Earlier this year, Kaufman Hall released a study that surveyed over 350 CFOs and senior finance executives from hospitals, healthcare systems, and other healthcare organizations.
Using these surveys, Kaufman Hall identified three areas of concern among hospital and healthcare CFOs. Each of these concerns reflects the changing regulatory and financial environment faced by healthcare systems, but each can be managed with some forethought and strategic planning.
1. Identify Cost Reduction Initiatives. When asked to select the single most important performance management activity for their organization, nearly one-third of CFOs selected identifying and managing cost reduction initiatives, yet an astounding 70% admit they do not have any effective cost measurement tools in place. Achieving savings requires initiating measurement, so implementing system-wide tracking is an important first step. A quick solution for really jump-starting cost reduction initiatives is to hire an external consulting firm. These groups tend to only charge a percentage of savings as a fee, so you can begin reaping the savings immediately, without budgeting in any additional costs.
2. Improve Financial Planning. A key job of the CFO is to plan for an institution’s financial future, and many feel as though there are abundant opportunities for improvement within their financial planning processes. However, the process is often siloed into the role of the finance team, and a lack of transparency can result in lack of accountability throughout the system. One easy way to create clarity is to distribute targets across the organization, so that each department knows both their own goals and that of the larger system. Involving additional people in the financial planning process allows for more opportunities to identify potential weaknesses, and can assist in achieving financial goals long-term.
3. Create Adaptive Budget Processes. The budget process is often slow and time-consuming; nearly 70% of CFOs surveyed say their process takes more than three months from initial rollout to board presentation. In the fast-paced environment of healthcare, that means many of these budgets are outdated by the time they are complete. To stay on top of changes and create a better budget, some systems are turning to rolling forecasts. These forecasts allow for real-time updates of your organization’s actual operating budget, and can help prevent end of year budget gaps and crises. Understanding your operating budget in real time can also allow for value-added analysis, an important step that is currently being skipped by nearly 50% of CFOs and healthcare organizations. Thinking of budgeting as a constantly changing process, rather than a static timeline, can help your organization become more agile.
About the author:
George Malik, the CEO of Quality First Solutions, has been in the healthcare industry for the past 30 years and has saved millions for hospitals nationwide.
The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.