CHICAGO, Jan. 28, 2020 /PRNewswire/ -- The need to identify and manage cost reduction initiatives continues to be a top priority for senior financial executives in healthcare organizations, according to Kaufman Hall's new report 2020 Healthcare Financial Outlook: Performance Management Trends and Priorities. This has been an ongoing theme since the report was first introduced in 2017, and today 87% of respondents say cost reduction is among the most important financial performance activities for their organizations.
Yet 76% say that resource constraints are impacting effective financial planning and analysis in their organizations, more than in 2019 (70%) or 2018 (66%). This disconnect underlines the need for a more widespread cost transformation effort.
Rather than just reducing costs, however, financial executives understand that current service offerings must be delivered efficiently to preserve margins under tightening payment pressures. According to the report, achieving this level of cost transformation will free up resources for investment in new technologies, sites of care, and care delivery models while addressing changing demand and new competition within the healthcare market. Many organizations are unprepared to do so, however, as 54% of those surveyed say they have insufficient data, benchmarking and reporting tools to completely support efforts to lower costs without compromising the quality of care; an additional 15% say they currently have no tools in place.
"The issue isn't a lack of data," said Kristopher Goetz, senior vice president of performance improvement at Kaufman Hall. "There is a massive amount of data flowing in from claims systems, electronic health records, cost accounting systems, patient satisfaction surveys, wearable devices and other sources. The problem is more than two-thirds of healthcare organizations don't have the analytics tools they need to use all that data to gain financial insights and inform their decision-making. This limits sustainability of high-value care delivery and long-term strategic financial viability. Healthcare financial executives recognize the risk but need support from the C-suite to take action and avoid more dire consequences. So far that hasn't happened, but we are hopeful it will change in 2020."
Improving agility
Another top priority identified in the report is the need for agility — healthcare financial executives lack confidence in their abilities to adjust easily to changing business circumstances. Only 24% are "very confident" their teams can rapidly adjust strategies and plans to react to market changes. This number is essentially unchanged from 2019 (23%) and 2018 (25%) despite new competition from tech giants, industry behemoths and innovative healthcare providers seeking to disintermediate legacy organizations from critical shares of their business.
