Hospitals’ fiscal ‘pain points’ topped by revenue cycle management, labor costs, workforce shortages
Healthcare CFOs spend more time dealing with cost management and, by extension, operational issues than any other single set of items on their to-do lists.
Just under 60% of those surveyed by the Healthcare Financial Management Association (HFMA) placed this focus high on their list of “pain points” for 2024.
The same broad item topped the list in the same survey three years ago, but at that time it was named by “only” 32% of respondents.
Working with the market research company Eliciting Insights, HFMA received completed surveys from 135 heath system CFOs.
Breaking down the wide net of “cost management & operations” into sub-categories, the researchers found revenue cycle management is the largest slice of the pie, at 24%. Building the segment out to 59% are operations expenses (18%) and cost management (17).
The remaining CFO “mindshare” is occupied by strategy (16%), cash management (8%), internal and external partnerships (8%), IT (6%) and “other” (3%).
In 2021, the height of the COVID-19 pandemic, cash management registered with almost 1 in 5 CFOs while strategy was even higher at 1 in 4.
The 2024 survey is largely focused on margin challenges for hospitals and market opportunities for vendors.
Other interesting findings include:
- Higher labor costs are the No. 1 cause of margin pressure, named by 96% of all respondents and 81% of those working for hospitals with negative or flat margins.
- Also high on this list are lower reimbursement from payers (84%/71%) and higher supply costs (47%/26%).
- Also high on this list are lower reimbursement from payers (84%/71%) and higher supply costs (47%/26%).
- Of labor shortages making a significant impact on hospital margins, shorthandedness involving RNs is the most vexing, named by 99% of respondents. Also producing tall bar graphs are LPNs/medical techs (75%), lab techs (74%) and imaging techs (73%).
- Causing CFOs lesser but still significant margin pain are shortages of coders (55%), business office staff (49%), patient access workers (44%), physicians (35%) and IT people (35%).
Apart from sources of direct margin pressure, the surveyors asked about other areas of concern to CFOs. Findings include:
- 54% of respondents are enjoying positive margins while 39% are seeing margins in the red and 7% are living with flat margins.
- Some 82% of health systems are experiencing higher denial rates from payers than they saw prior to the pandemic.
- Only 39% of CFOs expect AI to help cut costs.
- Almost 20% have stopped accepting at least one Medicare Advantage plan—and an eyebrow-raising 61% are planning to do so or considering the move.
Commenting on the latter findings, the report authors observe:
“Between onerous authorization requirements and high denial rates, health systems are frustrated with Medicare Advantage.”
The full report, “HFMA Health System CFO Pain Points 2024: Margin Challenges & Opportunities for Vendors,” is available for purchase here.
Dave P. has worked in journalism, marketing and public relations for more than 30 years, frequently concentrating on hospitals, healthcare technology and Catholic communications. He has also specialized in fundraising communications, ghostwriting for CEOs of local, national and global charities, nonprofits and foundations.