Preparing for the changes in healthcare: Part 1 Financial Improvement

Health care organizations are under a lot of pressure due to rising costs of health insurance and governmental requirements and regulations. To better serve their customers and to stay ahead of the challenges, health care enterprises must improve their operational as well as financial performances. Many organizations will have their own in-house consultants or management team, but not all. Any health care organization will benefit from seeking healthcare management consulting to improve their strategies and achieve their goals.

Health care is a business and those running the show must understand how to manage the business. This means that administrative information, financial data and clinical data must be taken and analyzed in order to put the information obtained into new strategies and other actions. In other words, health care managers need access to this information in order to understand the nature of the business.

Improving Financial Performance
By working with healthcare management consultants, a health care organization will be able to better manage its operational costs, present new growth opportunities, and ultimately increase revenue. With better financial performance, an organization can provide better health care to patients and eliminate problems with cash flow.

Competition is high in the health care industry and optimized financial performance will put an organization above its competitors. With healthcare management consulting, an organization can have access to necessary tools and data analysis.

Essential Components of a Financial Analysis

In a recent newsletter we reviewed  the 5 key components of a successful financial analysis. Following these can create nearly overnight revenue increases with little to no additional expense.  In todays economic situation where we all have to do more with less I thought these ideas may be of interest.

Getting Paid For What You Do

It sounds simple but “revenue leaks” can cause an organization to lose valuable capital.  A thorough review of the organization’s service to payment operations can identify these leaks and ensure that they do not continue.

Cash Flow

The saying goes “cash is king” and cash is the life blood of any organization.  A solid financial review needs to include the identification of all revenue sources and the setting of benchmarks at all levels of the organization including service contracts, payers, and grants.

Expense Review

If your organization needs to “fund its mission” or “create shareholder value” a critical component of a financial review is to evaluate the expenses required to generate that revenue.  This review will allow organizations to identify programs, services, and offices that bring value to the organization.

Payer Aging

Do you know which payer pays within 30, 60, 90 days or hardly ever?  Do you know the total cost to your organization related to the submission of claims?  The answers to these questions are critical to all organizations.  Understanding your payer aging can stabilize cash flow and increase both the top and bottom line.

Brian Johnson BHM’s SVP of Finanace and Claims Operations stated “Few things are more vital to the success of an organization than a financial analysis”

Importance of Financial Analysis

Does your organization use financial benchmarks and evaluations for future planning?  Do you have a clear indication on how your business is performing and where it could improve?  If you answered no to either question then your organization could benefit from a financial analysis.  A financial analysis is a comprehensive tool which is essential to understanding how your business is currently performing, and how you can allocate resources for improvement in the future.  Financial analysis can help you evaluate your return on investment and also give you an edge over the competition in a down market. “Few things are more vital to the success of an organization than a comprehensive financial analysis. It takes the guesswork out of success and can greatly help your organization from a strategic standpoint” said Brian Johnson BHM’s SVP of Fianciacial and Claims Operations.  In fact now when many organizations are experiencing lower profit margins and wide cutbacks a financial analysis can be an important tool in getting the most bang out of your buck.  It can really help you pinpoint your strengths and weaknesses and adjust your planning strategy accordingly.  Analysis can improve profitability, allow you to set benchmarks, assist your organization in optimizing productivity, and allow you to get a thorough look at your finances situation now and into the future.  Tomorrow I will review the essential components of a financial analysis.