Cyber Siege: The Financial Vulnerability Healthcare Didn't See Coming

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The Change Healthcare cyberattack underscored vulnerabilities beyond cybersecurity. The very lifeline of the industry, namely the processing of claims for payment, ground to a halt. At Strategic Office Support, we mobilized immediately to help our clients any way we could by keying in claims and cross training team members.

The reliance on one major clearinghouse created a single point of failure, resulting in an almost immediate cessation of claims processing, cash flow, and payment deposits. Though workarounds and solutions ensued, the industry is still reeling from the aftermath.

Most DME companies do not have the working capital or cash on hand to sustain a prolonged cessation of deposits. To weather unexpected situations, especially in a low margin industry, you must “bulletproof” your business. That means having financial statements every month and having minimum three to six months of cash reserves on hand.

We all believe that cash will always roll in as planned. This belief can cost you and your employees their livelihood. We recommend the industry take steps to bullet-proof their business, so that providers can continue to give the best patient care and support employees and their families.

If you do not have three to six months of cash reserves or access to lines of credit, your number one objective is to accumulate six months of operating cash. Then, go to your local bank or financial institution and request a line of credit equal to the cash you have on hand. That credit line will cost you a small percentage per year, however you look at that as an insurance policy. If anything were to happen, even if you need extra working capital to fund business growth, you can utilize the already established line of credit. It’s easier to get money when you have money. This is the keystone of your bulletproof business strategy.

You may be asking yourself, how do I accumulate this amount of cash? That requires monthly financial statements, which is another non-negotiable bulletproof business strategy. You must have a bookkeeper or accountant that create financial statements by the 15^th of the month, every month. The financial statements allow you to find the margin in your business. You can determine what is producing margin and what is costing you. Then, with that knowledge, you can rectify it, maximize profitability, and thus build your cash reserves.

In this industry, we must optimize. We must do everything we can to operate the business properly. We’ve been short-staffed for too long, budget constrained too long, and that has put following best business practices on the back burner.

At Strategic Office Support, we work with clients to optimize their workflow and employee utilization. This in turn increases cash on hand. You need a partner who will mobilize with you. You need a team that is in it with you. You need a partner that can move at your speed when you need them.

Click here or call (737) 225-1331 to meet with Steve Cela and his team to discuss strategies. Take the first step towards bulletproofing your business, today!