During 2023, healthcare systems, hospitals, and practices made progress rebounding from the pandemic’s many disruptions. While momentum remains positive, significant headwinds persist.
Overall Observations
Provider finances are healthier, but there is considerable variability among organizations and the gulf between stronger and weaker performers may be widening.
Many trends and forces intersect and often conflict, rendering decision-making more complex, with high-stakes.
Affordability, patient financing and competitive factors are a key triad influencing the patient financial experience in 2024.
Technology investment is still a priority, especially in revenue cycle automation, artificial intelligence and cybersecurity, but many providers are constrained by their financial challenges.
Financial Update
The financial picture for many health systems, hospitals and practices has brightened somewhat in 2024. An emerging consensus views the industry as increasingly bifurcated into financially healthy and unhealthy organizations. A poll of CFOs earlier in the year indicated that only 54% were achieving positive margins while 39% were negative.[1]
Just over half of surveyed CFOs said they’re optimistic about their organization’s financial future.[2] Fitch’s mid-year assessment of not-for-profit hospitals reaffirmed a “deteriorating” outlook and unfavorable cost trends.[3] S&P Ratings questions the “sustainability of positive cash flows” and holds a negative outlook on 25% of hospitals.[4] For health insurers, Moody’s expects lower profitability from reduced Medicare Advantage reimbursement rates throughout 2025 and 2026.[5]
Generating growth and expansion
This year, 57% of C-suite executives consider revenue growth their top strategic initiative.[6] The most active expansion paths include:
Outpatient Services
Telehealth
M&A
Managing prior authorization (PA) and payment denials
The American Medical Association (AMA) surveyed 1,000 primary and specialty physicians at the end of 2023 and came away with a clear message: “The PA process continues to have a devastating effect on patient outcomes, physician burnout and employee productivity.”[7]
Finding solutions to workforce shortages
Labor challenges have abated somewhat in 2024, but shortages appear to be “structural” and are a “long-term challenge.”[8] The latest report on physicians forecasts a shortfall of 13,500 to 86,000 by 2036, assuming increased investment in graduate medical education.[9]
Turnover among skilled administrative and clinical professionals is a critical concern for 83% of surveyed financial managers who now maintain a “primary focus” on attracting and retaining talent.[10]
Patient Financial Experience Update
Despite improvements, the patient financial experience is a source of frustration for many individuals. A confluence of three forces is exerting pressure on the patient financial experience today: affordability, patient financing demand, and competition.
Affordability
46% of adults have little to no confidence that their resources will sufficiently cover their care as they age.
The average cost of healthcare for a typical individual covered by an employer health plan is $7,151 in 2024, up 6.7% from the previous year.[11]
56% of adults aged 50 and over are “very concerned” about the cost of medical care.[12]
Patient financing demand
Given that 50% of all patients owe between $1,001 and $5,000 for their care, financing programs are crucial.[13] Zero interest rate lines of credit that can be extended for longer terms have been well received by patients and generate benefits for all.
Competition
The proliferation of new retail health competitors offering affordable care has fueled the “rising consumerism” of patients by prioritizing convenience and low-friction processes.
Technology and Automation Update
Automation
Organizations see automation as a source of cost reduction, streamlined payments processing and effective management of suppliers. Most health system finance executives (87%) say they face intensified demand to upgrade their RCM systems.[14]
Digital Transformation (DT)
A host of technologies aim to “digitally transform” healthcare in ways that unleash major cost clinical and operational benefits necessary to twenty-first century success.
89% of healthcare executives call digital transformation a leading priority, but 3 in 4 consider it incompletely planned or resourced.[15]
96% of surveyed finance leaders report that DT is a major emphasis for 2025–26, but under 11% have fully implemented comprehensive solutions.[16]
50% of hospitals and health systems have formulated a comprehensive digital plan that is actively monitored by the financial team.
Cybersecurity and artificial intelligence (AI) have been prominent throughout 2024. AI is one of the most potentially transformative technologies, and 2024 has witnessed little diminution of provider enthusiasm for identifying and implementing tangible applications such as decision support, radiology interpretation, clinical documentation, analytics, and many others.
Digital Payments
ACH continues to be popular, registering 126 million healthcare transactions in the second quarter of 2024, a gain of 2.8% over the same period in 2023.[17] Same day transfers are growing rapidly, with volume up 47% year over year across industries.
Real-Time Payments. E-Money payments, including mobile wallets, will reach 28% of $2.3 trillion in global non-cash transactions by 2027.[18]Advanced technologies are powering banks’ ability to provide “real-time treasury services” facilitating swift transactions to improve “cash management, risk mitigation, and liquidity enhancement.”[19]
Buy Now, Pay Later (BNPL). Paying for purchases digitally via interest-free installments has shown appeal, and 29% of consumers have used BNPL over the past twelve months.[20]
Earned Wage Access (EWA). There is noted growth in rapid payments to employees and the market anticipates new oversight will underpin its expansion.
AI-influenced Payments. AI will embed digital payments into broader financial apps and enable “voice-activated conversational front ends.”
Blockchain as a Support Tool. Proponents say blockchain can bring privacy/security support to the payments infrastructure.
Collaboration and Trust
Research has underscored the contribution these connected values make to several healthcare initiatives:
Value-Based Care (VBC) and care coordination
VBC embodies the objective of delivering high quality, cost-effective care over time and across sites. Robust growth forecasts see 90 million lives covered by VBC models by 2027, up from 43 million in 2022.[21]
Responding to competition and disruption
The AHA advises hospitals to “emphasize the value your providers deliver consistently as a trusted health partner for the community.”[22]
Technology adoption
AI and cybersecurity are particularly dependent on user trust to attain full potential. A study on AI adoption identifies one principal challenge as lack of patient confidence in data privacy, unbiased output, and algorithm methodology.[23]
Health equity
Pinpointing disparities in health access and outcomes for different socioeconomic populations hinges on self-reported data, observes a recent study, but “systemic mistrust of the health delivery system” leads population segments to avoid sharing their information.[24]
Conclusion
The various factors at play are often intertwined and sometimes conflicting, complicating decision-making. Success still depends on balancing cost control with growth investments in solutions spanning financial management, patient financial experience, automation technology, and trusted collaboration. With healthcare poised to undergo substantial change in coming years, understanding industry dynamics and trends is essential.
For more trends and insights from CommerceHealthcare®, click here.
CommerceHealthcare® solutions are provided by Commerce Bank.
[1]. Healthcare Financial Management Association, Health System CFO Pain Points 2024 Summary, March 2024.
[2]. L. Dyrda, “Hospital CFOs Choose Optimism,” Becker’s Hospital Review, March 15, 2024.
[3]. Fitch Ratings, “2024 Mid-Year Outlook: U.S. Public Finance Compendium,” June 25, 2024.
[4]. S&P Global Ratings, “S&P Healthcare Credit Beat: Ratings Outlook 2024,” February 27, 2024.
[5]. J. Lagasse, “Medicare Advantage Profitability on Decline, Moody’s Finds,” Healthcare Finance, February 2, 2024.
[6]. Sage Growth Partners, The New Healthcare C-Suite Agenda 2024–2025, January 22, 2024.
[7]. American Medical Association, “Infographic: 2023 AMA Prior Authorization Physician Survey” June 18, 2024.
[8]. S&P Global Ratings, “S&P Healthcare Credit Beat: Ratings Outlook 2024,” February 27, 2024.
[9]. Association of American Medical Colleges, The Complexities of Physician Supply and Demand: Projections From 2021 to 2036, March 2024.
[10]. Black Book Market Research, “Black Book Unveils 2024’s Top Client-Rated Financial and RCM Solutions Leading Digital Transformation and Liquidity Management,” June 24, 2024.
[11]. Milliman, 2024 Milliman Medical Index, May 2024.
[12]. University of Michigan Institute for Healthcare Policy and Innovation, “On Their Minds: Older Adults’ Top Health-Related Concerns,” May/June 2024.
[13]. Kodiak, “Drawing The Line on Patient Responsibility Collection Rates,” February 2024.
[14]. Black Book Market Research, “Black Book Unveils 2024’s Top Client-Rated Financial and RCM Solutions Leading Digital Transformation and Liquidity Management,” June 24, 2024.
[15]. McKinsey & Company, “Digital Transformation: Health Systems’ Investment Priorities,” June 7, 2024.
[16]. Black Book Market Research, “Black Book Unveils 2024’s Top Client-Rated Financial and RCM Solutions Leading Digital Transformation and Liquidity Management,” June 24, 2024.
[20]. McKinsey & Company, “Consumer Digital Payments: Already Mainstream, Increasingly Embedded, Still Evolving,” October 20, 2023.
[21]. McKinsey & Company, “What to Expect in U.S. Healthcare in 2024 and Beyond,” January 5, 2024.
[22]. American Hospital Association, 2024 Health Care Disruption Outlook, February 2024.
[23]. N. Sahni, G. Stein, R. Zemmel, and D. Cutler, “The Potential Impact of Artificial Intelligence on Healthcare Spending,” National Bureau of Economic Research Working Paper, October 2023.
[24]. Optum, 2024 Annual Health Care Trends Report, May 2024.
Healthcare Finance Trendsfor2024 by CommerceHealthcare® presents the bank’s annual outlook on major factors commanding leadership attention. Ten themes are identified from analysis of a broad spectrum of industry data.
Technology is a top-three priority for 56% of providers, and 75% plan spending growth in the next twelve months.[1] Three information technologies are at the forefront in 2024:
Robust system integration. CommerceHealthcare® sees its clients integrating various systems to streamline and improve processes.
Cybersecurity. A poll revealed that 78% of respondents had at least one security incident over the past year.[2]
Artificial Intelligence (AI). Almost one-third of leaders recently named AI as the biggest current topic in healthcare technology.[3]
Difficult Financial Pressures and Conditions Frame 2024 Actions
Decision-making in 2024 will be framed by financial considerations.
Profitability/Margins: Improvement will be challenging as “longer-term industry dynamics continue to suggest protracted margin compression.”[4]
Volume: Despite some recovery, 44% of healthcare systems remain behind their pre-pandemic inpatient volumes.[5]
Cash: Moody’s projects that 2024 median operating cash flow margins will increase 100 basis points to 7%.[6]
Debt/Credit: Almost one-quarter of hospitals encountered debt covenant challenges during the past 12 months.[7]
Workforce Shortages Maintain Hold on Leadership Attention
Fitch Ratings describes pervasive 2024 staffing shortages as a “labordemic.”[8] National nursing turnover stands at 23%, and the vacancy rate is nearly 16%.[9] RCM/finance staffing is problematic as well. In a recent study, 80% of respondents said their turnover in RCM functions is between 1140%, while 73% cited “finding qualified staff” as a major challenge.[10]
Growth Strategies: An Imperative for Near-Term Financial Health and Long-Term Success
Forty-nine percent of surveyed healthcare executives regard growth as their top challenge.[11] Four major growth avenues are:
Outpatient Services. Outpatient volume will grow 16% between 2023 and 2033, compared to just 2% for inpatient, and ambulatory surgeries will rise 18%.[12]
Telehealth. Virtual care encounters continue to see solid growth.
Home Care. Many see promise in the budding Hospital-at-Home (HaH) movement.
Mergers and Acquisitions (M&A). In a mid-2023 survey, 75% of respondents expected M&A activity in the coming 12- to 18-months, and 65% will increase activity over the next three years.[13]
Taking Patient Financial Experience to the Next Level
This year is expected to bring a concerted push by providers to elevate their game in delivering a positive patient financial experience. Comprehensive strategies are called for: “Without a holistic, unified strategy and high-quality services, the patient financial experience will remain fragmented and continue to disappoint consumer expectations.”[14]
Healthcare affordability is a persistent problem. In a Harris poll, 26% of Americans said healthcare costs strain their finances, and 23% have insurance coverage gaps.[15] Many seniors who rely on Medicare have turned to Medicare Advantage (MA) plans to address affordability. MA has become a significant point of contention between payers and providers who feel the reimbursement rates are too low and the administrative hassles too high. A critical solution to the affordability issue is expanded no- and low-interest patient financing options.
Momentum Building for Greater Finance/RCM Automation and Outsourcing
Automation helps achieve sustained cost savings, management of workforce shortages, and removal of complexity from administrative processes. Finance/RCM departments represent attractive automation potential.
The opportunity is sizeable. The Council for Affordable Quality Healthcare (CAQH) estimates the industry cost-saving potential from fully electronic administrative financial transactions at $22 billion.[16]The cost differential is about $5.00 for manual transactions versus $0.67 for electronic.
Multiple Avenues for Expanded Use of Digital Payments in Healthcare
Healthcare is likely to expand adoption of various digital payment rails over the next 24 months:
Automated Clearing House (ACH). Healthcare electronic bank-to-bank transactions through ACH experienced volume growth of 5.8% through the third quarter of 2023.[17]
ePayables/Virtual Cards. This alternative to paying suppliers by check or ACH is used by 37% of healthcare organizations, and 59% of non-adopters say they plan to do so.[18]
Mobile payments. This category encompasses contactless and tap-to-pay technologies as well as eWallets. Mobile payments should see 17% compound annual volume growth across industries through 2025.[19]
Real Time Payments (RTP). Making payments in real time is attractive to providers as it allows them to hold onto cash longer and pay bills with precision timing. The Federal Reserve’s new “FedNow” platform, facilitating 24-hour instant settling and clearing of payments, may provide fresh impetus to RTP expansion.[20]
Need to Adapt to a Fast-Changing Competitive Landscape
Non-traditional healthcare providers grew in 2023, and retail health is garnering both consumer mindshare and growing use.[21], [22] Bain projects the new providers will capture a 30% primary care market share by 2030.[23] Healthcare systems, hospitals, and practices are pursuing competition and partnering simultaneously.
Collaboration and Trust Increasingly Central to Strategic Success
Trust-based relationships among patients, staff, clinicians, suppliers, and other providers — including competitors — are essential. Unfortunately, there is a trust gap. For example, only 45% of frontline clinicians trust their leadership to do what is right for patients.[24]
Conclusion
The report’s overarching takeaway is the imperative not only to improve financial health, but also address serious issues in workforce management, patient financial experience, and trust-building. Technology will deliver real benefits.
For a more in-depth analysis of 2024 healthcare financial trends, find our full trends report here.
CommerceHealthcare® solutions are provided by Commerce Bank.
[1]. A. Feinberg, E. Berger, and R. Hammond, “2023 Healthcare Provider IT Report: Doubling Down on Innovation,” Bain & Company Brief, September 12, 2023.
[2]. J. Lagasse, “Almost 80% of Healthcare Organizations Experienced Cyber Incidents in the Past Year,” Healthcare Finance, August 30, 2023.
[3]. Stoltenberg Consulting, 11th Annual Health IT Industry Outlook Survey, October 26, 2023.
[4]. Fitch Ratings, “2023 Median Ratios: Not-for-Profit Hospitals and Healthcare Systems,” July 25, 2023.
[5]. Kaufman Hall, 2023 State of Healthcare Performance Improvement: Signs of Stabilization Emerge, October 2023.
Four financial themes were prominent in the year’s first half:
Chasing elusive profitability
The median hospital operating margin turned positive in May, and labor costs appear to be headed in the right direction, though they still exceed pre-pandemic levels.[1Increased patient lengths of stay represent profit headwinds. Regaining profitability requires “unrelenting cost discipline” and concentration on producing “recurring savings.”[2]
Staying on revenue growth track
Pursuing top line growth remains a high 2023 priority alongside cost control. Commitment to telehealth remains steadfast. Half of CFOs expect to increase investment throughout the year. .[3]
The current emphasis is on making telehealth more convenient through:
Attractive hybrid virtual/on-site combinations of care
Throughout the first half of 2023, payers were aggressively pursuing prior authorization of procedures, and 95% of hospitals say that this process is consuming considerable staff time.[5] Initial prior authorization/precertification denial rates for commercial inpatient claims rose to 2.8% in 2022 and reached over 3% in 2023’s first quarter.[6] The cash flow impact is not trivial. As one measure, 50% of hospitals indicated that they are carrying over $100 million in receivables for claims older than six months.[7]
Addressing ongoing workforce challenges
This year has seen some easing from pandemic crisis levels, but staffing is a substantial challenge across clinical and administrative functions. Nursing remains a flashpoint. Over 142,000 RNs returned to work in 2022, a 4% uptick, and turnover declined nearly 5% to a still-high 22.5%.[8] However, prognoses augur a meaningful nurse exodus. In late 2022, nearly one-third anticipated leaving direct care within a year. [9] On the administrative side, 63% of organizations say they are experiencing staff shortages in revenue cycle management. [10]
These workforce disruptions are producing:
Increased cost. Median staff costs increased 10% from 2022 to 2023.[11]
Knowledge loss. Early retirements of seasoned executives create an “experience brain drain.”[12]
Stepped-up retention efforts. Organizations are working to retain employees through pay increases, hybrid work extension and benefits such as on-demand Earned Wage Access.
Patient Financial Experience
Even with financial constraints, providers realize that substantial improvements in patient experience are vital and cannot be deferred. The impetus emanates from two leading directions — patient demand and competitive pressure.
Patient demand
The patient struggle to meet cost obligations is ongoing. In a Harris poll, 61% of Americans cited affordability as their highest barrier to care access, while 26% said healthcare costs strain their finances and 23% stated insurance fails to cover care.[13]
The need is fueling expansion of patient financing programs. Low- and no-interest credit lines covering significant dollar amounts and extended durations remain the industry gold standard for generating patient-friendly experiences. Over 60% of hospitals and medical groups anticipate greater reliance on third parties to offer patient financing over the next two years. [14]
Competitive pressure
Early 2023 witnessed little diminution in activity by payers, “retail health” providers, and other competitors to expand further into ambulatory care services. Bain & Company projects non-traditional players will own 30% of the primary care market by 2030. [15]
Beyond taking market share, these competitors are leveraging technology to offer highly convenient care and financial experiences, pressing traditional providers to “up their game.” Several strategies are urged by industry leaders, from partnering with the national firms to adopting retail practices to expanding outpatient facilities aggressively - either organically or through acquisition.[16],[17]
Digital Transformation
Digital transformation has been a significant goal in healthcare for several years. A mid-year status check reveals several points of technology emphasis.
Technology as enabler
Facing heavy financial challenges, providers are focusing pragmatically on digital enablement of key near-term goals and are rigorously screening technology projects for rapid ROI. Current priorities support two goals:
Growth. Funds are flowing to technologies that foster diversification of revenue streams. Telehealth, remote patient monitoring and other tools are critical to fast-growing ambulatory services and Hospital-at-Home programs. Home services are projected to grow 20% over the next decade. [18]
Cost reduction/process improvement. The first half of the year saw an expansion of financial process automation to cut costs, manage remittances effectively and address continuing supply chain management/payables changes.
Requirements for value realization
Unlocking transformative value from technology deployment is increasingly understood as carrying several critical success factors:
Wide deployment and use throughout the organization. Application Programming Interfaces (API) to facilitate integration of various information systems are important for broad adoption.
Interdisciplinary teams to drive projects. The goal is faster product development that more closely maps to desired business outcomes.
Building Trust
The Trends Report noted the challenges and benefits of building trusted relationships with patients, employees and other vital constituencies. Trust yields practical returns.
Consumers “crave a trusted partnership” with healthcare providers.[19] Analysts believe that their reservoir of community trust enhances most providers’ partnership attractiveness to retail health corporations.
One key component of organizational trust is cybersecurity. Cyberattacks have not diminished in 2023. A federal report noted that “ransomware attacks, data breaches — and often both together — continued to be prevalent in attacks against the health sector” in the first quarter of the year.[20] Investment in cyber-defense is growing at 15% annually, while rising insurance premiums are adding financial burden.[21]
Conclusion
The Trends Report themes are not only still in force at mid-year, but many are also intensifying. Multiple crosscurrents span financial management, patient financial experience, digital transformation, and trust-building. Staying the course on driving change is imperative to meet today’s demands and usher in new levels of success for healthcare. To read the full report from CommerceHealthcare®, please click here.
CommerceHealthcare® solutions are provided by Commerce Bank.
1. Kaufman Hall, National Hospital Flash Report, June 2023.
[2]. Advisory Board, “10 Takeaways from our Cost Management Intensive,” March 17, 2023.
[3]. BDO, Healthcare’s Challenging Road Ahead: 2023 BDO Healthcare CFO Outlook Survey, February 2023.
[4]. Penn State Health News, “Penn State Health Enhancing Access to Primary Care Through Subscription-based Virtual Service,” June 13, 2023.
[5]. American Hospital Association, “Infographic: Commercial Health Insurance Practices that Delay Care, Increase Costs,” November 2022.
[6]. Crowe, Time for a Commercial Break: Crowe RCA Benchmarking Analysis, May 2023.
[7]. American Hospital Association, “Infographic: Commercial Health Insurance Practices that Delay Care, Increase Costs,” November 2022.
[17]. Definitive Healthcare, Retailers in Healthcare: A Catalyst for Provider Evolution, May 2023.
[18]. Sg2, 2023 Impact of Change Forecast Highlights, June 21, 2023.
[19]. The Harris Poll and American Academy of Physician Associates, The Patient Experience: Perspectives on Today’s Healthcare, May 20, 2023.
[20]. U.S. Department of Health and Human Services Health Sector Cybersecurity Coordination Center, “HC3 Cybersecurity Bulletin,” 2023.
[21]. A. Condon, “Hospitals Must Boost Cybersecurity Investment Despite Other Costs Weighing on Margins,” Becker’s Hospital CFO Report, April 17, 2023.
Unfortunately, refund processes tend to be manual, complex and time-consuming for both providers and patients alike, with traditional paper-based methods no longer matching the needs of consumers.
As the number of patients paying out of pocket for healthcare services grows, refunds are taking on even greater importance. Patients often have multiple provider encounters that involve self-pay. Ensuring those dollars are posted accurately and appropriately is important in the provider's relationship with the patient and in the patient's overall journey and experience.
While many providers attempt to collect balances due upfront to relieve the difficulty and stress of collections post-service, the estimates that are available ahead of service or at the time of service aren't always accurate based on which provider is paid first in the line of claim submissions.
Sue Martin, senior vice president of healthcare specialty services for CommerceHealthcare®, spoke about the burdensome nature of patient refunds.
"People must advocate for themselves," Martin said. "That means keeping up with appropriate insurance payments, as well as tracking where their self-pay dollars are being applied and where they may be entitled to refunds."
The traditional paper-based refund process has significant drawbacks. For providers, paper-based processes are inefficient, take more time and require additional labor. These antiquated processes are even more problematic as providers struggle with labor shortages and narrow margins in today's worsening economic climate.
Paper-based processes also are not ideal for patients, especially in an environment where so many consumers engage in online banking due to the convenience. It can be time-consuming to receive refund checks via the mail, and the traditional bank deposit process takes extra time. In addition, paper checks are prone to getting lost.
"We hear about these challenges on a regular basis from clients," Martin said, however, she offers a silver lining through modern technology. It's now possible to offer greater transparency about refunds to providers, payers and patients. CommerceHealthcare® offers its PreferPay® solution, for example, which is a secure, end-to-end automated refund process that integrates with provider solutions.
PreferPay® supports a variety of payment options including direct debit cards, direct deposit to a bank account and traditional paper checks. Offering multiple refund options is a huge step forward that improves providers' patient satisfaction scores.
"Consumers are looking for the same experience in healthcare as they have with their banking and shopping partners," Martin said. "Today, patients often have to wait for a paper refund check to arrive in the mail from their providers. With PreferPay®, they can get the funds owed to them in as little as 30 minutes."
Manual, paper-based systems commonly require multiple solutions and multiple departments to complete the entire patient refund process. Another major concern is the effort associated with escheatment of unclaimed funds.
Transitioning away from paper processes makes sense, but it's important to work with a trusted partner. "You want all the departments involved in the refund process to experience seamless workflows," Martin said. "CommerceHealthcare® works with providers to implement best practices and ultimately migrate to fully digital patient refund functionality."
A current-state review is a good first step on the transition to electronic patient refunds. Martin recommends tracking the costs surrounding check stock, printing and postage, as well as team member time spent processing the checks and following up, which should shed light on potential for return on investment.
Another best practice is to look for a partner and a solution that will work easily with the organization's treasury and receivables teams. Refunds routinely require processing from both accounts receivable and accounts payable for authorization and issuance of payments. These departments also need a workflow for tracking unclaimed payments.
In addition to processing patient refunds, PreferPay® can also streamline process flows that are critical to a strong employee value proposition.
"We've instituted workflows learned from other industries to drive better employee recruitment, retention and overall employee satisfaction," Martin said.
Automated payments also can be useful in areas like clinical trials and contract workers. "Take the automation and think bigger with it," Martin said. "You'll find it to be a true success."
"Implementing technology and automating refund processes that align with consumer preferences is absolutely a win-win for healthcare providers," Martin said. "Find a financial partner that offers a full suite of end-user and consumer satisfaction choices. If you make patients and your employees happy, you will find good success in the marketplace."
Sue Martin, Senior Vice President of healthcare specialty services for CommerceHealthcare®
CommerceHealthcare® has released its fifth annual Healthcare Finance Trends for 2023 report.
The report includes an in-depth analysis of research combined with practice experience and identifies consideration for the industry given multiple intersecting challenges in the year ahead.
The report’s key insights range across regulatory, financial, technological and supply chain considerations.
The full article is accessible at CommerceHealthcare.com, but one trend that will continue to carry importance for healthcare leaders is the need for a digital transformation.
Digital transformation is fundamental to healthcare’s business and care delivery model changes. IBM’s website succinctly captures the goal, “Digital transformation means adopting digital-first customer, business-partner and employee experiences.” A leading forecaster believes 70% of healthcare organizations will rely on digital-first strategies by 2027.1
Transformation efforts need to accelerate. One study showed that “digital, technology and analytics strategies exist for nearly all organizations, yet only 30% have begun to execute on those plans.”2
One functional segment ramping up digital transformation is finance. According to a recent survey, 94% of CFOs and senior leaders stated that such efforts will be at the forefront of financial operations and strategy for 2023-2024, and 79% described it as an “absolute need” for “commercial stabilization and long-term survival of their healthcare organization.”3
Advanced technology is gaining traction. Many see optimization in combining robotic process automation (RPA), artificial intelligence and machine learning to create “intelligent automation.”4Together these technologies create algorithms to automate decisions that guide “robotic” software to perform financial actions and thereby reduce manual labor.
Getting to digital-first in finance and across the enterprise has several critical success factors. These include sustained commitment, a platform-centric mindset and effective governance.
Commitment
Some assert that few healthcare executives have “created digital strategies that look far enough into the future.”5 Speed of change is also important. Health systems, hospitals, and practices exhibit varying risk appetites and change rates. When asked to self-identify “transformation personas,” a little over half regarded themselves as on the innovative “early mover” end of the spectrum, while the remainder will adapt as technologies prove themselves. Slower organizations will likely need to increase the pace.
Platforms, not point solutions
Implementing enterprise platforms rather than proliferating “point solutions” is obligatory. Organizations must be “prepared to compete in the platform economy as platform-based business models have changed the way we live, work and receive care.”6
There are still too many tools and applications. A survey of top decision-makers at health systems found that 60% use over 50 software solutions just in operations (24% have over 150).6System integration is one answer. Use of application programming interfaces (API) helps this effort substantially. API-first is fast becoming the norm among solution providers, with global API investment expected to nearly triple by 2030.7
Governance
Effective governance is vital to constructing a platform-based transformative model and to ensuring wide user adoption. Healthcare has seen the rise of new senior roles such as Chief Digital Officer and Chief Transformation Officer, positions focusing on initiatives like ownership of technology success at the department level and devising user incentives.
To learn more, access the full 2023 Healthcare Finance Trends Report on CommerceHealthcare.com
CommerceHealthcare® solutions are provided by Commerce Bank.
1. IDC, Futurescape: Worldwide Healthcare Industry 2023.
2. Huron Consulting, Embracing Healthcare’s Digital Transformation.
3. Black Book Market Research, “Black Book Announces 2022 Top Client-Rated Financial Solutions Delivering Digital Transformation and Managing Liquidity,” June 4, 2022.
4. Editor’s Choice, “RPA and the Rise of Intelligent Automation in Healthcare,” Information Age, March 11, 2022.
5. KPMG, 2021 Healthcare CEO Pulse.
6. Accenture, The Health Experience Reimagined.
7. Symplr, From Disparate to Dynamic: Opportunities and Challenges in U.S. Healthcare Operations, November 16, 2022.
8. Vision Research Reports, Healthcare API Market Size, Growth, Trends Report 2022-2030, July 2022.
40%, while 73% cited “finding qualified staff” as a major challenge.