Preserving Health and Finances: Financial Guidance for Medical Practices

Published by BradyRenner CPAs | February 15, 2024

The U.S. healthcare system is still reverberating from the disruptions caused by the COVID-19 pandemic. The already complex industry is facing declining revenues as well as increased consolidation, intensifying financial challenges for healthcare providers. BradyRenner specializes in guiding healthcare entities through the intricacies of these challenges and is positioned to assist providers in planning for a lucrative future.

Let’s take a look at these challenges, their financial implications, and how BradyRenner’s combined decades of experience can guide healthcare providers onto a successful path.

The Impact of Telehealth on the Healthcare Industry

Telemedicine usage skyrocketed during the COVID-19 pandemic, and since becoming a viable option for healthcare visits, has held a steady state of popularity since patients appreciate the convenience of telehealth as well as the affordability and accessibility. But for the healthcare industry, this rapid shift to telemedicine brought some challenges – including payment structures as well as licensing limitations. Legal considerations must be weighed as providers rise to meet the demand for telemedicine. While many states granted temporary waivers during the pandemic to allow for the rapid adoption of telehealth appointments, many are now implementing more permanent regulations as the demand for telemedicine continues to rise.

The Financial Impact of Telemedicine

For patients, telemedicine has been a financial win: there is no expense involved in transportation to and from appointments, and because telehealth appointments are done from home or the office, the lack of transportation time also means fewer lost wages for non-salaried workers. Particularly for those living in rural areas, telemedicine opens up opportunities in care. Additionally, during the pandemic, many insurance companies announced payment parity for virtual visits, changing the previous policies which reimbursed at a lower rate for telehealth. 

In addition to the payment parity issue, some challenges still exist particularly for those providers who practice along state borders, as billing is not approved across state lines.

Regulatory Concerns

Government regulatory agencies are also playing catch up to meet the demand for virtual medical appointments. During the pandemic, HIPAA concerns were relaxed to accommodate providers acting in good faith, and allowed for appointments to happen over otherwise unsecure communication mediums such as Zoom and FaceTime. Beyond that, prior to the pandemic, many states had separate licensure requirements for telemedicine. Many physicians are now advocating for a federal licensure requirement in order to ensure quality of care for patients while not causing undue burdens for providers.

Trends in Healthcare Usage and Consolidation

Another effect of the COVID-19 pandemic on healthcare was the substantial decrease in healthcare spending. Patients concerned about exposure to the virus deferred services, which in turn led to revenue decline for providers. The decrease in healthcare spending during the pandemic negatively impacted smaller practices in particular, who experienced a decrease in profits. 

Pre-pandemic statistics also reveal an upward rise in healthcare consolidation, with 778 hospital mergers between 2010 and 2017, but the pandemic amplified this trend significantly. And while there is no evidence that healthcare mergers improve the quality of care provided to patients,  there is supporting evidence which suggests that both horizontal and vertical mergers reduce charity outreach and other positive community contributions.

The Financial Impact of Consolidation

For patients, healthcare mergers almost invariably increase costs. And for providers who struggle to remain financially healthy through a period of revenue decline, merging with a larger, more established practice may be worth considering. 

There are, however, several funding sources available for struggling healthcare providers, including CARES Act grants, advanced Medicare payments, loans, and other financial support resources that were created to help businesses survive the financial impact of the pandemic. BradyRenner’s team of experts is knowledgeable regarding these options and can help your practice make informed decisions regarding whether or not to seek grants and other funding or consider merging with a larger practice.

BradyRenner Can Help

The CPAs at BradyRenner can offer healthcare providers expert guidance on government assistance and walk them through leveraging such programs effectively, making sure that any assistance remains in line with the provider’s specific needs and goals. Additionally, BradyRenner provides clients with strategic financial planning aimed at alleviating any existing financial pressures while taking steps to stabilize operations. By expertly navigating the complexities of antitrust enforcement and policy considerations, BradyRenner can guide healthcare providers through the regulatory landscape and provide expertise on foreseen challenges as well as opportunities. BradyRenner is uniquely positioned to develop strategies for healthcare service businesses, including telehealth. Additionally, BradyRenner’s CPAs can advise healthcare practices on the advantages and disadvantages of joining forces with larger practices or remaining a smaller healthcare provider.

Contact BradyRenner today for more information on how they can help your healthcare business navigate the latest challenges of the industry by utilizing years of experience as well as industry knowledge. And as we wrap up our analysis of health care consolidation and its financial implications, stay tuned for our upcoming segment where we will examine an entirely different domain: the restaurant industry. Learn about how restaurants are navigating their own industry challenges such as labor shortages and rising costs, and how they are demonstrating resilience and innovation in their financial strategies. Follow our blog for insights into diverse sectors and the dynamic solutions that shape their financial landscapes.