New Survey Findings Highlight the Expanded Scope of Healthcare CFO Responsibilities, Including Their Increased Role in Leveraging Data and Analytics to Inform Decision Making Organization-wide
CHICAGO, Jan. 30, 2019 /PRNewswire/ -- Healthcare's changing business environment requires CFOs to measure and monitor a broader set of initiatives and dimensions. Senior financial executives cited quality of care & clinical outcome and patient experience as dimensions of management almost as frequently (80 percent) as they did financial health (85 percent). This is just one of the striking results in Kaufman Hall's 2019 CFO Outlook: Performance Management Trends and Priorities in Healthcare. Other areas managed by more than 50 percent of respondents included operational efficiency (69 percent), strategic growth (62 percent), and employee growth/retention (52 percent).
"A key part of the role of the CFO is to understand what is occurring as circumstances change, as well as how such change affects their organizations' strategy," said Jay Spence, vice president of healthcare at Kaufman Hall. "Increasing consumer expectations, new competition, and evolving delivery and payment models challenge leaders to effectively translate sound business strategy into plans that are successfully executed to support long-term sustainability. The CFO defines strategic financial scenarios and communicates the operational and financial impact of strategies prior to and following execution. Such responsibilities are enormous."
Improving performance management
CFOs recognize the important role data and analytics, as well as other advanced technologies, play in elevating organizational performance. Yet they have many concerns in this area:
Ninety-six percent believe their organizations should be doing more to leverage financial and operational data to inform strategic decisions; at the same time, 94 percent are experiencing increasing pressure to have greater insight into how financial results impact business strategy
In terms of financial reporting challenges, 67 percent want to be able to create better dashboards and visuals, while 64 percent need an improved ability to pull data from multiple sources into a single report; additionally, fewer than one-half believe they are able to access clean, consistent, and trusted data
The result is only 7 percent are very satisfied with the performance management reporting at their organizations.
Identifying priority areas
It comes as no surprise that the top priority cited by CFOs for 2019 is identifying and managing cost-reduction initiatives. Financial realities—revenue and expense, consumerism, regulatory and competitive pressures—make cost transformation an imperative for healthcare leaders.
Yet according to a previous Kaufman Hall report entitled, 2018 State of Cost Transformation in U.S. Hospitals and Health Systems: Time for Big Steps, most of the cost transformation that has occurred so far has been in traditional cost reduction areas, such as supply chain and other non-labor costs. CFOs recognize the urgency, but cite as the top impediment the lack of good data and insight into costs and where savings opportunities exist. These impediments can be addressed with reliable cost data, high-quality analytics, and best practice monitoring and reporting capabilities.
Other priorities include:
Forecasting and managing the impact of changing payment models. Only 13 percent of respondents said their organizations are very prepared to manage evolving payment and delivery models with their current financial processes and tools, down from 15 percent in the 2018 survey
Shortening the budget cycle to ensure accuracy of assumptions and in-depth analysis by finance executives. Currently, 37 percent report having a budget process that takes six or more months from initial rollout to board presentation (up from 27 percent in 2018), and 46 percent say their budget cycles do not leave ample time for value-added analysis that can inform strategic decisions. As a result, budget assumptions formed at the beginning of an elongated process are often outdated by the time budgets are finalized
The CFO report surveyed senior financial executives from more than 160 hospitals, health systems, and other healthcare organizations in September and October 2018. To download a copy, click here.
Kaufman Hall will also provide a webinar explaining the details of this report on February 28, 2019. To learn more, click here.
About Kaufman Hall
Kaufman Hall provides management consulting and software to help organizations realize sustained success amid changing market conditions. Since 1985, Kaufman Hall has been a trusted advisor to boards and executive management teams, helping them incorporate proven methods into their strategic planning and financial management processes, and quantify the financial impact of their plans and strategic decisions to consistently achieve their goals.
Kaufman Hall services use a rigorous, disciplined, and structured approach that is based on the principles of corporate finance. The breadth and integration of Kaufman Hall advisory services are unparalleled, encompassing strategy; financial and capital planning; cost transformation; treasury and capital markets management; and mergers, acquisitions, partnerships, and joint ventures.
Kaufman Hall software includes the Axiom Software Suite, providing sophisticated, flexible performance management solutions that empower finance professionals to analyze results, model the future, and optimize organizational decision making. Solutions for long-range planning, budgeting and forecasting, performance reporting, capital planning, and cost accounting deliver decision support, reporting, and analytics within an integrated software platform. Kaufman Hall's Peak Software empowers healthcare organizations with clinical benchmarks, data, and analytics to provide a higher quality of care for optimized performance and improved patient outcomes.
Amendola Communications (for Kaufman Hall)