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Strategic planning in the new year: 3 challenges and 3 digital solutions

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Strategic planning in the new year: 3 challenges and 3 digital solutions

As the fourth quarter soon comes to a close, hospitals are examining 2022 year-end revenue, setting goals for 2023 long-term capital, and creating strategic plans for patient engagement and staffing stability to achieve pre-COVID-19 patient volumes and revenue.

CFOs will continue to focus on margin pressures, enhancing revenue, controlling costs, continued staffing challenges and enhancing the patient experience while improving efficiency and driving down costs.

Challenge 1: Patient care is more complex leading to more expensive procedures

From 2020 to 2022, non-COVID patients delayed or avoided care, including primary care and other specialty care visits, resulting in a 10% overall increase in patient acuity, as measured by the average length of hospital stay.

According to a survey of primary care physicians by the Primary Care Collaborative and the Larry A. Green Center, 37% said that their patients with chronic conditions were “in noticeably worse health” resulting from the pandemic. Additionally, 56% of physicians noted that they had seen an increase in negative health burdens due to delayed or inaccessible care.

The pandemic particularly impacted routine screenings for diseases such as breast cancer. A study published in the Journal of Cancer found that screenings decreased by 80.6% for colorectal cancer, 69% for cervical cancer and 55.3% for breast cancer over three months in 2021. Data from Strata Decision Technology show that the case mix index (CMI) —  another measure of the severity of inpatient cases for patients receiving hospital-based procedures — increased significantly from pre-pandemic levels. In 2022, CMI for patients receiving mastectomies (breast tissue removal) was up 11.1%; for appendectomies (appendix removal), it was up 15%; and for hysterectomies (uterus removal), it was up 7%.

Caring for sicker patients often requires more staff time, more intensive treatments and higher-cost drugs and greater need for more supplies and equipment. Combined with rapidly rising economy-wide inflation and reimbursement shortfalls, these mounting costs threaten the financial stability of hospitals around the country.

In these circumstances, manually managing staff time, treatments, medical records and coding is improbable, if not impossible. Digital data management enables healthcare systems to capture and manage critical information to maximize yield.

Challenge 2: Expenses are still high from labor and specialty supplies

Consumers aren’t the only ones feeling the pinch of rising prices. The rise in patient acuity has driven increased labor, drug and supply costs for hospitals, creating unsustainable financial challenges.

Hospital expenses have increased by 23% since 2016. Supply chain issues, medication costs and labor challenges sparked by the COVID-19 pandemic have all  contributed to spiking hospital expenses.

Multiple factors are contributing to alarming and sustained increases in hospital expenses. Growth in labor expenses is outpacing increased hours worked, suggesting hospitals are paying more due to nationwide labor shortages. Rising supply and drug expenses also point to worldwide supply chain issues.

The American Hospital Association (AHA) noted that a Kaufman Hall analysis found hospital labor costs were up 12% in June from a year ago. Hospitals also are contending with higher-cost drugs, the need for more supplies and equipment, rapidly rising general inflation and reimbursement shortfalls.

Growth in labor expenses is of particular concern. Hospitals are reporting a 7.2% increase in labor expenses compared with 2021 and are saying that healthcare staffing agencies are charging far more than they did before the COVID-19 pandemic. In a bipartisan effort, nearly 200 members of Congress have asked the Biden administration to investigate price gouging by nursing staffing agencies.

Challenge 3: Payers having extensive delays

Insurance companies have also been impacted by the “Great Resignation” and are struggling to replace lost headcount, which has exacerbated the issues created by delays in physician billing and has led to greater lag times in processes such as appeal review and approval.

Payers initially experienced cost reductions due to care delays but then experienced a subsequent increase in operating expenses due to the growing volume of COVID-19 patients and the resumption of deferred health services. Likewise, as insurance is an industry premised on forecasting and risk assessment, the fundamentally unpredictable nature of a pandemic created significant challenges for payer operations in 2021, particularly in pricing and enrollment.

Anthem Blue Cross, the country’s second-biggest health insurance company, is behind on billions of dollars in payments owed to hospitals and doctors because of onerous new reimbursement rules, computer problem, and mishandled claims.

Even when new staff is brought in, it can take months, if not years, for them to acquire the advanced level of skill needed, especially when it comes to coding, as issues during the coding process can cause claims to be rejected or denied. This, in turn, leads to additional work for staff, poor cash flow, delayed or incorrect reimbursement and write-offs.

Here are three ways CFOs can address complex patient care issues, rising costs and payer delays.

Strategy 1: Digital workforce optimization

As more physicians retire at the end of their careers or leave the workforce due to burnout caused by such things as increased administrative tasks, including charting and updating electronic health records (EHRs), the net result means decreased patient care access. Too, the task of dealing with EHRs, note-taking or other “paperwork” is creating more of a burden for nursing staff, and taking away from their time caring for patients.

Revenue cycle management programs can help healthcare professionals focus on patient care by integrating existing systems to enhance patient experience and improve financial performance. Automating processes in the revenue cycle helps an overburdened workforce effectively manage the surges of returning patients.

Strategy 2: Strategically implement technology

As mentioned earlier, the burnout epidemic has far-reaching implications across productivity, care and costs. A recent study by the University of Texas Medical Branch found that nationwide physician burnout is increasing the frequency of premature retirements and attrition rates. The Well-Being Index “State of Well-Being 2021–2022 Report” shows the incidence of physician burnout to be around 55%, with 52% of respondents reporting emotional lability and a third of physicians reporting not having enough time for their personal or family life. The burnout rates worsened an anticipated shortage of medical personnel. The University of Texas Medical Branch estimated the total annual cost of burnout among healthcare managers to be $300 billion.

Hospitals and clinics should make it easier for healthcare professionals to do their jobs. Strategic partnerships, tech-enabled services and process automation give providers more time to consult with patients and less time on administration. If the workflow is better, that gives medical specialists more time to consult with other physicians about a patient’s case and provide better care.

Strategy 3: Utilize outsourcing partnerships

An article in hfm magazine reports that the pandemic-driven workforce shortage is leading to significant changes in revenue cycle management operations at many hospitals and health systems. According to one recent survey, 55% of healthcare finance leaders say they have a shortage of billing specialists, and 42% said they have a shortage of patient follow-up staff.

Healthcare institutions and hospitals increasingly use services in the global healthcare outsourcing market. The many benefits outsourcers bring extend beyond just filling headcount. Outsourcing all or a portion of revenue cycle operations can deliver benefits that healthcare systems might never be able to realize on their own. The following are just a few examples:

  • Liberates management’s schedule to focus on more strategic initiatives
  • Provides access to broader, multi-shore talent pools at lower costs
  • Delivers training at scale, which improves work quality, and clean-claim rates and reduces errors, denials, lingering days in A/R and delayed reimbursement
  • Reduces infrastructure costs, as outsourcers can spread each investment across many clients
  • Supplies broader access to automation technology, enabling greater process consistency and efficiency
  • Enables quicker and more proactive identification of payer trends for more timely intervention, facilitating fewer denials and faster, more accurate reimbursement
  • Offers access to a higher level of payer-specific expertise than any one practice would have


The effects of the COVID-19 pandemic will likely continue to impact healthcare systems for years to come. Implementing digital strategies will help relieve the burden on administration, physicians and nurses, allowing them to focus on what they do best: patient care.

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