying a volume decrease adjustment, and obtaining rural hospital status.
Service Line Expansion
Many hospitals are increasing their footprint (both within cities and outlying towns) and are able to expand into different service lines such as speech, OT, PT, home health, primary care, some cancer care, and hospice. Physicians that travel to rural communities are decreasing their travel and scheduling remote visits, which improves their quality of life.
As telehealth strategies expand, hospitals need to take into consideration the development and rollout of the platforms to make it easily accessible for less tech-savvy patients. Staffing also needs to be considered. If care is delivered primarily through telemedicine, what does that look like as hospitals start pulling people back on board? Are there ways to get more strategic as hospitals set up doctors’ schedules and/or use nursing staff more efficiently? There are many opportunities hospitals can take advantage of to make sure that as they return, they are running as efficiently as possible.
With all the uncertainty of reimbursement and changing regulations, many hospitals are choosing to fund software and telehealth expansions through First American. First American can fund 100% of the project, provides the support and expertise of the project manager, and understands hospitals’ cash flow needs. Rather than a hospital paying cash, First American is able to take the cost of the entire telehealth project, including consulting fees, travel, and training, and break it up into manageable monthly payments.
To inquire about funding for your telehealth expansion, contact Sara Fay, Vice President at First American Healthcare Finance at email@example.com or 585.643.3397.
About First American:
First American Healthcare Finance, an RBC / City National company, provides funding solutions to healthcare providers. Funded projects range from $250K to $100MM+ and commonly funded initiatives include EMR and software implementations and/or upgrades, medical and dental equipment acquisitions and/or upgrades, and expansion and/or renovation projects. First American has earned the HFMA Peer Reviewed designation and is a partner of the American Hospital Association.
*To view complete summaries from First American’s recent CFO virtual roundtables and inquire about attending an upcoming roundtable, visit First American’s Virtual Events page: www.faef.com/healthcare/insights/virtual-events