The healthcare industry in Australia has some challenges that lay ahead - an ageing population, a growing number of people living with chronic or complex health conditions and increased complexity to manage multiple stakeholders, budget and resource constraints. Many health organisations are responding to these challenges by looking for innovative ways to improve operational efficiency while also improving patient care outcomes through better Financial Performance Management. Unfortunately, most finance teams still spend too much time in manual, spreadsheet-based processes or relying on complex systems - collecting, consolidating and validating their data from numerous patient management and general ledger systems, before they even begin to analyse it. And as a result this impedes the ability to deliver reports, plans, budgets, forecasts and value add analysis that stakeholders need in time.
Removing these overcomplicated manual processes can unlock a more productive workforce, a more profitable business and, ultimately, a healthier population. Here's some key strategies that healthcare providers are using to improve Corporate Performance Management (CPM) to succeed in this rapidly changing landscape.
Shift To Driver-Based, Integrated Planning In Health
The enterprise budgeting and planning process for a healthcare provider is usually a complex, manual, adhoc process with hundreds of contributors, multiple patient management and general ledger systems and a reliance on error-prone Excel standalone spreadsheets. This type of decentralised, Excel-based approach has the risk of relying on one or two key people. Our recent article on 4 keys to effective Financial Performance Management talks about systemising and the benefits of this. Relying on Excel also makes it difficult to enforce the use of drivers which impact downstream models and variance analysis, as managing versions and forecasting more regularly is labourious. This makes it difficult to provide a common aggregated view of Doctor activity upon which to base plans. Doctor activity is inherently difficult to forecast as they operate independently of the healthcare provider. Healthcare providers need to look for ways to generate these type of views, while simplifying budgeting and planning and reduce the time it takes for the entire process - 5+ months is just too long.
Taking an integrated approach to strategic, financial and operational planning ensures the divide is bridged between strategic goals, the financial plan and what the business is saying they can deliver. Host Analytics for example supports more dynamic planning techniques like driver-based planning. Plans can be built to start with Doctor activity for example, linking related models including Doctor compensation, when appropriate. Strategic and operational plans are automatically integrated with financial budgeting and planning seamlessly to understand P&L, cash flow and balance sheet impacts at a granular or more summarised, department or cost centre level if required.
Simplify Workforce Planning In Health
The level of granularity required for labour planning is enormous and can be complex in understanding compensation awards, staff mix, quality of care and profit implications. As one of the largest variable costs, carefully planning and managing labour expenses is critical to optimise scarce resources. Host Analytics makes it easy to understand the interdependency between staffing requirements, revenue and quality of care, as labour is often tied to the volumes in the revenue plan.
Host Analytics has sophisticated prebuilt workforce planning capabilities that allows complex employee expense arrangements to be easily modelled providing accuracy of plan data. You can shift differentials, plan by personnel type, structure pay scales by time of day or union affiliation, perform overtime workforce planning and calculate employee specific benefit costs. A framework for healthcare providers to easily develop a five year strategic workforce plan often required by stakeholders. Plus, Host Analytics is easy to use. Cost centre managers simply enter their assumptions and plans using a web browser, and Group Finance gets an immediate, consolidated rollup with greater visibility into the planning process.
Streamline Performance Reporting
Hospitals are accountable to health agencies, government offices, patients, management and more. As a result, demands for greater disclosure of performance and transparency increase, while reporting is extended to both financial and non-financial disclosures.
Satisfying this performance reporting is a massive undertaking for the finance team, with strict guidelines often imposed on reporting performance, reporting emergent issues and financial adjustments, in a timely manner. Also due to the varied nature of stakeholders, each has different information needs, some are standard and repeatable, others are more ad hoc. The reporting platform used by healthcare providers needs to cater to all these needs, in a way that can be easily managed by the office of finance, without heavily relying on IT, underpinned by a single source of the truth.
To understand more about how to improve Financial Performance Management in healthcare, read our new whitepaper.