To navigate the unprecedented changes in the healthcare industry, FP&A teams must transform how they approach processes, people, and data.
If you work in the healthcare industry, I suspect you’re already accustomed to dealing with a lot of change. And from what I understand, it’s likely only going to increase.
“We measure our success by market segment performance, so new regulations, fluctuating premiums, and other factors regularly impact our main business drivers,” explained Sarah Renaud, team leader of budgets at Blue Cross Blue Shield of Rhode Island.
From aging baby boomers to industry shake-ups, healthcare faces massive shifts that create margin pressure and widespread uncertainty. In order to effectively guide their organizations through these minefields, FP&A teams must transform how they approach three distinct areas: processes, people, and data.
Hospitals and other healthcare providers are shifting from a volume-based model of care to a value-based one, in which providers are reimbursed at higher rates for accurate diagnoses and positive patient outcomes. This change requires far more attention to quality, efficiency, and cost metrics—an area in which healthcare FP&A teams are uniquely positioned to help. To add the most value during this seismic industry shift, however, finance teams must themselves evolve along a similar path. Their planning processes must move from a static, annual endeavor to one built on rolling forecasts and performance-driven planning so that they are constantly in possession of updated, correct metrics.
That’s one reason PowerHealth Solutions embraced Adaptive Insights, a Workday company. “I can now produce accurate monthly reports for our board of directors in an efficient, quick, and visual way, which I couldn’t do with Excel,” said COO Amanda Anderson.
On a broader level, the pressures currently weighing on the healthcare field make efficient and frequent planning all the more critical. If a company’s strategy changes significantly—as is the case at many healthcare organizations—the traditional budgeting process “falls apart,” Paul Cichocki, leader of Bain’s Americas Performance Improvement practice, pointed out in CFO magazine. “The ‘start with last year’s budget and adjust it’ mentality doesn’t apply in situations where the industry context has changed or a company’s own competitive position has changed,” he said.
More nimble reporting—the kind that extends beyond finance figures to look at operational and efficiency metrics—allows healthcare companies to change how resources are allocated in response to changing market dynamics. Scenario planning, meanwhile, can anticipate looming regulatory changes that may make or break a company.
An implementation of Adaptive Insights by a large U.S.-based healthcare organization is a great example of how using cloud-based tools can transform the finance function. The medical institution employs more than 60,000 people and treats more than 1 million patients annually. By using Adaptive Insights, it was first able to speed up its reporting cycle and shift to monthly reports. As a result, better reporting and the ability to see operational metrics improved decision-making.
Change management and collaboration play an increasingly important role in healthcare organizations buffeted by an onslaught of change. Moreover, performance transformation is no longer just the finance team’s responsibility. That means FP&A professionals must focus on continuously improving collaboration and engagement with frontline stakeholders, including clinicians and administrators, department heads, and managers.
In order to win them over, the finance team must help colleagues in other departments buy in to not only the new vision for improved efficiency and results, but also to the new ways in which they must do their jobs. Simple, intuitive tools engage them easily. That’s why Kindred at Home, the largest provider of home health and hospice care in the U.S., uses Adaptive Insights. “It’s simpler, people are involved, and it takes a lot less time,” said Kevin Bradshaw, Kindred’s finance director.
Great data is the bedrock of tomorrow’s healthcare system. But improving the quality of existing, subpar data doesn’t happen overnight. Healthcare companies still using Excel-based planning often grapple with errors and outdated budget figures. Moving to a cloud-based system first helps to reduce mistakes and establish a single source of financial truth that builds trust throughout company leadership.
Once the financial data has been centralized and standardized, healthcare FP&A leaders can work to integrate other data, including operational statistics and billing figures, into their overall plans. The last step is to put that robust, high-quality data and timely information into the hands of your stakeholders in a way they can use. Cloud-based tools with simple, visually attractive dashboards improve productivity and make planning easier and more relevant. And by this point, you’re well on your way to a high-functioning, value-based healthcare organization that’s able to thrive in today’s uncertain environment.