Healthcare Consumerism Top Risk Management Priority of CFOs

May 02, 2019 - Health system and health plan CFOs see healthcare consumerism as one of their top organizational risk management priorities, according to a recent survey conducted by the Deloitte Center for Health Solutions.

Fifty-eight percent of CFOs participating in the survey said consumer engagement is their top risk priority today, followed by cybersecurity (55 percent), transitioning to value-based care (55 percent), and technology and digital business transformation (53 percent).

Consumer engagement is also slated to remain a top risk management priority, too. Sixty-nine percent of healthcare CFOs say consumer engagement will be a major organizational risk management area in the next three years.

However, financial executives expect technology and digital business transformation to become a greater organizational risk priority in the next three years. The risk management area outranked consumer engagement with 79 percent of respondents.

Big data analytics also pushed its way to the top of future organizational risk management priorities. Fifty-four percent of respondents rated data analytics as a top risk in three years versus 30 percent today.

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Healthcare consumerism is sweeping the industry. Patient financial responsibility for healthcare rose 11 percent according to data from TransUnion Healthcare, and nearly three-quarters of providers see an increase in patient costs, InstaMed reports.

Higher out-of-pocket costs are prompting patients to act more like consumers. And failing to address the healthcare consumerism trend through consumer engagement is impacting a provider’s ability to collect revenue. In fact, a Crowe analysis shows that the likelihood of collecting full payments from patients decreases as the amount in out-of-pocket spending increases.

Technology and digital business transformation, as well as big data analytics, oftentimes go hand-in-hand with consumer engagement, experts from the Deloitte Center for Health Solutions explain.

“Both these areas are also connected to broader strategies and investments that healthcare organizations are making to become more efficient, engage consumers, stay competitive, and, most importantly, remain relevant in their markets,” they write in the report.

“The ability to better engage consumers, improve cost and quality of care, and transform their businesses, all depend on the ability to leverage technologies, digital solutions, and data-driven insights. But these investments also carry cyber, regulatory, quality, safety, and other strategic risks that organizations should prepare for.”

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Unfortunately, CFOs are not confident their health systems or plans are ready to mitigate the risks associated with consumer engagement. Fifty-eight percent of CFOs said their organization is either moderately or not prepared for consumer engagement.

Most CFOs also reported not being fully prepared for technology or digital business transformation (58 percent), transitioning to value-based care (58 percent), and cybersecurity (65 percent).

Thinly staffed departments and a focus on crisis management have CFOs not looking beyond the immediate steps they need to take to prepare for organizational risks like consumer engagement, the respondents elaborated.

While 73 percent of CFOs have identified staff to address risks, only about 63 percent have invested in supporting technologies to prepare for risks and 58 percent have conducted training, the survey finds.

CFOs also had trouble with allocation of resources based on historical risk experiences (48 percent), more important organizational priorities (38 percent), and lack of information or awareness (30 percent).

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The findings indicate that a new approach to organizational risk management is needed to help CFOs prepare, the industry experts say.

“In the past, prevention and limiting access was the primary method of mitigating risks, particularly with technologies such as personal devices or patient records. But, the scope and type of challenges have changed with technological advances. At the same time, regulatory and consumer expectations about access to information are significantly different today. These market pressures and strategies likely require a new approach to enabling access while mitigating risk,” they write.

Health systems and plans need to take a risk approach with emerging technologies to elevate their organizational risk management strategy.

“As emerging technologies become more pervasive at organizations, they should be accompanied by a risk approach that builds technical capacity while effectively managing today’s top-of-mind risks,” the report states. “Technology is changing and maturing exponentially; to start behind the curve today will only make it more difficult to catch up later.”

“By taking the time now to consider how to thoughtfully deploy new technologies, organizations can prepare for today’s risks and those of the future. Waiting to do this can result in greater, more complicated risks as organizations will have already started to invest in and use these new technologies.”

CFOs and other risk management leaders should also consider establishing an inventory of technologies, models, and algorithms being used, creating a governance framework to identify opportunities to implement innovative technologies, and evaluating the skills and capabilities of staff in risk functions, the experts advise.