April 21, 2020 - The Coronavirus pandemic is widely expected to have devastating effect on many of our nation's hospitals, even with the federal relief now available. Rural community hospitals are particularly at risk.

According to research, median 2018 operating margin for rural community hospitals in expansion states was 0.8%, compared to (0.3%) in non-expansion states. Further, the University of North Carolina's Center for Health Services Research reports 168 rural community hospitals have closed since 2005, including six in the first three months of 2020. With 65% of those closures occurring since 2013, the rate of closure appears to be accelerating.

Depleted cash reserves, facility and equipment maintenance deferments, and antiquated information systems and medical technologies can mean that your hospital is one adverse event away from crisis.

It goes without saying that the Coronavirus pandemic has added complexity never seen before by our nation's healthcare system. Signed into law March 27, 2020, the CARES Act (Coronavirus Aid, Relief and Economic Security Act, H.R. 748) provides benefit to the healthcare industry to help with the COVID-19 pandemic.

Healthcare executives are chiefly focused on the most fundamental of activities today - access to PPE, patient and staff safety, retention of (healthy) skilled professionals, and maintaining enough cash to keep the doors open. To mitigate the detrimental impact of the pandemic, there are a few critical activities leaders can take now.

• Manage revenue cycles closely. Rural community hospitals are now beginning to experience sharp declines in cash collections resulting from the pandemic-induced decline in outpatient activity. The detrimental impact on cash position will be compounded if there is a simultaneous decline in collection performance from pre-pandemic receivables, or processing and follow-up of new claims through its course. If/where staff responsible for coding, billing and other revenue cycle activities are working remotely, the probability of worsened revenue cycle performance is anticipated to increase.

• Take advantage of available relief now. Take steps to quickly understand what relief measures are relevant to your organization and take the necessary actions to secure them. In addition to federal relief, many individual states have also organized aid for hospitals and other healthcare providers. Contact your state's hospital or medical associations to see what might be available in your state. Being an early applicant to available aid may prevent costly delays.

• Focus on collaborative capacity management. The pandemic is a global one, and its response should be coordinated regionally and broadly. Rural community hospitals should collaborate closely with their regional referral centers to optimize regional capacity management planning. Rural community hospitals with excess acute and sub-acute capacity will have an important role in the event of a regional surge.

• Leverage Telehealth. Through the course of the pandemic, the increased use of telehealth and other technological solutions to more traditional care delivery has been widely reported. Early reports suggest that many providers have found some patients find telehealth more convenient, especially among the working-aged demographic, and appear to have a smaller cancellation/no-show rate than traditional appointments. Fuller deployment of this technology, now and going forward, may be an effective strategy to retain and develop relationships with patients.

• Understand the Impact of CARES Act Waivers to Normal Operations. - With the passing of the CARES Act, CMS is waiving certain standard regulations to enable hospitals and providers to focus on providing clinical care. Examples included utilization review, three-day inpatient admission prior to SNF utilization and certain patient notices. For critical access hospitals, standard regulations related to the 96-hour rule and 25-bed limit are waived during this time. It's important to note that Medicare Advantage and commercial plans have the ability to create their own polices, so take time to understand payor-specific implications of these waivers.

If you are a rural community leader or hospital administrator, the Coronavirus pandemic is undoubtedly a top concern. The good news is there are steps you can take to minimize its impact. By taking advantage of relief offered by the CARES Act, closely managing your revenue cycles, managing capacity collaboratively, leveraging telehealth, and understanding payor implications of waiver changes, you can improve your organization's current situation and outlook.

Mark Armstrong is a Shareholder in LBMC's Healthcare Consulting group. He has advised many healthcare organizations through mission-critical, destabilizing situations. He can be reached at mark.armstrong@lbmc.com