After COVID-19 disrupted the healthcare system last year, finance teams adjusted processes to provide budget flexibility and rolling forecasts and will continue to do so in 2021, according to Syntellis Performance Solutions’ 2021 Healthcare Financial Trends Survey report.
Compared to 2019, 59 percent more respondents expressed confidence in their team’s capacity to quickly adjust finance strategies, rising from 24 percent in 2019 to 83 percent in 2020.
The 2021 Healthcare Financial Technology Trends: Evolving Priorities and Best Practices report is based on online survey responses from late 2020. Respondents included over 160 healthcare finance leaders from a wide range of US hospitals and health systems.
During a year of unexpected and complex changes within the healthcare industry, finance teams have reinvented processes and adopted new capabilities like rolling forecasting to manage their budgets effectively.
The survey results show nearly a 100 percent increase in the use of rolling forecasts, with 12 percent of 2020 respondents reporting that their organization uses rolling forecasts instead of annual budgeting compared to 7 percent in 2019.
Rolling forecasts use historical data to predict future performance over a continuous period of time. The forecasts are updated regularly throughout the year to predict the next period of time. This system of budgeting gives organizations financial flexibility, which is key to ensuring funds are being allocated to departments where they are most needed.
Nearly half (49 percent) of individuals reported that their organizations use rolling forecasts as a supplement to annual budgeting. After a year of unexpected obstacles per COVID-19, the prevalence of rolling forecasts is expected to continue to grow. Nearly three out of five respondents (59 percent) said that their organizations will make rolling forecasting a priority in order to provide the freedom to continually reevaluate and adjust budgets.
John Muir Health has been using the dynamic technique of rolling forecasting for four budget seasons now.
“It’s true that we’re budgeting for shorter timeframes. However, what it allows us to do is actually give managers, directors, and the folks who are actually running departments targets that they can focus on,” Chris Pass, CFO of the California-based health system, told RevCycleIntelligence last year. “And if things change drastically in the beginning of the year, say, in the first quarter, then we can give people new targets throughout the year.
While rolling forecasting could prevent budgeting issues in the future, the survey revealed that cost management as well as data and analytics are two of the greatest keys to financial recovery in the present.
Eighty-two percent of respondents cited cost management as “very important” in helping their organizations maintain or reestablish their fiscal health, and 87 percent rated clinical quality data and insights as important or very important to performance reporting initiatives.
“We’ve all seen great heroism from front-line healthcare workers since the start of the pandemic, but what hasn’t been visible to most until now is the way that their organizations’ finance teams have also stepped up,” said Craig Schiff, President and CEO of BPM Partners. “They’ve adopted new tools and practices while responding to a time of constant and unprecedented change.”
Additionally, 76 percent of those surveyed said their organizations should focus more on leveraging financial and operational data to advise strategic decisions. The Syntellis survey also found that there is sizable room for technological improvement in planning processes, as almost one in four organizations still use spreadsheets for budgeting (23 percent).
For More Information: https://revcycleintelligence.com/news/rolling-forecasts-budget-flexibility-key-2021-health-finance-trends