In this episode, we are joined by Kim Montgomery, Vice President at TIAA Bank to discuss how to best strike a balance between preserving cash flow and finances in response to COVID-related difficulties.
Highlights of this episode include:
- How providers handled equipment issues during the pandemic
- Three questions to ask yourself when assessing the changes and to prepare for a recovery
- Suggestions on current equipment needs and new capital investments
Mike Passanante: Hi, this Is Mike Passanante and welcome back to the award winning Hospital Finance Podcast. Health care providers have dealt with an unprecedented year. As they cared for COVID patients and saw inpatient stays plummet. The equipment they use to carry out their missions still required upgrades and depreciated during the pandemic. To talk about this issue, I’m joined by Kim Montgomery, vice president and health care originations leader at TIAA Bank, who has been on the front line of advising health care equipment vendors and providers about how to best strike a balance between preserving cash flow and finances in response to COVID-related difficulties. Kim, welcome to the show.
Kim Montgomery: Thanks, Michael. I appreciate the opportunity to chat with you today. And just to give a little background, at TIAA Bank I lead our health care vendor, equipment, finance business, and we specialize in providing equipment leasing and financing solutions for US health care providers through relationship with leading manufacturers and distributors of health care technology. Our team touches many different aspects of health care from the largest health systems to ambulatory surgery centers to private practices in nearly every specialty. And we engage with providers daily to help structure financing, to support the implementation of health care technology, including, but not limited to diagnostic equipment and imaging technology, surgical devices, telehealth solutions and really anything that’s deployed to support health care.
Mike: Well, thank you for that set up, Kim, and certainly in a great position to help talk about this particular issue. And I’m curious, from what you’ve seen, how did providers go about handling equipment issues during the pandemic?
Kim: Well, from what we heard in conversations, it really varied. Of course, health care providers that were on the front line were solely focused on acquiring equipment and PPE to support the urgent need of COVID care. And so they invested in key emergency resources such as hospital beds and ventilators and PPE. And we all read the headlines about the shortages in those areas with ventilators and PPE and hospital beds, of course. On the other hand, health care providers that were shut down in some cases took a different approach. As I mentioned, we also provide financing for equipment used in other types of facilities, such as surgery centers and private practices, for example. And we found a good number of practices using the time they were shut down to make improvements to their practice. It’s a whole lot easier to build out an operatory or complete some construction project and have new equipment installed and tested when the practice is closed and you don’t have patients coming in and out. Of course, it was somewhat risky for them not knowing when they would be allowed to reopen, what their patient volume might look like, and how soon they would start to receive those reimbursements to offset their investment in infrastructure and equipment and those types of projects. But in all cases, whether the health care provider was focused on urgent COVID care or managing their shutdown, we saw a lot of changes made to daily procedures to increase safety for staff and patients. And we’ve all experienced this if we’ve been back in any type of medical facilities recently. But of course, adjustments were made to add Plexiglas barriers and social distancing floor markings and distance seating spaces and waiting rooms. But we also saw a lot more substantial upgrades, like improved air filtration systems and disinfection and sanitization systems to provide clean environments. And we’re still seeing a lot of technology being deployed to help those type of causes even now. Some providers also made heavy investments into technology like patient portals and telehealth solutions to provide virtual care where that’s available.
Mike: And Kim, you suggested that providers ask themselves three questions as they assess the changes that they made and prepare for a recovery. Let’s start with your first one. What have we changed since the pandemic started and then what impact has it had? Tell us about that.
Kim: Yeah, I mean, a lot has happened and changed, and it’s worth an investment of time for providers to conduct a thorough evaluation of all the changes driven by COVID-19, take a step back and take another look at what has changed and also look at the cost benefit analysis of each change that they’ve made. That will make it a lot easier for them to decide what has actually made a difference and what their path forward could look like.
Mike: And second you posed was should I reassess the changes and investments I’ve made?
Kim: Yeah, there have been some positive results of the changes providers made during the pandemic, especially as it relates to patient experience. Pre pandemic, we found a 2019 study by the nonprofit health research institute, Altarum, that found that Americans were traveling farther and waiting longer for health care when compared to other professional services. And COVID has certainly streamlined many of the factors that contributed to this pain point as well. We’ve seen online check-in and patients being able to check-in and check their status online or in an app. You can update insurance information and past health history prior to arrival at a facility, meaning patients don’t have to spend time updating their information sitting in a crowded waiting room on a clipboard. And many health care providers have also put resources into an effective telehealth strategy allowing patients to opt for virtual care for certain types of health care visits. But a lot of the changes driven by COVID were made quickly and time wasn’t on anyone’s side and as a result, providers should evaluate the changes they’ve made thoroughly to make sure they’re solid from a technology and cost standpoint and to determine if they need to make any further adjustments as we move to the other side of the pandemic
Mike: Kim, your third question was, am I in the financial position to keep changing?
Kim: Yes, this is a critical question. Providers should make sure that as they are implementing the changes, that they’re matching the expenses to their anticipated revenue as closely as possible, implementing technology services that provide insurance reimbursable revenue should be paid for as that revenue comes in. And they should also consider using financing options like an equipment lease or loan to make necessary upgrades that will strengthen their balance sheets in the long run. For example, if it takes three months for patient volume to increase and get back on track and another three months for insurance reimbursements to begin contributing to revenue, the payment structure of the financing option should allow for lower payments during that first six months as those things are ramping up. And that’s the type of conversation we’ve been having with health care providers across the US throughout the pandemic and the recovery to help them determine the best structures for financing to meet their unique needs.
Mike: So let’s go a little bit further into that, Kim. Do you have any further suggestions for providers that are looking at their current equipment needs or considering new capital investments?
Kim: Yes, absolutely. I would make three recommendations to them as patients are becoming more comfortable returning for a regular diagnostic testing and procedures. And the first I would point out is that providers should evaluate their existing technology. We saw a lot of delays with upgrading equipment during the pandemic because it just was not a top priority. So were any upgrade cycles delayed, and if so, it’s important to get back on track or they could run the risk of incurring higher maintenance costs to service older equipment as it nears the end of life. Next, I would suggest that providers should also assess the benefit of adding new technology to achieve the best standard of care and a better patient experience. As I touched on earlier, patients have choices, and it’s important for providers to differentiate themselves as leaders with the best technology to diagnose and treat health conditions. In addition, tools like telehealth options and health records, portals and the like can also help differentiate providers in the sea of options. Patient expectations are changing, and providers should consider how they will respond. Third, as I mentioned earlier, providers should consider the best way to acquire the technology that allows them to match revenue with expense, whether it’s through a capital budget, a lease, a loan, a rental agreement, pay per use type of structure, or a subscription based payment option that bundles equipment and maintenance and supplies into one convenient payment. There are numerous options to budget for and numerous ways to acquire medical technology and devices, and the options can be overwhelming. And I would recommend that they find an expert with health care domain expertise to help guide them through the evaluation process and make the best decision for their unique situation.
Mike: Sound advice, Kim. If someone wanted to get in touch with you or your organization, where can they go?
Kim: They can visit our website at TIAABank.com and click on the commercial tab.
Mike: Excellent. Kim Montgomery, thank you so much for joining us today on the Hospital Finance Podcast.
Kim: Thank you.
Mike: If you have a topic that you’d like us to discuss on the Hospital Finance Podcast or if you’d like to be a guest, drop us a line at email@example.com.