As seen in Providence Business News

Financial data has immense value. It can tell you the true history of your healthcare organization, reveal the honest story of its performance, and highlight hidden growth opportunities.

Yet, in my experience, many healthcare organizations are not using it as a decision-making tool. They use it to explain decisions retroactively but not to make them. That can lead to serious challenges, from payroll disruptions to facility closures — even to bankruptcy.

Let’s explore five ways financial data can help you proactively manage your healthcare organization and increase your revenue.

5 Ways Financial Data Can Drive Healthcare Decisions

Strategic Budgeting

Budgeting is not so much a task but rather a strategic planning initiative where you get all stakeholders aligned and then hold them to the plan. It is the act of setting a roadmap for where your healthcare organization is going in the coming year and how you will get there. But the success of that plan depends on the accuracy of your numbers.

Use accurate past financial data as your baseline. If you do not have accurate financials you can trust, this is the first place to start. This roots your team’s projections in truth, not hope. You might pad those census numbers for seasonal drops, known expense hikes, or pandemics, but on the whole, use numbers you find, not invent.

Then, continuously monitor your actuals versus projections to dynamically adjust your budget, navigate to targets, and reduce the chance of end-of-year surprises.

Manage Your Workforce

The best staff members often come at a high price. However, they become even more expensive if they are underutilized or over-taxed.

Financial data can tell you how much staff members cost, how likely any given person is to leave the healthcare organization, and how often you have hired a placement agency to cover staff who called out sick. Those numbers can help you forecast your staffing needs more accurately for the coming year.

Financial data can also help you identify and address workforce issues quickly. If you start seeing higher overtime expenses and increases in contract labor costs, you can staff up, introduce new schedules, or make full-time offers to your contract professionals. Plus, you can measure the impact of those changes in the following quarter and every quarter thereafter.

Control Your Costs

Every healthcare organization should have a cash flow report. It is an early warning system for escalating costs and can turn what feels like financial pressure into opportunities to become more efficient and grow.

For example, say you run a network of nursing homes. Your real-time cash flow might show that payroll is rapidly outpacing admissions earnings. Though you would like to find skilled patients, filling empty beds with Medicaid patients might temporarily help with cash flow. That way, you can afford to pay and retain staff who would otherwise be not fully productive.

Run Data-Driven Marketing Campaigns

Healthcare organizations need effective marketing to sustain patient admissions. However, limited margins mean every dollar must be spent wisely. Real-time budget tracking can guide your marketing decisions quarter over quarter.

If billboards and commercials are not raising admissions like you predicted, you can switch to cheaper strategies like building relationships with doctor’s offices or senior centers. If you are not getting as many referrals from those facilities as you would like, perhaps you can test direct mail or online advertising.

Without a pulse on your finances, you would not know what your marketing earns you, if anything.

Corporate Restructuring

With rising competition and evolving regulations, many healthcare organizations are downsizing or considering a sale or merger. Your financial data can provide much-needed direction.

When an ancillary service company lost its primary revenue stream, we used its financial data to develop a new cost structure with less overhead and reduced staff. You might identify a high-performing service line that, with more investment, could carry your organization.

If neither growth nor layoffs are viable options, your past financial data can help you prepare for M&A. It can serve as the basis of your valuation and guide you through the tax implications of a sale.

Develop a Financial Data Strategy Now

Your financial data helps you make decisions that put your healthcare organization in the best possible position. The best time to invest in a financial data strategy is when things are going well, long before you need those reports.

Put your energy and resources toward upgrading technology, hiring the right people, and charting paths to revenue — before you are stuck in a fight to fill beds or open blocks of time with unused staff without knowing how you got there.

Citrin Cooperman has a comprehensive, dedicated Healthcare Industry Practice that provides professional services to organizations across the entire healthcare ecosystem. Get in touch with our Healthcare Industry Practice today!