Top Concerns for Hospital CEOs & CFOs
With the new fiscal year just beginning for many hospitals, strategic and financial planning for the next several months is starting to take shape. Among the many issues facing CEOs and CFOs is COVID-19’s effect on operations, costs, compliance and cybersecurity. The way consumers interact with healthcare is changing. Moreover, careful attention still needs to be paid to the revenue cycle.
These are some of the top issues that hospital CEOs and CFOs are dealing with right now.
Cost Reduction
Hospital executives have always been focused on costs; now more than ever. The American Hospital Association is telling hospital executives that they should expect challenges related to certain non-COVID-related costs.
These four cost challenges include:
- Drug shortages
- Wage and labor expenses
- Non-PPE, medical supplies and equipment
- Capital
Updates on the CARES Act
Recently, more guidance is available for providers that accepted money as part of the CARES Act. The three most important areas are incremental costs associated with treating COVID patients, lost revenue due to patients’ inability to come to the hospital for non-COVID-related treatment and the additional reporting for yellow book audit requirements; also known as single audits.
The most important thing to focus on right now is the reporting window and whether the hospital meets the requirements for reporting. If so, finalize the methodology for lost revenue. Next, prepare for the yellow book audit and identify the auditor. It’s not too early.
Rise of Patient Consumerism
COVID-19 altered the trajectory of patient consumerism. Patients became more comfortable engaging digitally. A recent survey by Ketchum indicated that 45% of patients actually changed their healthcare brand preference during the pandemic and 62% were expected to do so once the pandemic ends. Patients now expect healthcare providers to make it easy to continue to engage digitally and provide greater transparency.
Price Transparency
Most hospitals have so far chosen not to fully comply with new price transparency initiatives that went into effect this year. However, larger health systems should be aware that fines and penalties will be increasing to $5,500 per day compared to $300 per day for smaller hospitals.
There are two steps hospitals can take to comply: Publish the machine-readable format and the list of 300 shoppable services.
Impact on Women in the Workplace
Prior to COVID, there were significant gains for women in executive positions and overall women participating in the workforce. Since COVID, women have self-selected out of the workforce to the point that the U.S. is now at pre-1988 levels. Senior-level women are burning out at a higher rate than senior-level men, and black women feel less supported in the workplace than their counterparts.
It’s important for hospitals to add this to their list of concerns and put together initiatives that help address and keep women in the work environment.
Transition to Permanent Work-From-Home Roles
Another top concern for executives as they enter fiscal year 2022 is the transition of staff to either permanent or hybrid work-from-home (WFH) environments. When hospitals initially sent employees home at the beginning of COVID, productivity increased. For many people, it was more like over-performing.
Since then, productivity has significantly dropped due to stress in the at-home environment and a lack of incentives. The challenge for hospitals is to ensure roles are designed to be as effective and efficient as possible in a WFH environment. Incentives should line up with the new reality.
Automation and AI
Automation continues to be a hot topic in healthcare. Robotics and artificial intelligence-driven solutions are the future of healthcare in the clinical setting and the business side. According to Gartner, 50% of healthcare providers are going to be investing in AI and robotic process automation (RPA) solutions over the next three years.
The AI focus is primarily around optimizing costs and the efficient use of scarce human resources.
Revenue Cycle Stagnation and Leakages
AI and robotic process automation (RPA) lead into the revenue cycle because it is primed for intelligent automation. More than that, the revenue cycle is stagnating across the industry. Surveys continually put revenue cycle challenges at the top of the list for most healthcare organizations.
A McKinsey survey found that 15 cents out of every U.S. healthcare dollar goes towards revenue cycle leakages, and the average cost to collect has increased from 2.4 percent of net revenue in 2011 to 3.3 percent in 2019. It’s unsustainable. CEOs and CFOs must evaluate how their revenue cycle is innovating to respond to these challenges.
Uninsured Population
The uninsured patient population is rising and continues to challenge even the best health systems. 70 percent of organizations surveyed expect that their self-pay populations are increasing because of COVID.
Now, with the comprehensive Debt Collection Improvement Act from May 2021, the Fair Debt Collection Practices Act has been amended to include a limitation to collect on medical debt for two years.
Organizations must have a full patient experience for their uninsured and high-deductible plans to include processes and risk management amidst an ever-changing regulatory landscape.
Cybersecurity Risks
Over the past few years, the rise in digital healthcare and online platforms has spurred an increase in cybersecurity threats and hacking incidents for hospitals and health systems. Attacks are predicted to triple in 2021. Hospitals have only allocated five percent of their IT budgets to cybersecurity even though 80 percent of providers report some sort of a breach.
Remote work will increase cybersecurity risk and cost. CEOs and CFOs must scrutinize their plan and risk mitigation strategies related to cybersecurity and start to develop strategies for the coming years.
This is not an all-inclusive list and there are bound to be more issues facing individual healthcare providers. The key is to stay vigilant and proactive. To discuss any of these areas in more detail or how they are affecting your hospital, contact Windham Brannon’s Principal of Healthcare Advisory Services Valerie Barckoff at vbarckoff@windhambrannon.com.