Hospital CFOs aren’t ready for new business models
That’s a red flag, especially since providers expect their share of patients enrolled in VBC arrangements to double from 23% in 2018 to 46% in 2021. Moreover, CEOs have pegged financial challenges as the most pressing concern facing their organization by far, indicating healthcare CFOs are likely under close scrutiny.
Hospital CFOs’ pessimistic outlook on their ability to weather the business impacts of an evolving industry is underpinned by a couple of shortcomings:
- CFOs are struggling to translate data into strategic decisions. Nearly all (96%) finance execs say their organizations should be doing more to leverage data to inform strategic decisions. The inability to synthesize healthcare data into actionable outcomes may be in part due to the siloed, disparate nature of providers data: The average health system has 18 different electronic health record (EHR) vendors across its affiliated providers, for example.
- And CFOs are facing resource constraints while taking on more responsibility.Most CFOs are tracking a broader set of hospital performance goals, ranging from financial health, to patient experience, to employee growth and retention. But at the same time, the majority (70%) of CFOs are dealing with limited budgets — up from 66% in 2018 — putting CFOs in a tough spot.
In order to stay afloat financially, CFOs are focusing their improvement efforts on operating expenses and service profitability:
- Cost management and efficiency are CFOs’ top improvement priorities. Sixty-four percent of CFOs say their organizations are looking to improve cost management and efficiency. And reducing operational costs is a common theme across hospital execs’ wish lists: Hospital CEOs also cited an uptick in labor and supply costs as a top concern.
- And finance execs are assessing the profitability of different healthcare services.Forty-three percent of CFOs cited service line analytics as a priority for improvement, likely because fundamental shifts in where patients seek care — like drops in inpatient admissions and spikes in retail and urgent care clinic visits — means many of providers’ past revenue drivers may no longer offer financial stability.