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Can U.S. Healthcare Entities Cope with Budget Constraints, Coronavirus and a Rapidly Changing Regulatory Environment?

As America’s healthcare organizations brace themselves for the full impact of the coronavirus pandemic, SAI Global’s U.S. Healthcare expert Marcy Utley discusses findings of the 11th Annual Healthcare Compliance Benchmark Report and the further impact of unprecedented disruption.

2019 was another tough year in the healthcare compliance sector, but not unexpected. This year may be just as challenging because the healthcare industry is fraught with risk.  Additionally, almost overnight the coronavirus (COVID-19) pandemic increased the amount of regulatory reviews and guidance needed from the compliance department for all areas of the organization. New technologies, laws, increased enforcement activity as well as potential regulatory waivers only add to the complexities and challenges that compliance professionals face.

To minimize the adverse effects of these trends and maximize their organization’s responsiveness to an evolving business environment, healthcare compliance teams need to make sure they have the tools, resources, internal support and systems in place to handle whatever comes next.

However, by delving deep into the real-world compliance experiences of healthcare organizations like yours, in our 2020 Healthcare Compliance Benchmark survey we uncovered some interesting findings, many of which highlight a disconnect between the day to day needs of the compliance function and the reality.

We all know that healthcare regulatory compliance is complex and costly. Providers are spending over $38 billion per year on regulatory compliance issues – for some hospitals, the regulatory burden increases by a staggering $1,200 whenever they admit a new patient.

However, that doesn’t mean there aren’t ways to decrease the burden for your hospital or healthcare organization. The 2020 Healthcare Compliance Benchmark survey produced several valuable data points to help healthcare providers take a smarter approach to how they handle their day-to-day operations and compliance concerns, but I want to focus on three takeaways that I found particularly interesting.


#1: Compliance health needs upfront investment

Healthcare organizations face a challenging, competitive health landscape. Pricing pressures, payment models, expanding demand for healthcare access, and emerging digital and analytic capabilities are shifting power dynamics within the value chain; increasing demand for services and changing consumer expectations. The result: a new health ecosystem is emerging.

To succeed in this new ecosystem, organizations must adopt a new mindset and broader perspective, and embrace a new dual pathway to resilience. A pathway that takes into account the changing business reality of today and the emerging opportunities of tomorrow.

But as the U.S. healthcare system seeks ever greater innovation to harness the potential presented by technology in solving many critical issues, such as the use of patient data, artificial intelligence (AI) and linked devices can have a paradigm shift, but the breathless charge for innovation should not eclipse the need for evaluating the additional pressure this is going to add to compliance teams.

Since compliance is a strategic imperative and key in protecting the organization from reputational damage, it’s surprising that healthcare entities are not investing more heavily or accelerating their spending on at a higher rate in their compliance functions. Our results tell us that only 25% of compliance professionals expect budget increases this year, as with prior years, the vast majority of healthcare compliance professionals (53.5%) are expecting their compliance team budget to remain the same.

This ongoing trend towards stagnated budgets demonstrates that resources available for compliance programs continue to be tight, despite the pressure and need to keep pace with unrelenting regulatory change, evolving regulatory expectations and additional responsibilities being added to the function.

In order to build and operate an effective compliance program, there must be adequate budgetary resources.


#2: The chain reaction of budget constraints

Our survey suggests that many healthcare companies aren’t investing enough in their compliance teams. The function is in the throes of a difficult reality, one where budget constraints and more responsibility are taking their toll.

This sober outlook is all the more striking when one considers across the board there is a growing expectation for compliance professionals to take on additional responsibilities. We found that:

  • Three-quarters (75%) of compliance offices are now responsible for HIPAA Privacy, with 31% also charged with HIPAA Security as well
  • About four in ten report responsibility for Internal Audit (42%) and Risk Management (39%)
  • One-quarter reported having accountability for Revenue Integrity, Claims Audit and Billing Compliance
  • 18% also reported responsibility for Quality Management

More worryingly, 16% reported having responsibility for Legal Counsel, which clearly runs afoul of OIG and DOJ-stated positions.

In addition, the function is struggling from staffing challenges. According to our findings, the average size compliance office staff levels among all the respondents are five. When we dug deeper into the answers it became clear that many compliance offices are operating with less than fully adequate resources to meet their obligations.

About one-third of respondents noted that one full or part-time person is working in their compliance office. This clearly shows that some healthcare organizations are significantly under-resourced and are unable to adequately meet all compliance challenges.  For these understaffed teams, I assume that some responsibilities have been outsourced to vendors in order to ensure coverage in essential areas.

Our report also outlines an impending crisis that is on the horizon for healthcare organizations, one of compliance staffing. When we asked compliance officers about how they are coping with ever-increasing expectations and pressure on their function, more than half (55%) told us they would consider opportunities or are actively seeking another position or opportunity.

That is a troublingly high percentage and organizations need to be cognizant of the scale of which losses related to skilled compliance professionals will have on their operations. It is undeniable that staff management is crucial to the future success of any company. But given the current changing picture presented by our results, it’s more important than ever for healthcare entities to retain people with the right skills to help safeguard them from potential regulatory, reputational and liability damage.


#3: Automation – the key to unlocking value across the organization

Data already plays a monumental part in the everyday delivery of healthcare. Without it, it would be like switching the electricity off in a hospital. Medical data typically flows from many different directions, with records kept as a mishmash of electronic and paper files scanned to a computer.

An average-sized community hospital devotes 4.6 full-time employees – over half of whom are clinical staff – and spends approximately $709,000 annually on the administrative aspects of quality reporting. Duplicative and misaligned reporting requirements, many of which require manual data extraction, create inefficiencies and consume significant financial resources and staff time.

By optimizing these processes using the latest tools and technologies can redesign behaviors and streamline operations through automating high-volume, low-value repetitive tasks. This helps compliance professionals increase accuracy when dealing with large quantities of data; and cutting down the administrative tasks associated with regulation. A software system allows organizations to have one source of truth and can also demonstrate adherence to requirements.

Since healthcare is a heavily regulated industry, there is a large amount of internal documentation that needs to be updated and submitted to external parties. Therefore, it’s easy to appreciate that collecting and securely distributing documentation remains a big challenge for compliance officers, according to our findings.

Compliance paperwork process is time-consuming but can be easily automated with the assistance of document management tools. However, the path for adoption is lagging. Our data confirms this as almost half of healthcare compliance professionals (47%) say that they are manually managing their documents. If organizations fail to revise or rescind policies in a timely manner this can invite problems and potential liability.

Given that administrative mistakes cost healthcare providers billions of dollars per year in lost revenue, the need for effective and easy-to-use technology is acute.


Disclaimer: SAI Global’s 2020 Healthcare Compliance Benchmark Survey was conducted before the pandemic declaration and before the COVID-19 outbreak took hold in the U.S.

Download the report.

Register here to participate in our webinar on April 7, when we will take a deeper dive into the findings from the 2020 Healthcare Compliance Benchmark Survey.

Learn more about our approaches and risk management solutions for U.S. healthcare organizations.