Revenue Cycle Management, AI Take Center Stage in 2024
As CFOs expect profitability increases, revenue cycle management and tech investments become top priorities.
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By - Healthcare CFOs are optimistic about the financial outlook this year as their organizations put revenue cycle management, dealmaking, and technology investments on the top of their priority lists.
The “2024 Healthcare CFO Outlook Survey” conducted by BDO surveyed 100 CFOs from organizations with revenues between $250 million to $3 billion at the end of last year. The recently released results showed that 79 percent expect a revenue increase this year. CFOs also cited profitability as an area of improvement, with 78 percent expecting the metric to increase.
BDO said the healthcare financial leaders may have some misplaced optimism about 2024’s financial outlook. Regulatory pressures, clawbacks of COVID-19 funding, and challenging bond and loan covenant agreements may make it difficult for healthcare organizations to achieve higher revenue and profitability in 2024, according to the survey.
About 11 percent of CFOs said their organizations have violated their bond and/or loan covenants in the past year and are concerned they will violate them again. Meanwhile, 30 percent said their organizations had not violated any covenants but are concerned they will over the next year.
Additionally, the survey found that only 35 percent of healthcare organizations represented had more than 60 days cash on hand. Forty-four percent of CFOs said they have to have more strategic conversations around economic resilience.
The survey indicated a shift in strategy this year. About 39 percent of CFOs said they are adjusting revenue cycle management to improve liquidity, while 37 percent are engaging in strategic cost reductions, including staff. Approximately a third (34 percent) said they are transforming operating models.
“The healthcare industry is still in recovery mode in many ways, and CFOs are revisiting strategy and investment in a proactive approach to support resiliency in their operations,” Brad Boyd, national co-leader of the BDO Center for Healthcare Excellence & Innovation, said in the survey. “Their clear focus on cash flow, cost optimization, and risk management will be critical to prevent disruption of care to their patient communities.”
Optimizing revenue cycles through roles and workflows, denials and post-payment audits, and AI and robotic process automation will also increase efficiency, according to the survey.
New advancements in AI, such as generative AI, have healthcare finance leaders excited. Nearly half of CFOs surveyed this year (47 percent) expect to increase technology implementation spending this year. Almost all (98 percent) also said they are piloting generative AI, while 46 percent are building a proprietary generative AI platform.
These technology investments are focused on front- and back-office improvements, the survey said. Forty-five percent of respondents reported increasing digital investments in patient-provider communications, and 44 percent said greater investments are going to remote patient care. Use cases for generative AI included treatment plan generation, clinician-to-patient communications, and diagnostics and medical imaging.
Other technology investments are focusing on predictive staffing, financial reporting software, and enterprise data analytics.
Finally, almost three-quarters of CFOs have dealmaking on their to-do lists in 2024. However, navigating due diligence (cited by 23 percent of healthcare CFOs), finding the right target or buyer (20 percent), and valuation gaps (18 percent) were the top challenges facing healthcare finance leaders this year.
