- Ninety-six percent of healthcare chief financial officers (CFOs) think that their organizations need to do more to leverage financial and operational data analytics, according to a report from Kaufman Hall.
Moreover, 94 percent of respondents said they have experienced increased pressure to have more insight into how financial results impact business strategy.
However, these executives lack confidence in their ability to utilize data to support actionable, informed decision-making in a quickly evolving environment.
“Given increasing consumer expectations, new competition, and evolving delivery and payment models, healthcare leaders are facing an unprecedented need to effectively translate sound business strategy into plans that are successfully executed to support long-term sustainability,” the report said.
“In this rapidly changing business environment, the role played by CFOs and other senior finance executives is vitally important and has significantly expanded.”
To determine the capacity of CFOs to respond to these changes, researchers surveyed financial executives representing more than 160 hospitals and health systems between September and October 2018.
The results showed that while CFOs recognize the important role that advanced technologies and analytics tools will play in organizational performance, executives lack confidence in their data, as well as their ability to manage the financial effects of the shifting healthcare landscape.
When asked about their top priorities for 2019, respondents listed “identifying and managing cost-reduction initiatives” as number one, followed by “predicting and managing the impact of changing payment models.”
With emerging payment models, executives need to be able to understand costs across the continuum of care. However, this will require the use of advanced data analytics tools, and, equally importantly, access to reliable data.
“CFOs recognize the urgency of generating cost improvements, but are struggling with the structure, transparency, and accuracy of cost data and, hence, data credibility,” the report said.
Fifty-two percent of survey participants said that a lack of clean, consistent, and trusted data is a significant barrier to improved strategic and financial planning decisions.
Nearly seventy percent reported that they want to be able to create better data dashboards and visualizations to improve business decisions, while 64 percent said they would like to be able to pull data from multiple sources into a single report.
High-quality data and analytics tools will also help organizations’ performance reporting capabilities, which are virtually non-existent.
Just seven percent of executives said they are very satisfied with performance management reporting at their organizations, down from eight percent in 2018.
“Performance management addresses every aspect of the integrated strategic, financial, and capital planning, execution, and monitoring process shown in the figure at right, so low satisfaction with how it is reported indicates likely risk for hospitals and health systems,” the report stated.
“High-quality enterprise performance management processes and tools incorporate the strategic, financial, operational, and specific clinical metrics required for the evolving value-based care delivery and payment model.”
Executives reported that their organizations struggle with financial performance benchmarks as well.
While 83 percent said they use performance benchmarks, 41 percent said they are not satisfied by how these benchmarks inform decision-making.
“Timeliness of critical data and how that data are used are key problems,” the report said.
“Although clinicians often benefit from informed decision making through use of point-of-care data that are provided ‘real time,’ executives and managers struggle with enterprise-level data that typically are anywhere from nine months to two years old and likely do not include appropriate peer-level benchmark data.”
Executives indicated that going forward, they are not fully confident that their organizations can manage the changing healthcare landscape.
Just 13 percent of respondents said their organizations are very prepared to handle evolving payment and care delivery models with their current financial planning processes and tools, while 15 percent said the same in last year’s survey.
Additionally, only 23 percent said they are very confident in their organization’s ability to quickly adjust their strategies and plans, down from 25 percent in last year’s survey.
“These data represent red flags that should be of serious concern to healthcare organizations. Senior finance executives must understand what is occurring as business circumstances change, as well as how such change affects their organizations’ business strategy,” the report said.
“Armed with this information through performance management processes and tools, they then can more appropriately make course corrections for achievement of strategic objectives.”
As new payment models and new sources of data become increasingly integral to the healthcare industry, financial executives will need to expand the scope of their responsibilities.
“Given the demands of the changing business environment, healthcare CFOs nationwide should be critically examining the role they and their finance teams play in their organizations. A singular focus on directing or managing financial operations and the related control/monitoring function is not sufficient going forward,” the report concluded.
“Finance executives must be integral to the development, execution, and monitoring of the organization’s vision and strategy, and be armed with the full breadth of data and analytics required for performance management in healthcare.”