CFOs need to fight back on excessive labor costs, manual processes, and declining reimbursement, but how?
CFOs have been getting the short end of the stick in 2024. What has pushed health system margins to the breaking point has been an unprecedented rise in the cost of labor, coupled with narrow operating margins.
But what can CFOs do about it?
Well, there are four main challenges that CFOs are facing head on, and next week at our HealthLeaders CFO Exchange, dozens of finance leaders from across the country will meet to talk strategy, workarounds, and solutions all four of them (and more):
Financial stewardship
Ensuring daily management of labor productivity and staffing to demand is crucial for cost control and efficiency, but CFOs have struggled with excessive labor costs due to inefficiencies in scheduling and staffing, and it’s only getting harder.
How can these costs be controlled?
Well, holding leaders accountable for their department performance is essential for driving a culture of continuous improvement. In the past, lack of accountability has led to stagnant performance and missed opportunities for labor cost savings.
On top of labor costs, we can’t forget about those other expenses. Streamlining supply expenses and purchased services, particularly physician preference items, is a common pain point for healthcare organizations looking to reduce costs without sacrificing quality of care.
Pictured: Attendees of the 2023 CFO Exchange in Napa California talk shop.
Achieving efficiencies in portfolio management, service line assessment, and conducting P&L analysis for programs and service lines can help identify areas for optimization and cost savings.
Historically, healthcare organizations have struggled with outdated financial management practices that hindered effective portfolio management, so CFOs need to optimize to save.
Revenue Cycle
CFOs are well aware that implementing technology in the revenue cycle space can lead to streamlined processes and improved efficiency since manual processes and outdated systems are hindering performance.
But, it’s not as easy as it sounds, so how are other CFOs getting this done?
Another area in the revenue cycle that CFOs need to be tackling are payers.
Using statistical data to tackle cost control and combat payers is a strategic approach to managing revenue. Historically, CFOs have struggled with mounting costs and shrinking reimbursements from payers, so fighting back is necessary but not easy.
Marketplace
Identifying growth opportunities in the market and reinvesting resources strategically is key to helping healthcare organizations stay competitive.
As CFOs know, market expansion has been a driver of growth for healthcare organizations, but how can it be done at a time when margins are already so thin?
On the same hand, healthcare organizations have faced challenges with leakage of referrals to external providers, so CFOs are challenged with keeping referrals for specialty care within the system as it’s an essential step for capturing revenue and maintaining patient volume.
Another marketplace challenge for CFOs has been addressing resource-intensive services with low reimbursement rates. Healthcare organizations have struggled to balance the financial viability of certain services with quality of care, so how do CFOs combat this?
Technology
Leveraging legacy technology with new-age technology can help drive innovation and efficiency in healthcare organizations, but a lot of CFOs are still struggling with outdated systems and siloed technology platforms.
So, how do you update and streamline on a budget?
Speaking of budget, accounting for automation and the impact on future work demands is crucial for preparing for technological advancements but not as easy as it sounds. And since using AI to automate workflow in clinical and non-clinical departments can lead to improved efficiency and accuracy, CFOs need to prioritize this cost.
But how? CFOs at the event will find out next week. Stay tuned for more coverage
Our Spring 2024 CFO Exchange is May 8-10 at the Fairmont Grand Del Mar in San Diego.
Are you a CFO or finance leader interested in attending an upcoming event? To inquire about attending the HealthLeaders Exchange event, email us at exchange@healthleadersmedia.com.
The HealthLeaders Exchange is an executive community for sharing ideas, solutions, and insights. Please join the community at our LinkedIn page.
Amanda Norris is the Director of Content for HealthLeaders.
KEY TAKEAWAYS
2024 has not been easy on CFOs.
From payers to poor margins to market disruptors, revamping tactics is a necessity for any CFO trying to keep their organization above water.
And the best way to do that? Networking and strategizing with their peers.