How our COVID-19 National Financial Impact Analysis helps contribute to financial security for hospitals
About the client
LOGEX closely collaborated with 20 volunteer hospitals on behalf of the Dutch Hospital Association (Nederlandse Vereniging van Ziekenhuizen, NVZ) to test the financial impact and potential risks of a national COVID-19 compensation agreement that aimed to provide financial security for hospitals amidst the nationwide COVID-19 outbreak.
The challenge
In July 2020, after extensive negotiations, the Dutch Hospital Association (NVZ) and the Association of Health Insurers (Zorgverzekeraars Nederland, ZN) reached a landmark agreement to guarantee financial security for hospitals amidst the national COVID-19 outbreak. To ensure sufficient capacity for COVID-19 care, hospitals deferred regular treatments, which had a significant impact on their earnings. In addition, the national agreement allowed hospitals to cover their fixed costs, aiming to provide financial stability in the healthcare system. Compensation, however, was applied through generic parameters, while the effects of COVID-19 did not equally hit hospitals. In this unprecedented situation with many unknowns, the NVZ approached LOGEX for support in conducting an in-depth financial ‘stress test using a financial P&L forecast among 20 of its member hospitals across the country.
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It was vital to test and understand the financial impact of the COVID-19 compensation scheme, its potential sensitivities or risks to make a well-informed decision on an arrangement that aims to provide financial security for the Dutch hospitals.
Jon Doe, function
The solution
Leveraging insights and experience of its Financial Analytics portfolio, LOGEX worked closely with 20 individual hospitals to develop a detailed P&L Forecast for the remainder of 2020, including the expected effects of the national agreement and various sensitivity analyses.
LOGEX’s deep knowledge of hospital financial control helped the hospitals and the NVZ develop a better understanding of the sensitivities and potential risks or opportunities of the compensation scheme to a level that otherwise would not have been possible within the highly demanding timeframe. Furthermore, partnering with LOGEX allowed the NVZ to focus more on managing the already challenging negotiations, backed by clear and quantified insights.
The impact
LOGEX’s Financial Analytics team was able to:
- Develop a detailed financial forecast in a highly challenging year
- Help analyse, identify and quantify variable elements in the hospital cost base
- Help review and standardise each hospital’s cost base for comparison with 20 hospitals
- Consolidate findings in a management report to the NVZ board with (anonymised) results from the analysis
- Invest significantly for the national interest conducting an extensive analysis for 20 hospitals and consolidating findings in a timeframe of under two months, leveraging the team’s experience as well as LOGEX’s Financial Analytics platform
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