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When it comes to new healthcare payment and delivery models, CFOs lack confidence

Finance leaders are worried about the changing landscape, and many feel unprepared for what's to come.

Jeff Lagasse, Associate Editor

New payment and delivery models are steadily seeping into the healthcare industry, and chief financial officers at hospitals and health systems across the country report a lack of confidence in their current financial tools' ability to handle the changes.

In fact, according to Kaufman Hall's 2019 CFO Outlook: Healthcare report, only 13 percent of CFOs say their organization is "very prepared" to handle the new models. In 2018, that number was 15 percent.

IMPACT

Being nimble and adapting to changes is a key component to financial success for most U.S. healthcare organizations, which has a lot of CFOs worried about the changing landscape.

Less than a quarter, 23 percent, say they're "very confident" their organization could switch strategies on the fly if it was required, which is a two percentage-point drop from a year ago at this time.

There was one big area of consensus: that their organization could be doing more to inform their strategies via financial and operational data. In total, 96 percent said they should be doing more in this regard, while 94 percent said they feel the need to offer more insights into how their group's financial health is affecting the overall strategy of the business.

Again this year, CFOs' number one priority is identifying and managing cost-reduction initiatives. Certain financial realities are making cost transformation imperative -- chief among them revenue and expense, consumerism, and regulatory and competitive pressures.

CFOs' second- and third-highest priorities, respectively, are predicting and managing the impact of changing payment models; and improving performance management and reporting to operational and C-suite leaders.

WHAT ELSE YOU SHOULD KNOW

Despite the lack of confidence, CFOs largely agree that improvement opportunities exist, with 64 percent prioritizing cost management and efficiency. Close to half say their organizations are looking to improve cost accounting and service line analytics, capital planning and tracking, and long-range financial planning.

One way to tackle some of their current challenges is to shorten long budget cycles, adding value to the analysis of finance executives. Thirty-seven percent of CFOs have a budget process that takes six or more months from the initial rollout to the board presentation; that's up from 27 percent in 2018.

Close to half, 46 percent, say their budget cycles do not leave ample time for value-added analysis that can inform strategic decisions. That's about the same number as last year.

THE TREND

The Centers for Medicare and Medicaid Services has been rolling out new payment models in an ongoing push to transition healthcare toward value-based care and reducing costs. Some will be mandatory.

New models coming down the pike will center on high-cost areas such as end-stage renal disease, cancer care, chronic disease and other serious medical conditions, and CMSa has said that providers should be willing to take on more risk.

Twitter: @JELagasse

Email the writer: jeff.lagasse@himssmedia.com

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