- Fewer hospital CFOs are prepared to manage the financial impact of evolving business conditions, such as value-based reimbursement and care delivery models, a new survey finds.
Consulting firm Kaufman Hall recently surveyed CFOs and other senior finance executives from more than 160 hospitals, health systems, and other healthcare organizations about their role and progress with performance management goals and challenges.
The survey uncovered some troublesome news. For example, only 13 percent of organizations are very prepared to handle evolving payment and care delivery models with their current financial planning and processing tools. That percentage is down from 15 percent the previous year.
Additionally, only 23 percent of hospital CFOs are very confident in their organization’s ability to quickly and easily make adjustments to strategies and plans. This percentage is also down compared to last year, falling from 25 percent.
“These data represent red flags that should be of serious concern to healthcare organizations,” the consulting firm stated in the report. “Senior finance executives must understand what is occurring as business circumstances change, as well as how such change affects their organizations’ business strategy. Armed with this information through performance management processes and tools, they then can more appropriately make course corrections for achievement of strategic objectives.”
But hospital CFOs and other senior finance executives are not armed with the necessary data and analytics tools to understand how new business conditions, like value-based reimbursement, will impact the hospital’s organizational strategies.
In fact, 96 percent of respondents said their organizations should be doing more to leverage financial and operational data to inform strategic decisions.
Another 94 percent also reported increasing pressure to have greater insight into how financial results impact business strategy.
Hospital CFOs want more data from across the organization to see into more than just the financial health of an organization. Value-based reimbursement and other evolving business conditions are pushing finance leaders to realign their operations and look beyond just the financial data to succeed.
The majority of hospital CFOs still manage financial health (86 percent of respondents), but an almost equal number (80 percent) also manage other dimensions of organizational performance that align with value-based reimbursement arrangements. The other dimensions include patient experience, care quality, and clinical outcomes.
Providers must improve their performance across most of these organizational performance dimensions to succeed in value-based reimbursement contracts. That means finance leaders must be monitoring more than the traditional metrics, like financial health, operational efficiency, and strategic growth.
“A comprehensive view of performance requires the integration of relevant data from disparate sources and the identification of a manageable number of metrics to track for each initiative within and across dimensions,” the report stated. “Leadership teams should consider having all required information reside in one system accessed by all managers and leaders. This will build commitment to sustainable progress monitoring, which will contribute to achievement of improvement plans.”
Data analytics tools are key to handling an evolving healthcare business environment. However, hospital CFOs are left wanting at their organizations.
The survey found that over 60 percent of respondents want to create better dashboards and visualizations, as well as the ability to pull data from multiple sources into a single report.
Another 50 to 59 percent of participants reported limited access to clean, consistent, and trusted data. These leaders also want to ability to drill into reports to understand underlying details.
Lack of access to clean data is a significant barrier to data analytics adoption. Without trustworthy data, finance leaders cannot trust the information that should be used to inform business decisions and strategies.
The limited access is prompting most hospital CFOs to rely on spreadsheets for strategic, financial, and tactical planning decisions, the survey showed. Twelve percent of respondents admit to using spreadsheets as their primary budgeting system and almost three-quarters of respondents (74 percent) use spreadsheets to supplement their core systems.
Additionally, the survey found only seven percent of finance leaders are very satisfied with their performance management reporting.
“Given the demands of the changing business environment, healthcare CFOs nationwide should be critically examining the role they and their finance teams play in their organizations. A singular focus on directing or managing financial operations and the related control/monitoring function is not sufficient going forward,” the report concluded. “Finance executives must be integral to the development, execution, and monitoring of the organization’s vision and strategy, and be armed with the full breadth of data and analytics required for performance management in healthcare.”