Health Tech

Rising Costs Are Keeping Healthcare CFOs Up a Night — Can Data Help?

The increasing costs of labor and supplies are the top issues keeping healthcare CFOs up at night, according to a new report. Even though providers’ margins are currently quite tight, the report recommended that healthcare organizations adopt data analytics software to remedy these concerns and help with important decisions like how to effectively manage their existing workforce and where to shift care delivery models.

The increasing costs of labor and supplies are the top issues keeping healthcare CFOs up at night, according to a new report released by Syntellis, a provider of performance management software. To effectively address these concerns, healthcare providers must ensure they have access to data-driven analytics software that can help them make important decisions — such as how to effectively manage their existing workforce and where to shift care delivery models — the report said.

Syntellis surveyed more than 200 U.S. healthcare finance professionals who work at hospitals, health systems and integrated delivery networks. These professionals agreed that last year was a tough one for healthcare finance. Providers across the nation suffered significant operating margin losses as they battled inflation and a severe workforce shortage — in fact, operating margins dipped more than four percentage points from 2021 to 2022.

sponsored content

A Deep-dive Into Specialty Pharma

A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.

From 2019 to 2022, healthcare providers’ labor expenses rose by more than 20%, and total expenses increased by 17.5% over that three-year period, according to the report.

The finance leaders surveyed in the report said these challenges are being exacerbated by increased regulation and decreased government aid, including the end of Coronavirus Aid, Relief, and Economic Security (CARES) Act funding. These leaders expect the workforce and inflation challenges they experienced last year to persist in 2023, the report showed.

When asked what issues keep them up at night as they enter 2023, 67% of financed leaders said employed labor and 61% said contract labor. Inflation was flagged by 55% of respondents, and 39% said supply chain expenses keep them awake.

Survey respondents ranked workforce optimization and productivity monitoring as their chief priority in 2023. Leaders’ top departmental goals for this year are reducing costs, managing improvement initiatives and managing productivity, according to the report.

presented by

To help healthcare providers achieve their financial goals this year amid a difficult economic environment, the report recommended that providers lean on data analytics platforms. Even though margins are tight, the report authors said that investing in this technology will be worth it due to the following five reasons:

  • Workforce optimization: It doesn’t look like healthcare’s workforce shortage is going to get better anytime soon, so providers need to focus on optimizing their existing employees. This includes monitoring workforce productivity, establishing incentives to help retain workers, and ensuring there is a strong data analysis platform in place to identify opportunities for improvement, the report said.
  • Effective cost management: The report pointed out that many of its respondents were confident in the accuracy of their cost accounting data but unable to use that data to implement meaningful cost strategies. To remedy this, organizations must have accounting software that analyzes cost trends and identify variances and their underlying causes, according to the report.
  • Continuous performance monitoring: Many factors influence healthcare providers’ performance, such as shifting patient volumes, fluctuating revenues and rising costs. That’s why it’s so important to have software that tracks performance relative to internal and external financial and operational benchmarks — this helps finance leaders better better understand how their organizations are faring compared to their competitors and the overall market, the report said.
  • Decision support: Providers can’t afford to rely on outdated processes, such as referencing spreadsheets, to drive their operational decisions. Instead, healthcare organizations must ensure they have analytics software to influence any changes they decide to make, according to the report.
  • Understanding market placement: Healthcare organizations must have access to data that gives them insight into the dynamics of their market — this will help them make important decisions like where to shift care delivery models, where to grow service lines and when to shutter or consolidate underutilized facilities, the report said.

Photo: Andrey Tolkachev, Getty Images