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June 10, 2019 – System integration across the healthcare enterprise was identified as the top IT challenge for healthcare financial executives recently surveyed by Black Book.
Upkeep of current financial legacy system and lack of financial IT talent were the second and third place IT challenges, according to the survey of 1,600 hospital and health system chief financial officers (CFOs) and other financial executives.
“Hospital financial functions, which could benefit immensely from technology investments, have been routinely deprioritized for the past five years because of budgets required for pricey electronic health records implementations,” commented Black Book President Doug Brown.
“Investment decisions have been made even more complex because there has been fluidity in healthcare organizations in determining key performance indicators to measure the financial success of new information technologies like population health tools,” Brown added.
A full 85 percent of senior healthcare financial leaders said they do not have suitable financial metrics for IT return on investment calculations, compared to only 36 percent of senior financial leaders in other industries.
Over the next five years, new technology adoption by healthcare finance departments is expected to result in better data quality, data mining for strategic analysis, optimized financial processes, minimized billing errors, reduced operational costs, and streamlined financial reporting.
Close to three-quarters of U.S. hospitals have automated their financial transactions processes since 2013; however, most are now outdated, according to 70 percent of healthcare CFOs.
DIGITAL TRANSFORMATION INVESTMENT IS CRITICAL FOR HEALTH SYSTEMS
Investment in digital transformation is critical for health systems to remain competitive and maintain quality patient services, according to 80 percent of healthcare CFOs.
More than three-quarters of CFOs and 89 percent of all other senior finance officers in health systems plan to increase their investment in digital transformations by the end of 2020. Of these, two-thirds forecast an increase of more than 20 percent by the end of the first quarter of 2020.
Only 9 percent of respondents said that their digital transformation investment efforts are directed at their regional competition through differentiation, compared to 40 percent of all other non-healthcare CFOs measured by Black Book cross-industry surveys.
Drivers of digital transformation in healthcare include reducing costs of care (96 percent), improving care coordination (93 percent), preparing for value-based care payments (90 percent), upgrading credit rating (90 percent), improving patient/consumer experience (76 percent), improving regulatory status (74 percent), and requiring steady, predictable earnings (72 percent).
“Over the past five years, investment strategies for digital transformation have been influenced among healthcare providers more by the desire to improve operational performance and reduce costs,” said Brown.
“Survey results indicate that future investments are moving towards improving patient experience, and differentiating from the competitors via technological innovations, including the interaction with patient payment and financial systems,” he added.
SIGNIFICANT SHIFT IN HEALTH IT INVESTMENT EXPECTED
Almost all the health systems and provider organizations said they expect a significant shift in IT spending to the CFO’s office next year.
In the second quarter of this year, the top healthcare financial processes that were automated included accounts receivable (80 percent), financial reporting and control (74 percent), and working capital management/treasury (70 percent).
Over the next four years, the top healthcare financial processes to be automated will be financial planning (86 percent), advanced financial analytics (83 percent), budgeting and cost accounting (79 percent), forecasting and decision support (75 percent), strategic planning (61 percent), and financial reporting (58 percent).
“Future investments in healthcare financial automation will focus on better strategy, analysis and predictions for growth,” said Brown.
More than half of healthcare CFOs said that, with few proven cases of digitization in healthcare finance to follow, the finance team has been content to allow their chief information officers to pursue digital transformation initiatives. However, 94 percent of healthcare CFOs intend to dedicate more time to the application of digital technologies to financial tasks without CIO input in the future.
Ninety percent of CFOs expect to move to active implementation of transformational software and services in 2020 from the current state of testing.