Healthcare Finance Literacy: a New Workforce Competency
Finance is integral to every decision that is made in healthcare organizations today. That means everyone on the team should have a basic understanding of healthcare finance.
In a time when industry leaders are attuned to the value imperative in health care, finance literacy is an important workforce competency.
Does that mean everyone needs to know the ins and outs of cost accounting, accountable care organizations versus bundled payment models, and tax-exempt bond financing? Absolutely not. But to function effectively in today’s complex healthcare environment, they should know the basics.
What Finance Literacy Means
Both clinical and nonclinical managers should understand the language of finance and financial reports. How many nonfinancial managers know the difference between cash-basis and accrual accounting? Or what it means for an organization to have a certain number of “days cash on hand”? Or the basics of ROI?
Such knowledge helps managers gain insight into the overall financial health of an enterprise and, ultimately, their role in contributing to it. Managers can’t work toward reducing the total cost of care if their perspective is limited to their department’s budget.
Managers should also understand the difference between fee-for-service and value-based payment on a conceptual level. How would your frontline managers define value in health care? No matter the prevailing payment methodology, the guiding principle is that everything team members do should add value for their customers.
That approach also helps everyone prepare for the volume-to-value transformation. Countless small decisions that healthcare team members make every day enhance or detract from value. Building a high-value healthcare system will require that we all understand the cumulative effect of those small decisions.
Our Efforts to Improve Finance Literacy
Over the past few years, HFMA has taken steps to make finance knowledge accessible to everyone on the healthcare team. For example, in conjunction with the American Organization of Nurse Executives, we developed a healthcare finance certificate program that has become a mainstay of continuing professional education for nurse leaders. Our self-paced, online Business of Health Care course enables all kinds of healthcare professionals to use their knowledge and skills more effectively to improve value. And our new organizational memberships help align employees with cross-departmental and organizational goals.
Healthcare finance literacy can help break down the silos that have characterized healthcare organizations for too long. When clinical and nonclinical leaders have a shared vocabulary, they are better equipped to have constructive, solution-oriented discussions. This is a two-way street—finance leaders need to understand the language of clinicians as well. Mutual understanding helps get everyone in the organization rowing in the same direction.
Joseph J. Fifer, FHFMA, CPA, is president and CEO, HFMA. Follow Joe Fifer on Twitter @HFMAFifer