With every day we move further away from the crisis end of the COVID-19 experience. There is still tremendous uncertainty and we are a long way from “normalization,” but it is increasingly possible and important for organizations to anticipate stabilization. Emerging best practices include using high-level rolling forecasting and scenario modeling around volume re-emergence to test potential outcomes ranging from financial performance to covenant compliance.

Equally important is the idea of best practice in balance sheet deployment. Healthcare balance sheets do not exist in isolation; rather, they are the anchor in a complex business model that creates and sustains the clinical infrastructure we all rely on in moments of need. Cash sizing, external financing, invested asset deployment, and risk mitigation will be critical parts of every healthcare organization’s recovery initiatives.

We believe that COVID-19 vindicates our long-term advocacy of frameworks that create a clear and purposeful connection between operations and balance sheet within the context of known and unknown risks. 

Our framework is “strategic resource allocation,” but however you choose to do it or whatever you choose to call it, the days of siloed planning and management between operations, strategy, and balance sheet have to be replaced by relentless integration. 

It is imperative that healthcare leaders assess their financial resources against their unique risk position and then make sure that everything is deployed in ways that protect and advance the clinical core. This is true for every healthcare organization regardless of size, scale, or complexity and doing this well will be a major differentiator in post-COVID positioning and performance.

See our COVID-19 Treasury Road Map to the Now, Near, and Far for an at-a-glance view of key issues in making the transition from crisis to transition to normalization.
 

Reach Eric Jordahl through email or by calling (224) 724-3134.

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Eric Jordahl

Managing Director
Eric Jordahl directs Kaufman Hall’s Treasury and Capital Markets practice and focuses on helping healthcare organizations nationwide by providing Treasury-related transactional, strategic, and management support across all financial assets and liabilities.
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