Plan Now, Save Later: How ARPA Planning Can Help Rescue Local Economies

Plan Now Save Later How ARPA Planning Can Help Rescue Local Economies

As you may recall, our previous Thought Leadership article addressed what local governments can expect from the American Rescue Plan Act which was signed into law in early March. Of the $1.9 trillion in relief funding, the ARPA will provide $350 billion dollars in emergency funding for state, local, territorial, and Tribal governments to remedy the current mismatch between rising costs and falling revenues. The state funding portion is approximately $195 billion, with $25.5 billion distributed equally among the 50 states and the District of Columbia, and the remaining amount distributed according to a formula based on unemployment. The local funding portion is approximately $130 billion, equally divided between cities and counties.

When can you expect financial relief?

Localities will receive the funds in two tranches – the first, after the U.S. Treasury certifies the proceeds to each jurisdiction and the second, one year later. Funding must be spent by the end of the 2024 calendar year. Now that you know these funds are headed your way, what’s the next step? We strongly recommend that now is the critical time for careful consideration, organization, and planning, to reflect on exactly how the ARPA funds can be used to stimulate rescue efforts and lead to economic recovery in your community.

Plan now, save later:

  • Whenever possible, use dedicated grants and programs, saving ARPA funds for priorities not eligible for federal/state assistance programs.
  • Whenever practical, costs related to ARPA funding should be spread over the qualifying period (through December 31, 2024) to strengthen budgetary stability.
  • Carefully consider all other possibilities for the practical use of ARPA funding before committing resources to ensure the best use of the temporary funding.
  • Critical infrastructure updates are a well-suited use of ARPA funds because it is considered a non-recurring expense that can be targeted to strategically important long-term assets that provide benefits over many years. However, assess any ongoing operating costs that may be associated with a specific project.

Eligible uses of these funds include:

  • Revenue replacement for the provision of government services to the extent of the reduction in revenue due to the COVID-19 public health emergency, relative to revenues collected in the most recent fiscal year before the emergency
  • COVID-19 expenditures or negative economic impacts of COVID-19, including assistance to small businesses, households, and hard-hit industries, and economic recovery
  • Premium pay for essential workers
  • Investments in water, sewer, and broadband infrastructure

The law contains two restrictions on eligible uses:

  1. States cannot use the funds to directly/indirectly offset tax reductions or delay a tax increase
  2. States and localities are prohibited from depositing funds into any pension fund

Before the COVID-19 pandemic, New York State enjoyed its longest economic expansion on record. However, with the onset of the pandemic, the state lost 1.9 million private-sector jobs in March and April 2020, half of which was recovered by November 2020. While the new law stipulates the allocation process and authorized use of funds, the U.S. Department of the Treasury will be issuing regulations that will provide more detail and guidance, our team will continue to update you as more information becomes available and help you to navigate this financial relief. Since 1969, our governmental clients have depended on RBT CPAs, LLP professionals for assistance with all types of financial issues. We encourage you to contact our team today if you have questions about ARPA, or other questions surrounding the unique factors that impact the government sector.

Sources: GFOA

Teachers’ Union Leaders Question New CDC Guidance

As many policymakers and parents alike anxiously await the return to in-person learning, the two largest teachers’ unions are vocalizing concerns regarding new Center for Disease Control (CDC) social-distancing requirements in schools. While we have long been advised by the scientific community that we should stay six feet apart to practice social distancing during the ongoing COVID-19 pandemic, the CDC now says three feet of space between masked students is a sufficient safeguard in most situations.

The CDC modified its recommendations late last month, a little more than a month after the agency released broader updates for schools, seeking to regain credibility and consistency in its messaging to schools under the newly formed Biden administration. The new guidelines say six feet of space is still necessary for middle schools and high schools in communities with high transmission rates unless schools can group students in small cohorts that remain together throughout the school day. Adults are advised to continue maintaining six feet from each other and students. Additionally, the CDC says students should still follow the six feet of space rule in common areas, like lobbies; in situations where masks can’t be worn, like mealtimes; and when “increased exhalation occurs,” like during sports, choir, band rehearsals, or exercise.

The country’s largest teachers’ union is expressing some criticism following the public health agency’s modification, urging the CDC to provide far more detail about the rationale for the change from six feet to three feet for students in classrooms. “We are concerned that the CDC has changed one of the basic rules for how to ensure school safety without demonstrating certainty that the change is justified by the science and can be implemented in a manner that does not detract from the larger long-term needs of students,” National Education Association (NEA) President Becky Pringle said in a statement. The second-largest teachers’ union released a statement echoing a similar sentiment. “Weakening one layer of layered mitigation demands that the other layers must be strengthened,” American Federation of Teachers (AFT) President Randi Weingarten said in a letter addressing the CDC. After months of mixed messaging and misinformation, AFT posed the following logistical questions:

  • With the guidance that students can be three feet apart from each other but adults should remain six feet from children or other adults, what is the expectation for the teacher in a classroom—that she remains in one spot at the front of the room the entire day, not moving about the classroom?
  • How will paraprofessionals work in reading circles or other small-group settings? Does this also apply to bus drivers and school bus protocol—i.e., will students be three feet from each other on buses, but six feet from a bus driver or a bus attendant?
  • With the increased number of in-person students, can we end the practice of concurrently teaching in-person and simulcasting to students at home? Alternatively, can we provide guidance on the negative effects of this practice?
  • What is the expected timeline for the implementation of these changes? Many school systems are just returning to in-person instruction right now, after significant planning—for bus routes, staggered schedules, etc.—based on six feet of physical distancing. Even with the significant investment of American Rescue Plan money, districts lack the human resources and institutional planning ability to make changes like this quickly. Is this something that can be implemented in the fall, or perhaps the summer?

Clearly, this new guidance provides some answers, but perhaps creates even more questions for educators. AFT is currently requesting that the Education Department, in conjunction with the CDC, release a national checklist outlining the enhanced mitigation strategies that must be in place if schools move to three feet physical distancing, and provide details about proper implementation. Additionally, the AFT requests that the CDC conduct comparative studies on mitigation efforts in urban, densely populated schools. At RBT, we are committed to keeping education professionals informed of important updates that may impact your financial planning. We extend a no-cost consultation to anyone with further questions or interest in working with our dedicated team of professionals.

Sources: EdWeek, NEA, AFT, CDC

Remote Learning Trends

2020-2021

The Hyde Park Central School District is making changes to its contact tracing protocols that could result in more days in which all of its students are remote learning.

The district says the change will be for the better.

While the more precise contact tracing system is expected to increase the burden on staff and perhaps take longer to complete, resulting in more days in which the schools are closed, it’s also expected to lower the number of students who will have extended periods of mandatory quarantine.

It’s a system other districts around Dutchess County are also considering, as schools continue looking for ways to maximize the number of days students can have in-person learning.

The plan, approved by the Dutchess County Department of Behavioral and Community Health and to be implemented after spring break, calls for quarantining students only when one of them comes within a six-foot radius of an individual who tested positive, rather than everyone in a given room or building, according to local school officials.

Dutchess BOCES Superintendent Richard Hooley said there have been discussions among district leaders across the county about making similar changes.

“A lot of schools were saying, ‘Really? You want to quarantine my entire lunchroom?’ If you have a lunchroom that is six feet apart, you would only quarantine the kids that are closer than six feet,” Hooley said. He noted that every district is different, but contact tracing has been a time-consuming task for many of them.

Kafka and Hooley agree that fewer children required to quarantine is a positive.

“This may cause us to go full-remote more often while we contact trace, as a more usual occurrence, but the good news is … less students would have to miss school activities,” Kafka said. “We have been quarantining a whole bus, or a whole classroom, and we wouldn’t have to do that anymore.”

The new contact tracing plan in Hyde Park would go into effect after students return from break April 6. The district is holding off until then to allow for time to inform the school community of the changes and get feedback from families.

 

It would also “allow us some time for seating charts for classrooms and for buses,” Kafka added. “It will take longer to do contract tracing this way because we will have to look at the classroom, and where they were sitting.”

Hooley said while contact tracing can be an arduous task, it’s a key component to keeping schools safe.

“The contact tracing is always tough … I breathe a sigh of relief at the end of each day that we don’t have a positive case,” Hooley said. “Yes it is a burden, but it is necessary, and something we are well equipped to do.”

 

The American Educator Panels (AEP) consists of the three nationally representative samples of educators who provide their feedback on important issues of educational policy and practice. The three panels are the American Teacher Panel, the American School Leader Panel, and the American School District Panel

12% of teachers reported covering—via distance learning—the full curriculum they would have if schools hadn’t closed due to COVID-19

42% of teachers reported the civic education and social studies materials provided by their school or district are not engaging for students

87% of middle and high school social studies teachers said students made unfounded claims based on unreliable media sources in the past month

66% of teachers reported that students lacked devices or reliable internet to acquire digital instructional materials from home

 

A fall 2020 survey of 375 school districts nationwide found

  • About two in ten districts have already adopted, plan to adopt, or are considering adopting virtual school as part of their district portfolio after the end of the COVID-19 pandemic. District leaders cited reasons related to student and parent demand for continuing various forms of online instruction in future years.
  • Among a wide variety of school instructional and staffing matters, three widely shared concerns rose to the top for district leaders for the 2020–2021 school year: disparities in students’ opportunities to learn during the COVID-19 pandemic, students’ social and emotional learning needs, and insufficient funding to cover staff.
  • School district leaders reported that the U.S. Department of Education had the second-least amount of influence on their COVID-19 plans; state and local health departments had the most.
  • School district leaders diverged in terms of the degree to which they emphasized certain needs for the 2020–2021 school year. More leaders from focus districts than from nonfocus districts rated fundamentals (such as internet and technology access) as a greatest need. In contrast, more nonfocus district leaders rated student mental health and high-quality instructional resources as greatest needs.

 

Pandemic pods. Our data also permit us to gauge the extent of the most widely discussed adaptation to the pandemic on the part of American households: The formation of pods through which families band together in small groups to share responsibility for childcare, instruction, or both. Some commentators hail this development as an example of Americans’ resilience and ingenuity, while others fret about its implications for equal opportunity. But just how common are pandemic pods at the midpoint of the 2020–21 school year?

According to parent reports, 72% of students are participating in remote or hybrid instruction, leaving them in need of supervision and potentially academic support during the school day. Of these students, the parents of 20% report that their child regularly participates in additional instruction with someone who is neither affiliated with the child’s school nor a family member living in the home. The parents of 40% of students who participate in this form of tutoring report doing so in a group with other children. In other words, the parents of fewer than 6% of American students report participating in a pandemic pod. Even so, this represents more than three million students nationwide.

We see similar increases in the frequency with which students receive assignments and feedback on their work. The parents of 75% of students reported in November that their child’s school or teachers assign required work on a daily basis, up from 45% in May. At that time, the parents of only 21% of students said their child received daily feedback on completed assignments, with parents of another 27% reporting their child got feedback several times a week. For students who are fully remote in the 2020–21 school year, those shares have increased to 42% and 30%, respectively.

In sum, according to parents’ survey responses, the measures taken by schools to prevent spread of the virus are having the least negative impact on academic knowledge and skills and on emotional well-being. They are having a greater effect on children’s social relationships and physical fitness. Across all five domains of students’ well-being, the least negative impacts are reported for those children attending school in the traditional in-person manner. The hybrid model seems to offer little, if any, advantage over fully remote instruction.

 

https://www.air.org/project/national-survey-public-education-s-response-covid-19

https://nces.ed.gov/surveys/

https://www.poughkeepsiejournal.com/story/news/education/2021/03/15/covid-contact-tracing-hyde-park-aims-limit-student-quarantines/4663552001/

Sources: RAND, AEP, Education Next,

The Pros of Going Paperless in the Pandemic

The pros of going paperless in the Pandemic

As you read this, look around at your desk. Are you seeing stacks, piles, folders full of paper? It should come as no surprise that all this clutter – uh, work, is causing major challenges for local government departments that are desperately trying to streamline processes and better serve the public. The pandemic has undoubtedly exposed the holes in the traditional processes that often waste valuable time and resources and result in productivity disruption and delays. Now more than ever, the public sector is under pressure to capture and retrieve data from documents quickly and make critical decisions based on available information. To better serve the public, many are moving away from solely relying on physical documents. What are the benefits of going paperless and is it even feasible with the deep budget cuts that New York municipalities are facing across the state?

Losing Paper means Gaining Green

The average US office worker goes through roughly 10,000 sheets of paper each year.

Yes, we said by ditching paper, you can expect to gain green. Besides going green – the environmental factor to consider when you reduce daily paper waste – there is money to be saved. Studies estimate that companies still using physical documents spend an average of $80 per employee on paper each year. By transitioning to a paperless system, you can phase out these expenses. What does your department spend on paper, printer ink, printer maintenance, and postage each year? These costs quickly add up when you consider how regularly staff members are sending and receiving contracts, forms, and other paper-based documents. Automating billing is another huge resource and cost-cutter. Instead of printing, folding, stuffing, stamping, addressing, and sending invoices, paperless billing means payments are a click away.

Make Paper Work with less Paperwork

US companies spend an average of four weeks every year trying to find lost documents. 

Being able to scan documents tremendously reduces the time spent doing manual input and also immediately delivers the captured data for decision making. The majority of consumers today prefer electronic correspondence to paper correspondence because it is easier to keep track of and is more secure, so not only will you be helping your team, but your residents will thank you, too! Create a list of priorities and start shopping around for the right digital document management system for your team’s needs. We suggest selecting a document management program that includes automatic backup. Once your team is trained on the software and the paperless process, you can prioritize the backlog. If your team is overwhelmed scanning backlogged documents while handling incoming documents and digital files, consider hiring an additional resource, like an intern who can focus on backlogged documents.

Overcoming the Digital Dilemma

More than 70% of today’s businesses would fail within three weeks if they suffered a catastrophic loss of paper-based records due to fire or flood.

Does that describe your current workflow? The reality is, the public relies on your team with highly-sensitive, important documentation. In a world that’s increasingly digital, digitized documents can be archived in a safe, easily accessible way, reducing the costs of both needing to store the originals on-site and physically retrieve them. Digital files encourage collaboration that can be carried out effectively from the office or home. Making this timely transition may even help you attract younger talent as remote flexible work schedules become even more pervasive and sought after across the country.

Get Started!

47% of employees surveyed said that one of the top three reasons they do not go paperless is a lack of management initiatives or mandates.

Essentially, employees are ready and willing to go paperless, but often, nobody is leading the way. Create a plan today and set short and long-term goals for each department. Review the recently issued Retention and Disposition Schedule for New York Local Government Records (LGS-1) on the NYS Archives website and adopt it. Research and decide on a secure, centralized system and begin the process of scanning documents, and check with team members to ensure everyone is on the same page. Put concerns at ease by demonstrating how going paperless can actually eliminate potential compliance issues in existing paper documentation processes, and save team members valuable time, energy and effort. Have questions about how to get started? Our team is proud to work with local government clients and we understand that you have unique operational, accounting, and regulatory compliance considerations. Contact RBT, today.

Sources: Efilecabinet, Recordnations, EPA, OpenAccessGovernment

Ignoring this Program is Costing You Millions

Ignoring this Program is Costing You Millions

While the pandemic continues to have devastating and staggering impacts on the health of the American people, it did push telehealth into the forefront of the medical industry – granting millions access to crucial care from home. In addition to the expansion of telehealth services, construction professionals are anticipating several new trends when it comes to building hospitals, urgent care centers, and other facilities in 2021 and beyond. Picture wider hallways and expanded waiting rooms to accommodate social distancing practices, updated HVAC systems, and a focus on automation to cut down on the number of surfaces that have previously required touching. For you, this might mean investing in new facilities for clinical expansion. If that’s in your future, look no further than the 504 loan program to access millions of dollars.

What is the 504 program?

It provides long-term, fixed-rate financing for major fixed assets that promote business growth and job creation. Generally, these loans max out at $5 million, but can go up to $5.5 million for “Small Manufacturers” and for certain energy projects. 504 loans are available through Certified Development Companies (CDCs), the Small Business Association (SBA) community-based partners, and the loan is distributed among three parties. The business owner puts up a minimum of 10%, a conventional lender (typically a bank) puts up 50%, and a CDC puts up the remaining 40%. Most businesses find that when their 504 loan closes, the rate is highly competitive with other financing options, making this an accessible, cost-effective opportunity you may not have tapped into. Ultimately, it’s a chance for you to hold onto as much-coveted working capital as possible.

How could your medical company benefit?

SBA 504 loan money can be used to buy a building, finance ground-up construction or building improvements, or purchase heavy machinery and equipment. You can also use the loan for the improvement or modernization of land, streets, utilities, parking lots and landscaping, or existing facilities.

To be eligible, your healthcare facility must:

  • Operate as a for-profit company
  • Have a tangible net worth of less than $15 million
  • Have an average net income of less than $5 million after federal income taxes for the two years preceding your application

The range of businesses that could qualify for commercial real estate lending extends across a wide spectrum, including:

Individual medical providers: like dentists, doctors, optometrists, physical therapists, or counselors needing more office or treatment space.

Medical and healthcare groups in the same class, with the same needs, seeking more room to treat patients.

While each of these facilities has unique real estate needs, they are all considered ‘owner-occupied’ healthcare businesses, which makes them eligible for SBA 504 financing. Additionally, businesses must meet the SBA’s definition of a small business, which typically means fewer than 250 to 1,500 employees. One of the most notable borrower benefits? Because payments are consistent over the term of the loan, the long-term, fixed interest rates make it easier for your company to budget each month. Keep in mind that a 504 loan cannotbe used for working capital or inventory, consolidating, repaying, or refinancing debt, or speculation or investment in rental real estate.

How do you apply?

The first step to apply is to contact your bank to learn more about the program, then prepare and assemble your 504 loan authorization package, using the SBA’s 504 Authorization File Library to identify the documentation you will need to apply for your 504 loan. This past fall, the SBA announced updated interest rates you can take advantage of to bounce back from COVID-19 financial disruptions. The program now allows for 10, 20, and 25-year interest rates as low as 2.2%. On average, the loans take around 30-45 days from application to funding. Approval time can, however, take anywhere from one to six months. Right now because of the Economic Aid Act, all borrower fees are waived through September 30, 2021, which means even more financial savings for your business. So, what are you waiting for? If you still have questions about how to get started, give our team a call today, we are happy to help out and can’t wait to get you access to the capital you need.

Three Steps to a Smarter Work from Home Plan

Three Steps to a Smarter Work from Home Plan

A year after the COVID-19 pandemic first shut down businesses statewide, many municipalities are still struggling to keep up with public demand. We are finding that those struggling the most have one common denominator: they are still completely paper-based, which creates a lot of delays, backlogged work, and overwhelmed employees. Based on our experience, municipalities that created a paperless environment pre-pandemic had a significant preparedness head start as we collectively acclimated to the remote workflow. Aside from work sustainability and convenience, it’s clear our governments’ public service sector needs new ways to attract and retain employees. Needless to say, resisting the changing (or changed) times is only going to hinder operating abilities moving forward. Below are three critical rules you can follow to succeed today, tomorrow, and in a post-pandemic world, because as you may have already guessed, there’s no going back to the “old way” of operating.

Daily Check-ins

At RBT, we create daily check-ins at the beginning of the workday to identify mission-critical functions to best conduct our professional services. Not only does this increase team member accountability, but it provides a reliable way to stay connected, while we are physically apart. Implementing small consistent actions can reinforce a sense of transparency, trust, and heightened team organization. Particularly in a remote work setting, researchers say high-quality connections (HQCs) are crucial for high-performing teams. HQCs happen when we have regular, short, positive interactions at work which provide a sense of positive energy in the moment, regardless of whether those interactions happen over Slack, email, or Zoom. Researchers believe HQCs lead to higher performance because high-quality relationships and the resulting psychological safety allow for greater learning in organizations and may contribute to innovation. We know, ZOOM burnout is real. While virtual interactions can never replace in-person meetings, the reality is some employees may never opt to return to traditional in-office settings, even post-pandemic. For some, the increased work-life balance, elimination of commute time, and comforts of home will trump returning to the office where workplace distractions cut into valuable productivity time. Respecting rather than resisting an employee’s desire to remain remote (as long as they continue contributing and remain productive) will set municipalities apart in the recruiting arena.

(Truly) Embrace Digital

The well-known “Silver Tsunami” is upon us as baby boomers retire, shrinking the public sector workforce significantly over the next few years. While the goal is to have tech-savvy millennials fill the void, the public sector struggles to recruit and retain them. Neglecting technological upgrades and modernizing employee training to transition to digital practices will only hinder your ability to recruit younger employees. Embracing digital workflows doesn’t just mean getting on board with cloud-based software or upgrading your internal IT and then forgetting about your tech for a few years. It’s important to revisit policies, both old and new to determine if there are holes in the way you are operating, and constantly improve processes. Have you transitioned to electronic signatures for purchase authorization? Fantastic, as this decision has no doubt smoothed the purchasing process. But, is your payment authorization still on paper and then being scanned into your system? Reevaluate all of the processes you have in place to avoid a workflow that’s vulnerable to threats and prone to delays.

Cross-Train

As local government employees age out of the workforce, are you staying competitive? Not only will cross-training provide team members with valuable skills and a sense of variety in their schedule, but it will be instrumental in keeping up with the pace of daily demands. It’s more important than ever before to be as accommodating as possible to employees who are balancing work, family, and the stressors associated with a yearlong pandemic. As many are feeling emotionally and physically fatigued, and likely some are falling ill with the virus, some team members will inevitably be quarantining due to community spread, or recovery. Payroll still needs to be properly documented, and taxes still need to be collected, even when teams are short-staffed. By training your team members to perform various duties, you are creating a more resilient and more efficient workflow that can and should be utilized for years to come.

We understand these are challenging and unprecedented times. Local government agencies are trying to serve the public with limited resources and in some instances, limited capabilities with remote restrictions. Our dedicated team is here to answer questions you might have, and help you navigate your financial needs.

The Challenge Ahead for NY’s 2021 Healthcare Planning

The Challenge Ahead for NY's 2021 Healthcare Planning

Before the pandemic, New York’s hospitals already had the thinnest statewide average operating margin in the nation. They face $20 billion to $25 billion in revenue losses and extraordinary costs due to COVID-19 – and that does not include the financial damages accruing during this latest surge of COVID-19 cases we are currently experiencing. Nearly a year into fighting this deadly virus, the financial situation has only become more dire. Facing a continued public health crisis, a complex vaccination rollout process for millions of New Yorkers, plus a historic deficit, healthcare industry leaders have a lot on their plates. According to the most recent information from state officials, New York projects a $13.3 billion shortfall, or 14%, in revenue and estimates a $61 billion decline through 2024 as a direct consequence of the COVID-19 pandemic. So, what are the top financial focuses of the health industry? PwC’s new study and issues report examines healthcare’s future uncertainty by outlining six major 2021 challenges:

  1. rightsizing after the telehealth explosion
  2. adjusting to changing clinical trials
  3. encouraging digital relationships that ease physician burdens
  4. forecasting for an uncertain 2021
  5. reshaping health portfolios for growth
  6. building a resilient and responsive supply chain for long-term health

The fiscal year (FY) 2021 New York Executive Budget recommends $88.5 billion for DOH, including $76.7 billion for Medicaid, $5.3 billion for the Essential Plan, and $6.5 billion for remaining health program spending. This reflects a decrease of $71.7 billion from the FY 2020 Enacted Budget due to the discontinuation of two-year appropriations for Medicaid. Below, we will touch on some 2021 state healthcare budget highlights to anticipate. What is the future of Medicaid, prescription drug pricing, medical transparency, and new mental health funding in our region?

Redesigning Medicaid and Health Care

The FY 2021 Enacted Budget calls for Medicaid spending to increase by 3%, or about $500 million. The Medicaid Redesign Team II, a cross-section of health care providers, labor, local government, and other industry stakeholders offer up their recommendations in the FY 2021 Enacted Budget which include a transformation of the hospital reimbursement structure to support services to the uninsured, increases investments in primary care, and new requirements that enhance oversight of managed care and transportation. The reforms also address managed long-term care, by far the fastest-growing sector of Medicaid. These include aligning New York State’s eligibility requirements with those of other states for new applicants for Consumer Directed Personal Assistance Program and Personal Care Services and enhancing reporting requirements for both programs; capping statewide enrollment in managed long-term care to incentivize plans to assist in ensuring appropriate enrollment, and creating a statewide independent assessor to achieve efficiencies by removing duplicative efforts to determining eligibility and enrollment in the managed long-term care program.

Prescription Drugs

The FY 2021 Enacted Budget includes a three-part plan to lower prescription drug costs for all New Yorkers. The Budget caps insulin co-payments at $100 per month for insured patients to help address the rising cost of insulin that has resulted in diabetes patients rationing, skipping doses, and not filling prescriptions. A commission of experts will also be recruited to study the feasibility and benefits of a Canadian drug importation program and submit a plan to the U.S. Department of Health and Human Services for review.

Medical Transparency

To increase healthcare service accessibility, New York plans to create a consumer-friendly, one-stop website, called NYHealthcareCompare where New Yorkers can easily compare the cost and quality of healthcare procedures at hospitals around the state. The website will be created by the Department of Health, the Department of Financial Services, and the New York State Digital and Media Services Center.

Student Mental Health Program

Some describe the ongoing COVID-19 pandemic as a psychological pandemic, as health service providers statewide have become overwhelmed with an increase in mental health requests. To meet the rising demand in light of school closures, the budget provides $10 million in funding for grants to school districts to address student mental health needs. These grants are intended to improve student access to mental health resources and assist students who have experienced trauma that negatively affects their educational experience. This program will be administered by the Office of Mental Health and developed in consultation with the State Education Department.

As we have seen, organizations need resilient infrastructures and supply chains to absorb future shocks. They need detection systems to spot financial trouble ahead and identify the right partners or deals. We understand that on every level, this industry is facing unprecedented pressures and stressors. We highly encourage management to frequently check in with employees. As a reminder, health care workers can text NYFRONTLINE to 741-741 to access 24/7 emotional support services. Any New Yorker can call the COVID-19 Emotional Support Hotline at 1-844-863-9314 for mental health counseling, and as always our dedicated RBT team is here to help you create a financial plan to navigate these complicated times.

Sources: PWC, NYS

Crash Course in Cash Management

Crash Course in Cash Management

A new year means a fresh look at what’s working and what’s not – in all aspects of life. Here we are (finally) in 2021, and while the Covid-19 pandemic rages on, there are some bright spots to keep in mind. 140,000 New Yorkers have received the first Covid-19 vaccine dose to date and New York expects to receive another 259,000 doses this week. But while we are taking steps to protect the physical health of our frontline heroes, it doesn’t mean that the healthcare industry as a whole has good financial health – in fact, far from it. The American Hospital Association (AHA) estimates that from March to June, the pandemic cost hospitals around $202.6 billion. If you’ve been scratching your head trying to reimagine cost-savings measures, you’re not alone. For starters, you’ve probably re-examined supply chain operations and discussed opportunities to beef up your organization’s personal protective equipment (PPE) inventory for the coming months. But what emerging best practices can your team adopt to help achieve better working capital amidst this unpredictable environment?

Liquidity

Your healthcare system’s ability to pay off its obligations is a central measure of its financial health. Improve liquidity ratios by paying off liabilities, cutting back on costs, using long-term financing, and managing receivables and payables. There are many ways to approach liquidity, but for starters, we suggest that you examine areas your team can cut costs and consider your accounts payable. You can often negotiate longer payment terms with certain vendors – but if you never ask, you’ll never get the extension. Remember to frame your request in a way that makes the arrangement mutually beneficial. For example, more cash flexibility could be exchanged for several glowing referrals to industry connections. A hospital that can pay its expenses and pay down its debts through the profits it generates from its operations is one that is likely to succeed.

Trim Wisely

When it comes to cutting costs, always align professional fees with clinical demand. If you notice a particular service lacks a financially positive growth trajectory, it’s time to modify or eliminate it. You can also consider removing capital projects that are no longer feasible or lack full funding. On the flip side, prioritize high-demand clinical services you expect to grow, and explore partnerships to create regional solutions that share cost and risk. You can also perform rolling budget updates to consider the ongoing economic impact on payor mix and volume.

Tech Flexibility

Embrace and expand telemedicine options. Despite the overwhelming challenges of the past year, Moody’s ranks U.S. for-profit hospitals as stable, with volumes expected to gradually recover from 2020 levels, while continued government aid and positive commercial and Medicare rate increases will drive growth. According to Moody’s latest report, technology and innovation will allow more procedures to be conducted outside of the hospital, and can also significantly help hospitals increase efficiency, improve patient outcomes, and save costs. By integrating long-term telehealth services, you will be saving money and expanding access to underserved communities, a true win-win.

Balancing Act

There are four common balance sheet (statement of financial position) mistakes we’d like to help your organization avoid:

  • Omitting transactions
  • Recording transactions incorrectly
  • Not classifying data correctly
  • Forgetting to record inventory changes

The best way to avoid these errors is to check your balance sheet frequently (not just when you need to), and keep your financial documents organized. Compare the current reporting period with previous ones. Calculating financial ratios and trends can help you identify lurking financial pitfalls. Ask your team a few questions to gain a more transparent understanding of your financial makeup. Do you have more assets? Have you accrued more debt or invested in new equipment and facilities? Are your financial obligations (current liabilities) under control? Is the amount that payers owe you growing?

Without additional funding and significant transformation, the healthcare industry is likely to experience rapidly eroding liquidity in the coming months. On our road back to normal, organizations need to make drastic structural and operational changes. Now is the time to revisit cost-saving ideas your team may have previously considered but not set in motion. Acting now will improve short-term liquidity and pave the way for a more sustainable operation in the years to come.

Additional Sources:

Healthcare Financial Management Association

ToneyKorf

The Invisible Healthcare Threat You Didn’t Know About

Ransomware Attack

As an industry, we have been consumed and devastated by the ongoing impact of the COVID-19 pandemic.

For months, oversaturated healthcare systems were pushed to their breaking points, in dire need of personal protective equipment (PPE). Still, some smaller buyers report struggling to maintain ample supply as we face a surge in cases. But as we battle one threat, another is silently lurking. If ransomware attacks aren’t on your radar, you need to consider the massive toll these cyber threats can take on your system’s financial health and reputation.

Did you know that just a few weeks ago, New York-based St. Lawrence Health System’s computer network was shut down after a ransomware attack?

The three-hospital health system with locations in Canton-Potsdam, Massena and Gouverneur discovered a new variant of Ryuk ransomware within hours of the initial attack and acted quickly to disconnect its IT systems. If you’re not already familiar, ransomware is malware that locks up a system’s computers and data until a ransom is paid. The New York Health Department acknowledged the attack and has been in communication with the health system. Late last month, Sky Lakes Medical Center in Klamath Falls, Oregon was also hit. Both providers maintain there’s no evidence patient information was compromised, but troubling data suggests this trend is a growing threat that isn’t going away. In 2020 alone, a total of 59 U.S. health care providers or systems have been impacted by ransomware, disrupting patient care at up to 510 facilities, according to Brett Callow, an analyst at the cybersecurity firm Emsisoft. In a joint alert, the FBI and two federal agencies said they had credible information of “an increased and imminent cybercrime threat” to U.S. health care providers. The alert said malicious groups are targeting the sector with attacks aiming for “data theft and disruption of healthcare services.”

The reality is, our healthcare systems have more data than ever before, but providing protection for that data is often an afterthought.

Internet-enabled medical devices are fantastic tools to increase speed and efficiency but many are poorly secured and come with additional risks. As patient records become more digitized and people depend on telehealth services, healthcare providers need to protect sensitive data. On average, the cost to recover from these attacks – without paying the ransom – totals more than $732,520 in the US, which includes business downtime, lost data, operational costs, device costs, and other expenses. But when the organizations paid, the recovery costs nearly doubled to $1.4 million. So you can’t afford to just hope it doesn’t happen to you. What steps can your team take now to proactively protect your system? Kevin Coleman, executive director of the National Cyber Security Alliance recently suggested implementing the following best practices:

  • effective security policies
  • training road maps for IT teams
  • integration of proactive cybersecurity education

“It’s essential for facilities to regularly create backups of critical systems and files, and to house those offline from the network. Healthcare and public health facilities should also be vigilant about upgrading and updating their legacy hardware and software; ensuring that all connected devices and applications have multi-factor authentication enabled; and that employees know how to identify and avoid malicious email links and attachments,” said Coleman. We understand for an industry already under immense pressure, adding this concern to your plate may trigger more stress. As always, if you have specific questions about strengthening your organization, please reach out to a dedicated RBT team member to schedule a consultation.