The banking crisis in March and April this year forced many healthcare companies to make fast decisions to protect their finances. Here’s how to prevent a meltdown in the future.

One of my favorite football players, Peyton Manning, said in an interview recently that he was able to perform well as a tv and commercial actor because he’s “pretty coachable” and if he messed up, he had a chance to try again. As a quarterback, he didn’t have the luxury of a second take, so acting likely feels significantly less high stakes. I had the honor of meeting and interviewing him earlier this year for an industry event, and I can share that this is true – we had a few bloopers together.

How often as leaders are we wishing we had second takes? Big problems present themselves, and we must act quickly with the information we have at hand, and we make mistakes. Sometimes, big ones. But often, we’ve had information and failed to act upon it before an inevitable crisis boils over. Life and work inherently involve acts of triage. We may just say, “it’s fine for now” and move to the next thing.

Last spring’s banking crisis made clear the need for organizations to have the ability to pivot quickly when a financial crisis arises, and the volatility of various markets is only continuing to pressure companies to be nimbler than ever before. The solvency of payments from many healthcare payers to care providers literally halted overnight and had to be adjusted for at incredible speed to keep the industry’s cash flow in place. A shift in the financial landscape might leave one’s business only temporarily exposed but, non-financial risk (such damage to client trust and loyalty) can contribute to the largest degradation of a business over time.

Getting ahead of unforeseen problems is a big aspect of organizational leaders; we must continually evaluate risk and get ahead of potential pitfalls, so we’re prepared when the next financial crisis hits, the labor market turns, or an event of a larger or localized scale rears its head.

Consider the Cost of Crisis

The short- and long-term effects of a financial crisis for healthcare payers are equal in magnitude. In the short term, increased costs and the strain to meet obligations can cause significant stress not only on the balance sheet but on our teams. There could be delayed payments to providers, causing more friction in an already delicate balance.

I’m happy to report that when Silicon Valley Bank and Signature Bank New York collapsed in March and First Republic Bank followed in April, Zelis clients were able to seamlessly address payments, banking information and communications issues associated with the affected banks. Not only was this a cost-saver from an efficiency standpoint but I’ll let you assign the value in the fact that our clients’ members and providers did not experience inconvenience or holdups.

Long-term effects are broader: changes to market dynamics or, as we are aware, shifting models of healthcare. Downstream of a banking collapse, healthcare as every other industry, would see disruption in research and innovation in care, as well as the ability to adopt new technologies—particularly in areas that have taken so long to change in the first place, even when it makes perfect business sense. Think: billing and payment models. With Transparency regs and other consumer-focused legislation, we’re on the brink of widespread adoption of seamless digital payments that offer accessibility and affordability to our industry. But one more crisis could set us back decades.

There is research that supports the idea that during an economic crisis, innovation proceeds by leaps. But I don’t know any CEO who wants to take the chance on a major financial crisis being the catalyst for their company’s advancement.

We Must Protect This House —Together

When we think about prepping for a potential crisis, particularly in healthcare, it’s helpful to consider the risks that would not only create capital deficiency but drastically alter operations. Which risks might change your ability to reposition resources to meet your mission?

It becomes clear that economic crisis mitigation must be collaborative. If we begin and end our plans by considering only risks to our own balance sheet or think we will be able to solve problems alone, we will fail. Take the case of fraud within our industry: cybersecurity attacks and data breaches are now commonplace for both companies directly related to care and to third-party vendors that support them. The value of the data we have the privilege of accessing puts everyone at risk. That shared responsibility is the reason we have a layered approach to security, eliciting insights from a team of professionals in the industry so we stay ahead of issues, building the necessary measures on the backend of our products and providing our associates with comprehensive security trainings.

I share my perspectives on this because I know that our clients’ reputations (as well as our own) are the most precious jewel a business can have, and I’m passionate about protecting that. Going into what promises to be another volatile year, with elections on the horizon, with the Israel-Hamas and Russia/Ukraine wars waging, and inflation continuing to climb, we need to be adaptive and collaborative partners. The banking crises have been a major learning for us and our clients on ingenuity and adaptability, even when the economy throws an interception.

Until next time, stay well.