Finance and Budgeting Challenges In The Evolving Healthcare Organization

Hospital leadership face multiple factors as they try to balance shifting dynamics within today’s evolving environment.

Everybody involved in healthcare, from frontline nursing staff to hospital executives and healthcare consulting providers, recognizes that change is the one constant factor in the industry.

Challenges facing hospital leadership

Hospital leadership faces multiple factors as they try to balance shifting dynamics within today’s evolving environment. Financial sustainability for every hospital incorporates a variety of trends, requirements, and challenges.

These include:

  • Quality, including patient safety, hospital acquired conditions and medication errors.
  • Regulatory and compliance requirements.
  • Reimbursement, new payment models and readmission penalties.
  • Mergers, acquisitions, market competition (including other hospitals and health systems, and entities such as Amazon, Apple, retail based companies such as CVS, and urgent care centers).
  • Capital improvements, innovation and new lines of business.
  • External partnerships and population health initiatives using Social Determinants of Health to identify, prevent and control chronic conditions.
  • Patient empowerment: This includes patient satisfaction, the consumerism, price transparency and patient access.
  • Revenue cycle improvements, such as coding, billing, and patient communication.
  • Supply chain transformation includes purchased services cost containment, prescription drug costs and shortages,and cost saving strategies for high cost medical devices and implants (PPIs).
  • Labor shortages and costs.
  • Physician and clinical staff productivity, including burnout.

IT challenges and future trends.

  • New ONC strategy to reduce IT challenges for patients and providers. The goal is to reduce reporting burdens, strengthen interoperability and enhance the patient experience. [1]
  • Cybersecurity, physical security and disaster preparedness.
  • New technologies and care delivery models include telehealth, wearable technology, home-based medicine, and a trend towards outpatient surgeries.
  • EHR upgrades, evidence based clinical decision support systems.

Looking at these factors, the task can appear overwhelming, and it often is.
There are multiple stakeholders, both internal and external. Coupled with the complexity of government oversight, accrediting bodies, private payers and the move toward consumerism, every hospital must plan, strategize and continually monitor budgets, costs, and revenue streams.

Creating a “patient centered vision”

This changing healthcare landscape requires a dedication to a “patient centered vision” by your hospital.
Historically, a healthy system is broadly divided into clinical and financial divisions. That model has evolved with the shift to value based reimbursement. Leaders from these respective functions are beginning to collaborate as they strive to provide high quality patient care.
Both understand that interdepartmental communication and transparency are crucial to success.
The insight of CFOs is essential in the development of strategic plans. As they take the lead in creating budgets, they simultaneously share the hospital’s vision and ensure that budgets are developed based on that organizational plan.
Current trends in budget preparation include a focus on operational performance with positive operating margins and a return on investment.
In this scenario:

  • Each department’s budget becomes a cog in the wheel and is crucial to the success of the entire healthcare entity.
  • The organization needs to create and share data-driven enterprise reports. This step enables departmental leaders to review the budget or change direction monthly.
  • An annual review of results is no longer a viable option.

The need for leadership in healthcare

Healthcare thought leaders of 2022 must be forward-thinking, strategic, data-driven, patient-centered, adaptable, future-focused, open to change, flexible, an active listeners, team leaders, teacher and coaches.

“As the healthcare industry acclimates to disruption, major health systems are turning to their CFOs for crucial guidance.” [2]

“The modern CFO is a cross-functional leader involved with everything from strategy to customer acquisition.” [3]

Where do you begin to address the many challenges within the organization and each department and ensure financial stability? You start with great leadership.

As the health system leadership creates the strategic plan, hospital CFOs lead the way for department heads to become partners down the road to change.
Department leaders must exhibit leadership qualities and embrace their role in the patient-centered vision.

Collaborating with the CFO, finance and clinical departmental leaders can begin with the following steps:

Step 1 — Dedication to routine open communication: utilizing the “huddle concept” by meeting regularly to share successes and clarify issues through virtual or in-person meetings. In follow-up, department leaders can huddle with their team to continue the transparency focus throughout the organization.

Step 2 — Data driven: Is your data being effectively used? CFOs must strive to share monthly departmental data reports with their department leaders. Accurate, actionable data should include target volumes, costs, and current revenue (and highlight any reimbursement issues).

Step 3 — Ongoing reviews: Encourage department leaders to review the original plan, current data points and any variances on a monthly basis. Utilize new budgeting and forecasting concepts to adjust priorities based on results.

Step 4 — Develop standard budget processes: These should be created throughout the enterprise and provide continuing education for department leaders. The importance of understanding trends with department specialties must be emphasized. In order to remain current, participation must be encouraged.

Step 5 — Utilize evidence-based process improvement strategies: Engage clinical leaders to provide staff training.

Step 6 — Celebrate successes: Share insights and educate throughout the year.

Step 7 — Stay focused: Productivity requirements, multiple distractions, and increased responsibilities are always issues for leaders as they embark on change. Keep the goal at the forefront, ensure communication channels remain open, and continually regroup to review processes and find more efficient ways to stay on task with budget improvements.

Challenges in the healthcare arena, while they may evolve, will not disappear.
Teamwork, transparency, and a shared vision are the only strategies that will help your organization successfully provide exceptional care for your patients for the best value while maintaining the financial health of your organization.

PATIENT ADVISORY

Medika Life has provided this material for your information. It is not intended to substitute for the medical expertise and advice of your health care provider(s). We encourage you to discuss any decisions about treatment or care with your health care provider. The mention of any product, service, or therapy is not an endorsement by Medika Life

The article lives here: Healthcare Policy and OpinionFinance and Budgeting Challenges In The Evolving Healthcare Organization
Lisa Millerhttps://viehealthcare.com/
Lisa Miller launched VIE Healthcare Consulting in 1999 to provide leading-edge financial and operational consulting for hospitals, healthcare institutions, and all providers of patient care. She has become a recognized leader in healthcare operational performance improvement, and with her team has generated more than $776 Million in financial improvements for VIE Healthcare’s clients. Lisa is a trusted advisor to hospital leaders on operational strategies within margin improvement, process improvements, technology/telehealth, the patient experience, and growth opportunities. She is committed to empowering hospital leaders to achieve their boldest vision and has created the healthcare sector’s only cost savings strategy. Currently, she hosts The Healthcare Leadership Experience — the radio show empowers healthcare leaders to optimize their careers and healthcare organizations.
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