Bulletproofing Hospital Finances amidst COVID-19

Since the COVID-19 outbreak, hospital revenues have dropped an estimated $1.4 billion per day, causing over 200,000 healthcare employees to be furloughed or laid off. Though revenue stability is reportedly increasing, it is unlikely that hospitals will see normalcy anytime in the near future. Even before the COVID-19 outbreak, hospitals routinely lost millions each year from unnecessary and unmitigated financial risks. Hospitals rely largely on Internal Audit to help shore up these risks, but one department alone often cannot handle the overwhelming number of system-wide procedural repairs that need to be made. Generally, gaps that directly impact patient care or compliance are addressed first, leaving the financial risk gaps largely unmitigated.

Now, in the midst of this unprecedented event, Internal Audit is being called upon even more to help hospitals navigate the uncertain waters of patient care. In a world of healthcare adaptations, Internal Audit is “bring[ing] a systematic, disciplined approach to evaluating and improving the effectiveness of risk management, control, and governance processes.” This approach allows Internal Audit to bring creative solutions to the table to help healthcare systems do more with less – less revenue, less time, less manpower.

To continue to do more with less, hospitals need additional revenue sources, especially those that can deliver consistent and dependable results for the long-term. With such a source, healthcare systems could begin bringing people back to work, securing additional PPE, or delivering necessary care to the community.

Why Perform a Recovery Audit?

A recovery audit is a dual-purpose tool at Internal Audit’s disposal that often goes unutilized but can bulletproof a hospital’s financial departments. As the name suggests, a recovery audit also recovers those lost funds for the system, delivering a dependable revenue stream that does not deplete other resources. An effective recovery audit also assists Internal Audit in discovering financial and compliance gaps that are directly causing loss to the healthcare system without taking time and manpower away from the Internal Audit team. This benefit can be provided by third parties, such as our Discovery Review that expands upon the traditional recovery audit to close process gaps and discover areas for mitigating risk throughout the procure-to-pay (P2P) process. By resolving current and mitigating future risks, a healthcare system can rest assured that their financial departments will be bulletproofed for the future.

Internal Audit can use the recovery audit tool to ensure that, despite the chaos caused by the pandemic, their system is running smoothly and effectively at all points within the system’s control. Losing money due to simple mistakes or easily remedied solutions is not a risk healthcare systems can afford to take today. By shoring up process gaps based on the recovery audit analysis, Internal Audit can ensure that its system is responsible for managing its finances to prepare for the future.

Additionally, Internal Audit can use the recovery audit to replace lost funds. While the primary purpose of a recovery audit should be a systemic improvement, bringing lost funds back into the healthcare system returns money to the bottom line. At a time when resources are particularly scarce, additional funds can be the difference between saving a life and losing one. By championing a recovery audit project, Internal Audit is both easing the burden on their department while mitigating the impact of financial loss.

Unfortunately, Internal Audit is not always guaranteed a seat at the decision-making table. They get the opportunity to provide recommendations but may not ultimately be involved in the decision-making process, despite being the only department whose function is to bring multiple departments together to solve problems. Today, though, healthcare systems are working as an all-hands-on-deck team to ensure they can weather this storm. This new approach can give a progressive Internal Audit department the boost to champion new projects and see recommendations through to the end.

Ensuring that COVID-19 does not leave lasting wounds in the overall healthcare landscape has become one of the most essential pieces of discussing the future. Internal Audit, because of their unique positioning within healthcare systems, can help to protect hospitals from current and future financial hardship by ensuring that their system is utilizing every tool at its disposal to bulletproof their finances and ensure their on-going viability.

---

When your Internal Audit Department is ready to implement a recovery audit, turn to us to provide value beyond that of the recovery dollars. We can partner with your team to recover dollars, but also put controls in place to stop lost funds. Reach out now to learn more.