The healthcare industry faces new challenges daily. Advancements in care keeps the field exciting and rewarding, while an increased population and a large generation of aging patients make healthcare tough.
It isn’t just patient care that makes the field a challenge. The administrative side of healthcare has its own concerns. These concerns aren’t always centered on financials, but financial planning and healthcare budgeting can play a huge role in helping doctors, hospitals, and other healthcare facilities address some of their biggest challenges head-on.
A staggering truth about the healthcare industry is that half of hospital bills are never paid. Some of this is because of issues between insurers or Medicare and the providers. Others are due to confusion about bills or lack of ability to pay on the part of patients.
To simplify the process, the federal government passed the Medical Access and Chip Reauthorization Act, or MACRA, which is meant to move providers to a more value-based payment system. In other words, the better patients are served, the better healthcare providers are paid.
For the first few years, providers will have the option to participate or not. The program will be fully rolled out in 2019 and will impact all hospitals as well as healthcare providers that service a significant number of Medicare patients. The effect on a facility’s bottom line, however, will vary throughout the roll out.
To accommodate the changes, healthcare administrators that can run different scenarios with their budgets and plans will be the ones best prepared to deal with the results of value-based payments. Being able to ask “what if?” and run multiple views of a financial plan will set healthcare providers up for success as the changes related to MACRA go into effect.
Practice Cost Management
Medical professionals understand cash flow issues and how they can affect their operations, but they also understand that cash flow is important to an organization’s financial well-being.
Day to day obligations like salaries, supplies, legal fees, tools and equipment, and so on must be balanced with co-pays, insurance reimbursements and patient payments. Budgeting expenses against cash flow – and controlling costs – is a critical concern for healthcare administrators.
Understanding where and how money is spent requires slicing and dicing of data and analyzing where savings can be found. Reviewing budget data against actuals and utilizing easy to understand dashboards can point to expenses that can be improved on.
Shifting Requirements and Regulations
As government regulations and laws change surrounding healthcare, it is difficult to know what will be required of providers and how payment models and coverages will change. Between the financial demands of becoming compliant with technology regulations and the shifting landscape of the ACA, providers must be flexible in planning and budgeting.
Volatility in financials requires systems that can change quickly and accurately. Unfortunately, spreadsheet budgets can be rigid with small errors resulting in potentially large miscalculations or reporting issues.
Healthcare providers need FP&A systems that provide for rapid changes and projections. Some providers may even consider switching to rolling forecasts, allowing for changes to be incorporated more quickly.
Healthcare providers face change and uncertainty, but must still plan financials like any other business. The key to doing so effectively is having a system that tolerates changes well, is flexible without adding significant operational overhead, provides accurate and easy to understand reporting and offers scenario planning. With these tools available to administrators, providers can be prepared for whatever lies ahead.
See how you can build a driver-based budget model in days. Test multiple scenarios, generate accurate and automated forecasts, and enforce your chart of accounts.
Centage Corporation’s Planning Maestro is a cloud-native planning & analytics platform that delivers year-round financial intelligence. With Planning Maestro, Centage offers the sophisticated features needed by small and mid-market organizations to integrate budgeting, forecasting, and deep data analysis within one easy-to-use, scalable SaaS solution. For more information on how to modernize your office of finance with intelligent planning, view our product demonstration video, or call 800-366-5111.