Does any other industry face the extreme financial pressures healthcare providers routinely take on? Add to those pressures the Medicare and Medicaid cuts, healthcare IT changes, and new reimbursement methodologies, and the healthcare CFO has more on their plate than ever. Not only must CFOs deal with budget crunches and shrinking reimbursement, they have to do what every business CFO does and ensure their hospital or healthcare facility remains financially healthy.
American healthcare CFOs have a generally positive outlook for 2016, with the majority expecting profits at their organizations to either remain the same or grow this year.
At the same time, they're wary of increasing costs, stronger competition, and in some cases shortages of the specialized clinical talent they need.
Following are 4 of the top challenges healthcare CFOs face in 2016 and their solutions.
1. Health Insurance Exchanges and the Affordable Care Act
In addition to concerns about the macroeconomic effect of the ACA, healthcare CFOs must also worry about keeping their own organization's health insurance costs under control. Furthermore, with penalties against individuals and companies increasing for not enrolling in coverage, 2016 is likely to see even more consumers enrolled in high-deductible health plans.
Hospitals and providers, historically, received 90% of the reimbursement from insurers, according to The Advisory Board. The patient portion was more of an afterthought. As more patients enroll in high-deductible health plans, patients are taking on a significant amount of their medical bills.
There may be fewer completely self-pay patients, but hospitals and independent clinics are going to need to redesign billing processes in order to collect payments from patients quickly and accurately.
While there are several reason bills go unpaid, providing cost transparency prior to services can help patients make better decisions about their healthcare expenses.
“People are not saving and people are going to need to plan for health care expenses just like they do for all kinds of services they already (pay for) out-of-pocket,” said Larry Van Horn, executive director of health affairs at Vanderbilt University’s Owen Graduate School of Management.
Redesigning the billing process to provide cost transparency is one way to tackle high deductible health plans and more self pay patients. Having a patient payment technology in place can also increase your organization's patient pay collections. Offering patients online bill pay and payment plans can make paying medical bills easier and affordable.
A $2,000 medical bill is a large price to pay at one time considering nearly two-thirds of Americans have less than $1,000 in savings, according to gobankingrates.com. Giving patients the option to make monthly payments towards that $2,000 helps your cash flow and reduces the chances of that bill never being paid in full.
2. Electronic Health Records
Implementing EHRs or upgrading old systems that can't keep up are two possibilities that many healthcare institutions will cope with in 2016. Operational efficiencies are expected to follow, but they may not be evident right away making the ROI in switching EHRs more difficult to forecast.
Unlike in other industries, where IT advancements and automation can reduce personnel needs, implementation of an EHR can often increase healthcare provider staffing needs. And when a new EHR system is rolled out, but work flows aren't examined so improvements can be made, don't expect a large return on your EHR investment. Then again, falling behind technologically is not an option either.
If switching or upgrading EHR systems is on your road map this year, be sure to consider your staffing needs ahead of time to ensure an efficient roll out. Implementing a new system can deliver significant cost savings but only if you understand your training needs, establish clear goals, and adapt the work flow with careful planning.
Reducing expenses without harming productivity is a big challenge in any industry. But in healthcare, regulations, patient expectations, and continually increasing costs add to the complexity.
One thing many healthcare CFOs are addressing in an attempt to keep costs under control without compromising effectiveness is the issue of physician alignment. In many cases, better physician alignment means putting physicians on payroll in hopes of improving clinical and financial performance.
Physicians are major cost drivers, and therefore must be key partners in reducing healthcare costs. Yet if hospital costs decrease and margins fatten up, do physicians benefit? Many of them would say no, and that can affect morale.
4. Delivery of Managed Care
Value-based purchasing and better management of population health are worthy goals, yet serious investment is required to create a managed care infrastructure that delivers the level of performance needed in a value-based environment. What's more, that new infrastructure has to be created under the specific financial pressures of risk-based contracts with payers.
New infrastructure requires elements like care coordinators and possibly new technology, and all of it has to work together in harmony for well-coordinated healthcare delivery. In many cases technology itself is a critical factor in moving toward managed care delivery while practices must still perform within risk-based contracts.
As advancing technology, digital media, and new payment models converge in the healthcare space, healthcare CFOs certainly have their work cut out for them in 2016. The change from fee-for-service to value-based reimbursement is ongoing and the result is conflicting motivators in provision of healthcare.
Smart competitive strategies, innovative partnerships, and new incentive alignments will all be required to successfully navigate the healthcare finance landscape in the coming year. Learn how GroupOne's revenue cycle management services can help your clinic increase revenue to stay competitive and focus more time on improving patient care. Request a revenue cycle management proposal today to learn more.