Why Value-Based Care and Consumerism are Embraced by Healthcare CFOs
In today’s rapidly evolving healthcare landscape, the role of healthcare CFOs has become increasingly critical. As the industry undergoes significant changes, such as the shift towards value based care in healthcare and the rise of consumerism in healthcare, CFOs need to adapt their approach and become strategic partners rather than solely financial gatekeepers. This transition is essential for organizations to succeed in the new ways of doing business.
Traditionally, healthcare CFOs have focused on looking back at data to understand company performance, manage budgets, track cash flow, and mitigate risks. While these tasks remain important, they are no longer sufficient in the face of value-based care, consumerism in healthcare, and other emerging challenges. The healthcare paradigm has shifted, and CFOs must adapt to stay ahead.
In the past, healthcare organizations relied on keeping patients in hospital beds and ordering revenue-generating tests and services to generate income. However, with the transition to value based care in healthcare, provider revenue is now tied to the value of care delivered rather than the volume of services provided. This change, coupled with the disruptive influence of non-traditional companies like Amazon, Apple, and Google in healthcare markets, has led to a decline in operating income for healthcare CFOs.
Opinions of Healthcare CFOs on Value-Based Care and Consumerism
Michael Allen, the CFO of OSF HealthCare, acknowledges this shift, stating, “In the changing business environment, you can’t have all the finance folks working in rearview mirrors anymore. That doesn’t give us anything except what happened.” Healthcare CFOs need to shift their focus from looking backward to looking forward and strategically planning for the future.
Jennifer Alvey, the senior vice president, and CFO of Indiana University (IU) Health, emphasizes the importance of forward-thinking, stating, “We’re now in the business of looking ahead, especially in terms of multi-year planning. The CFO is providing a lot more detailed data on what opportunities there are going forward.” Healthcare CFOs play a pivotal role in helping organizations seize these opportunities by developing innovative strategies aligned with value-based care, consumerism, and future trends.
Value-based care, with its emphasis on improving care quality and reducing costs, requires strategic thinking from healthcare CFOs. The transition to value based care in healthcare has been slow, with a significant portion of revenue still tied to the traditional fee-for-service model. Healthcare CFOs need to bridge the gap between the old and new payment models by developing a strategic mindset that focuses on predicting patient costs, measuring outcomes, and improving population health.
Ric Magnuson, CFO of Minnesota-based Allina Health, explains the mindset shift needed, saying, “You have to shift your mind from wanting every bed full in the hospital to asking about how to best care for a population.” This change in perspective requires healthcare CFOs to align their financial strategies with the organization’s mission and long-term goals.
As payment models evolve, healthcare CFOs are being pushed to assume greater financial risk. The Centers for Medicare & Medicaid Services (CMS) and other payers are encouraging provider organizations to take on more financial responsibility, aiming to reduce costs while improving care quality and patient satisfaction. However, healthcare CFOs are often hesitant to embrace this increased risk.
To navigate this challenge, CFOs must better understand their market. Patrick Holland, CFO of Atrius Health, advises healthcare CFOs to anticipate where the value-based care market is heading. Developing closer relationships with payers and understanding insurance design and purchasing patterns can help CFOs identify opportunities and position their organizations for success in risk-based care.
The rise of consumerism in healthcare further underscores the need for healthcare CFOs to adapt their approach. With the prevalence of high-deductible health plans and greater cost-sharing arrangements, consumers are becoming more conscious of the value of care. Organizations must deliver high-quality, cost-effective care that meets patient expectations.
To thrive in the era of consumerism in healthcare, CFOs can play a pivotal role in improving the patient experience. By leveraging technology-driven solutions such as price transparency tools, online payment capabilities, and convenient appointment scheduling, CFOs can empower patients to make informed decisions about their healthcare. This focus on enhancing patient satisfaction and engagement contributes to a more patient-centric healthcare ecosystem.
How technology plays a part?
Technology plays a vital role in empowering healthcare CFOs to become strategic partners. CFOs are no longer confined to using IT systems for financial analysis and reporting. With advancements in analytics tools and data-driven insights, CFOs can provide valuable information for decision-making, helping organizations identify trends, allocate resources effectively, and optimize revenue streams.
By embracing digital health solutions and automation, CFOs can streamline financial processes and enhance operational efficiency. Automated revenue cycle management systems, for example, can help organizations reduce billing errors, improve cash flow, and optimize reimbursement. CFOs can also leverage data analytics to identify opportunities for cost savings, revenue growth, and operational improvements.
To succeed in their evolving roles, healthcare CFOs need to possess a unique blend of technical expertise and emotional intelligence. The ability to understand and influence the financial narrative of an organization is crucial. CFOs must communicate the organization’s financial health challenges, and growth opportunities to stakeholders, including the board, executives, clinicians, and staff.
In conclusion, healthcare CFOs play a transformative role in the era of value based care in healthcare and consumerism in healthcare. As strategic partners, they navigate the challenges of the value-based healthcare system by adopting a forward-thinking approach, aligning financial strategies with organizational goals, and embracing technology-driven solutions. By prioritizing the patient experience and leveraging data analytics, healthcare CFOs can drive innovation, improve financial performance, and ultimately contribute to better patient outcomes and satisfaction. The evolving role of healthcare CFOs is vital in shaping the future of healthcare delivery and financial management.