As the pandemic began to distrupt the normal financial flow of the healthcare industry, Blue Shield of California was uniquely positioned to not only pay its bills but provide assistance to providers, said Emily Glidden, a senior director in finance analytics.
In a wide-ranging interview with Euromoney she described the nonprofit, taxpaying insurer's efforts to keep its books in order and about it's quickly assembled effort to build a financial backstop for struggling practices in its network.
When Emily Glidden realised the coronavirus pandemic was about to unleash severe disruption on the staff, counterparties and clients of Blue Shield of California, where she is senior director, treasury, one of her first thoughts was to ensure that the non-profit health insurer could secure enough liquidity to cover it for what might be coming. No problem, she thought, the company had a big investment portfolio of safe, liquid fixed income securities. But this was March, when people were selling whatever would sell. She was in for a surprise. “In a bad crunch, it might take a bit longer than normal and the bid-ask might be a bit wider,” she tells Euromoney. “But – wow! – you don’t think to yourself that you may have to give someone two weeks to sell triple-A paper at a decent price.” When it came to preparation for the crisis, Blue Shield of California was in many ways ahead of the game – partly because of where it is based. The Six Counties in the Bay Area of San Francisco are widely recognised as having been early movers on shelter-in-place policies in the US.
Here's how Glidden described the support program for providers:
What it came up with was a programme of advances against healthcare claims payments. “If a provider was doing $10 million of business with us over the course of a year, we could advance them up to $5 million of that now,” says Glidden. To do this, Blue Shield needed the money itself. “We have a working capital line for our daily needs, but with this situation we weren’t really sure what we would need, and we didn’t know how the environment was going to impact our own financials,” says Glidden.
Blue Shield’s existing $50 million line was with Bank of America, and the bank was able to provide another $50 million to support the programme. It’s a good example of the kind of responsiveness that Glidden likes about the bank. She has been with Blue Shield for about 13 years, but the company’s relationship with BofA predates that by nearly another 20 on the cash management side, a little less on the credit side.
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