The recent cyberattack on Change Healthcare exposed a critical vulnerability in the healthcare industry—one that extends far beyond cybersecurity. When the claims processing lifeline was abruptly severed, cash flow and payment deposits ground to a halt, sending shockwaves throughout the DME industry.
At Strategic Office Support (SOS), we immediately mobilized to support our clients, stepping in to manually key in claims and cross-train team members. While these efforts provided temporary relief, the event highlighted an undeniable truth: relying on a single clearinghouse creates a single point of failure.
A Wake-Up Call for the Industry
The Change Healthcare event demonstrated how quickly the financial stability of DME businesses can be compromised. Many companies found themselves unprepared, with insufficient cash reserves to sustain operations during a prolonged halt in cash flow. For an industry already operating on tight margins, the risks of being unprepared are monumental.
Bulletproofing Your Business
To weather emergencies like this, DME businesses must adopt strategies to safeguard their operations. At SOS, we advocate a two-pronged approach:
1. Build Cash Reserves
Every DME business should aim to have three to six months of operating cash reserves. This financial buffer provides the stability needed to maintain operations and continue delivering quality patient care during unexpected disruptions.
2. Secure a Line of Credit
Once your cash reserves are in place, work with a local bank or financial institution to secure a line of credit equal to your cash on hand. Think of this credit line as an insurance policy:
- It’s a low-cost safety net for emergencies.
- It’s easier to secure financing when you already have money in the bank.
- It provides extra working capital to fund growth opportunities.
Why It Matters
The belief that cash will always flow as planned is a dangerous assumption. Failing to prepare can jeopardize not only your business but also the livelihood of your employees and the care of your patients. Bulletproofing your finances ensures you’re ready for the unexpected.
The Role of Financial Statements
To accumulate cash reserves and manage your business effectively, monthly financial statements are non-negotiable.
Key Benefits
- Identify Margins: Financial statements help pinpoint what’s driving profitability and what’s dragging it down.
- Maximize Profitability: With clear visibility into your numbers, you can take targeted action to optimize your margins.
- Build Reserves: Use insights from your financial statements to increase cash flow and strengthen your financial foundation.
Best Practices
Ensure that your bookkeeper or accountant delivers financial statements by the 15th of each month. This consistent, timely reporting allows you to:
- Stay informed about your financial health.
- Make proactive decisions to safeguard your business.
Operational Optimization: A Necessity, Not a Luxury
The Change Healthcare event underscored the need for optimization across the board. For too long, the industry has:
- Operated short-staffed.
- Neglected best business practices due to budget constraints.
- Focused on reactive rather than proactive strategies.
At SOS, we specialize in helping DME businesses optimize their workflows and employee utilization. By streamlining operations, we help our clients:
- Increase cash flow.
- Build financial resilience.
- Focus on what matters most: patient care and business growth.
Why You Need a Partner Like SOS
When emergencies strike, you need more than just a service provider. You need a partner who:
- Mobilizes quickly to support your needs.
- Works alongside you to solve problems in real time.
- Shares your urgency and adapts to your speed.
At Strategic Office Support, we pride ourselves on being that partner. From navigating financial vulnerabilities to optimizing daily operations, we’re here to help your business thrive—no matter what challenges arise.
Conclusion
The Change Healthcare cyberattack served as a wake-up call for the healthcare industry, exposing vulnerabilities that can no longer be ignored. By building cash reserves, securing lines of credit, and optimizing operations, DME businesses can “bulletproof” themselves against future disruptions.
Don’t wait for the next crisis to act. Contact SOS today to learn how we can help you build a more resilient, efficient, and thriving business.
