The increasing frequency of disruptive events like the Change Healthcare cyberattack means that "enhancing preparations is more important than ever," according to an April 2 report from Kaufman Hall.
Kaufman Hall said that if the hospitals that were most affected by the incident "sized the potential impact of a cyberattack and set aside cash reserves in their investment portfolio to protect against just such an incident, the impact would be more manageable."
"These preparations will not only ensure adequate liquidity in a crisis, but we contend they will also be well received by the rating agencies as a sophisticated step in managing financial risk," Kaufman Hall said in the report.
Kaufman Hall recommends hospital finance leaders consider strategic resource allocation — a systematic approach to allocating reserves to areas of risk within the organization.
Risk identification requires participation from key executives with the goal of whittling the list down to the top 10 to 15 risks, according to the report. After the risks are identified, the next task is to quantify the potential dollar impact of those risks in a "structured and collaborative way." This helps position the balance sheet to prepare for both macro risks and risks unique to each situation.
The report said another proactive step is to create a board-approved "liquidity preparedness plan" that can be used to designate sources of cash in crisis situations.
Read the full report here.