Finance leaders in healthcare face a rough road ahead. The COVID-19 pandemic left many providers in a precarious financial position they are still recovering from. At the same time, multiple transformational changes in the healthcare landscape – everything from regulatory requirements to payment structures to patient expectations – are happening all at once.
These changes will have a tremendous impact on how providers of all stripes manage their finances. And while it will take extensive work to adapt, it will take an equal effort to keep an organization’s financial position at full strength in the midst of great change. That is to say, plenty could go wrong.
Keeping the financial ship on course will take many things: staff, technology, leadership, change management etc. But the single most important asset is data. Healthcare finance is complex enough under the best circumstances and will become vastly more so as it undergoes rapid evolution in coming years. Decision makers must be able to see and understand everything relevant to accounting and finance. That depends on data.
Unfortunately, data alone isn’t an asset – and it’s actually an obstacle. Huge amounts of raw data only makes accurate insights harder to find. For data to serve the needs of finance leaders, it must be organized, analyzed, and visualized. Which leads to an obvious question – how?
Organized – Break Down Data Silos
When data lives in multiple different places – different software systems, locations, or departments – someone has to integrate it manually, which takes large amounts of time and, as a result, tends to end up incomplete. Using data for financial decision making starts by breaking down the silos that exist between data sources and integrating more of that data. Having all financial data in one place ensures that any metrics or analytics based on that data are not based on an incomplete, inaccurate, or outdated set of numbers. Integrating data eliminates manual workloads and streamlines access to insights. Most importantly, though, it ensures the integrity of those insights so that decision makers act based upon the best information available.
Analyzed – Pick KPIs
There are countless ways to analyze data and evaluate performance. And while all of them are informative and valuable, some matter more than others for understanding (and then improving) performance. Those key performance indicators include:
- Operating Margin – Measuring profit by subtracting costs from revenues.
- Volume – Output and utilization at all levels of the organization.
- Revenue – Tracking (and projecting) whether incoming revenue is adequate to cover expenses.
- Total Expenses – The total amount of money being spent, broken down by type or origin.
- Labor Expenses – Calculating what percentage of total expenses goes to labor costs.
- Length of Stay – The average amount of time patients spend in the facility, which affects both costs and revenues.
- Cost by Payer – The percentage of costs paid by each insurance provider.
- Physician Investment – Amounts spent to subsidize physician practices.
- Productivity – The level of outputs at each department, practice, or facility relative to the time and labor cost necessary to produce that output.
Visualized – Build Data Dashboards
Dashboards are the final piece of the puzzle. They take specific KPIs, present them in a clear, user-friendly format, and update them in real-time. Essentially, they cut out the need for someone to create and distribute reports by supplying that information to decision makers directly. Without dashboards, it’s easy for KPIs to go untracked, overlooked, or ignored. Alternatively, having dashboards puts KPIs front and center for leaders inside and outside healthcare finance making decisions large and small.
Exciting (and important) as leveraging healthcare data may be, each component – organizing, analyzing, and visualizing – is a significant undertaking, and all three need to work in sync. RSM is here to help healthcare finance units make better use of their data by implementing technology, updating practices, and training users. Change is unavoidable, but it doesn’t have to be disruptive. And with our experience, expertise, and input, doing things differently means doing them better than before. Adapt confidently – contact RSM.