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Hospital CFOs losing confidence they can adapt to new business models


Hospital and health system CFOs are less sure of their organization’s ability to weather the financial effects of evolving business conditions, a new survey has found.

Consulting firm Kaufman Hall asked senior financial executives from more than 160 hospitals, health systems and other healthcare organizations about their priorities and challenges last fall and uncovered some worrisome findings. Among them, only 13% of CFOs said their organizations are very prepared to manage evolving payment and delivery models using their existing financial planning processes and tools, compared with 15% in the last survey, conducted in fall 2017 and released last year. Only 23% said they were very confident in their team’s ability to quickly and easily make adjustments to strategies and plans, down from 25% in the last survey.

“I think that was a bit surprising,” said Jason Sussman, a managing director at Kaufman Hall and author of the report. “The level of the drop and how quickly it occurred. I think of all the things, that was the one that stood out to me.”

Adapting to an evolving business environment has always been difficult, but Sussman said it could be that now CFOs understand more fully the breadth of the potential impacts and the type and quality of data they need to truly fulfill their duties.

The survey highlights providers’ ongoing struggles with data. All but 4% of respondents said their organizations should be doing more to leverage financial and operational data to inform strategic decisions. And all but 6% said they’re experiencing increasing pressure to have greater insight into how financial results impact business strategy.

Those results show CFOs feel they should be doing more to inform strategic decision-making, said Jay Spence, Kaufman Hall’s vice president of healthcare solutions and another author of the report.

The new survey also illustrates how the scope of CFOs’ focus has broadened in recent years. Asked to name their core dimensions of organizational performance, perhaps unsurprisingly, 85% of respondents said financial health. But almost the name number, 80%, also said they’re monitoring patient experience and another 80% said quality of care and clinical outcomes: two factors that affect payment and performance under value-based payment structures.

The top priority area CFOs cited for 2019 was identifying and managing cost-reduction initiatives. Below that was predicting and managing the impact of changing payment models and, lastly, improved performance management and reporting to operational and C-suite leaders.

The survey results emphasized the need for shorter budget cycles, with 37% of respondents saying their budget process takes six months or longer from the initial rollout to the board presentation, up from 27% in 2018. And 46% said their budget cycles do not leave ample time for value-added analysis to inform strategic decisions, about the same as last year.

Some health systems can get their budgets done in 90 days; others take 9 months, Sussman said. The shorter the budget cycle the better, Sussman said.

“The shorter the better,” he said. “But it really depends on how you focus the budget. The organization that does it in 90 days spends a long time at a higher level connecting their strategies to their financial plan and then uses the output of that to drive the budget.”