The post-pandemic path to recovery for hospitals and healthcare systems is steep with multiple challenges, including a severe shortage of clinical and revenue cycle labor, and unprecedented inflation. Initiatives such as value-based care, patient experience improvement, and process automation, on the other hand, are screaming for investments.
For CFOs to navigate these testing waters, they must play bold and adopt strategies ahead of time. It is also a great time to review their cost structures and find every dollar they can. Access Healthcare recommends outsourcing to convert Capex to Opex and gain access to a global workforce and new-age automation and analytics solutions.
The path to recovery for hospitals and healthcare systems across the country continues to be steep. Multiple challenges, including a shortage of clinical and revenue cycle labor, are compounding the problems healthcare CFOs face.
Impact on healthcare entities
Most industry watchers believe that while 2022 is likely to be easier for larger healthcare systems, smaller healthcare provider groups are running out of options and may soon need to merge with larger entities. As per the National Hospital Report by Kaufman Hall, healthcare costs have increased by a minimum of 15% from the pre-pandemic levels. In general, hospitals are more likely to weather the storm than smaller healthcare providers due to their ability to absorb costs.
We believe that healthcare CFOs face an uphill battle to find elusive margins amidst a tightening labor market and inflationary economy. Soon they will be left with Hobson’s choice of raising capital at unattractive terms or merging with larger, branded healthcare systems. The time is now for healthcare CFOs to look within and extract every dollar from their revenue cycle.
Labor Shortage
Ask any healthcare leader, and the number one issue they are likely to talk about is the labor shortage. The shortage of qualified labor across clinical and administrative functions in healthcare entities is crippling their ability to recover from the financial impact of the pandemic. Many healthcare systems are accelerating the adoption of outsourcing and offshoring strategies to access a large pool of talent globally.
Shortage of the clinical workforce is yet another problem that threatens the quality of care delivered. The shortage of nurses is not going away any time soon. The gap will continue to widen with the aging population. Hospitals are trying to attract talent by providing higher pay, better learning opportunities, better engagement, and improved work-life balance.
Inflation
The costs of care are going up across spend categories – labor, supplies, and infrastructure. While the increased costs will hit consumers in CY 23, the costs for healthcare entities have already gone up. CMS is still catching up and has only marginally increased reimbursements compared to the cost increase.
VALUE-BASED CARE AND PAYMENT MODELS LIKELY TO SEE SLOWER ADOPTION
Let’s face it. Value-based care and payment model transitions appear more interesting than the reality. Less than 5% of contracts are on the value-based care model. A complete shift to value-based care requires an understanding of the high-cost members and deep data analysis for health plans offering incentives for value-based care. As employers typically fund healthcare costs, the transition to newer models of care delivery and payments is likely to slow down in today’s tight labor market,
Investing in Revenue cycle transformation
Regardless of their size, hospitals and healthcare systems have delayed investments in many areas that could potentially improve their reimbursements and reduce their costs to collect. Patient experience improvement is one such area that is screaming for investments. Another area that hospitals have not invested in is technology to improve workforce collaboration and workflows to reduce human effort. Some institutions are taking hasty steps to implement RPA and analytics without recognizing that these solutions can be costly to manage and maintain. If the third-party outsourcing services provider can apply them in its operations and bring you a more cost-efficient outcome, one without the headache of managing and does not require upfront investments.
Revenue cycle partners like Access Healthcare can help accelerate the journey by bringing in a qualified workforce, processes, and tools. Healthcare CFOs can shift the cost structures from fixed to variable to unlock the capital needed to fund critical initiatives by relying on the partner.
Strategic imperatives for Hospitals and healthcare systems
Our recently published financial transformation guide outlined some of the strategies decision-makers can adopt. We provide below some of the highlights:
Get access to qualified labor. The right revenue cycle partner brings best practices in recruiting, training, deploying, and managing revenue cycle labor. By adopting outsourcing, you can eliminate your revenue cycle labor challenges.
Create a thriving revenue cycle. The revenue cycle is a numbers game, and achieving some of these KPIs requires collaboration amongst clinicians and the revenue cycle workforce. It is also an iterative process that requires continuous feedback to interaction and sharing of feedback between revenue cycle team members and clinicians.
Find the right RCM partner – get access to technology and automation tools on variable costs. Innovative revenue cycle partner organizations can give you access to technology (workflow automation, workforce management, AI, automation, and analytics) to reduce your investments.
Improve patient visit volumes and utilization of clinical staff. Invest in marketing – improving your website and patient engagement tools. Improving patient experience can also improve clinical staff utilization. Reassess your staffing levels in each clinical area and, where possible, optimize staffing.
Optimize your supply chain: Adopt the 80:20 principle. The costs of hospital supplies are growing exponentially. Eliminating wasteful usage by clinicians by sensitizing them is one way. CFOs can achieve a sustainable reduction in costs by relooking at the GPO contracts and focusing on spend categories that contribute to 80% of the total cost of supplies. Identify opportunities to renegotiate these contracts.
Invest judiciously: Look to improve patient access and experience; Invest in denial prediction tools.
Shift CAPEX to OPEX: Outsourcing can be an effective strategy to reduce investments in fixed assets.
Conclusion
These are challenging times for hospitals and healthcare systems. For smaller hospitals and those in rural areas, the economic climate threatens their very survival. Access Healthcare can help.
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