I recently had the pleasure of attending the Tennessee Hospital Association’s annual conference, where I moderated a panel called, “Challenges of a Hospital CFO.” I was joined by two fantastic hospital CFOs, Adam Hopper of Methodist North Hospital and Benjamin Cunningham of The University of Tennessee Medical Center. Both Adam and Benjamin graciously shared personal anecdotes and insights about the challenges they face as financial executives in the hospital industry. Although COVID has become less of a news headline in recent months, its impact still lingers – especially on a hospital’s staff and bottom line.
Here are some key takeaways I had from this year’s conference.
Takeaway #1: The hospital business outlook will remain tough for now.
Even before we began our own CFO panel, one of the things that struck me as I talked with attendees of the conference was a shared belief that the business outlook for hospitals was likely to remain rocky in the upcoming year. That is, extreme margin pressure will persist, and as a result, hospitals will need to enact more cost-cutting measures to stay ahead.
Takeaway #2: Hospitals will continue to prioritize staffing issues – especially nursing shortages.
In almost every conference session, the top focus for hospital executives was staffing concerns: recruiting, retaining and streamlining job roles of all frontline workers. Burnout within physician and nursing teams are both at the highest levels they’ve ever been, and hospitals have experienced an unprecedented amount of staffing shortages as a result (this is especially true for nurses). That means, any financial investments hospitals are going to make right now are likely ones that will help solve these staffing challenges.
Takeaway #3: Hospitals will continue to make a push toward value-based care.
Value-based care provides the incentives and flexibility to truly transform care delivery. But with health care costs at an all-time high, many hospitals are stuck straddling a fee-for-service system with their aspirations of a value-based care approach. Much work is needed in these four areas though to make that big leap come to fruition: contracting, physician compensation, digital medicine and care delivery.
Takeaway #4: Technology investments are critical now more than ever.
One of the discussions I had with my fabulous CFO panelists was around technology implementation. Everyone agreed that during COVID, implementing a new technology was low on their list of priorities. Medical staff and other frontline workers were already under a tremendous amount of stress, so introducing a new technology seemed counterproductive at the time. But now that some of the dust has settled from the first few years of the COVID surge, many hospitals are relooking at their plans to introduce technology where it’s needed. And if the technology can assist with their cost-cutting efforts, then it will definitely get prioritized over other initiatives.
Final Thoughts – Investing in Tech Isn’t an ‘Option’ Any More
Hospital teams clearly have much on their plates, even as the worst days of COVID are (hopefully) behind us. But implementing cost-cutting tactics has become increasingly imperative in the wake of the pandemic, driven by extremely high burnout rates and major staffing issues. Hospitals are more open to investing in technology to help their teams too, but only if they can first address their staffing and financial concerns. And, as a former hospital executive myself, I totally get that. But the fact is, technology investments aren’t optional anymore. Even in our own surveys of physicians nationwide, 83 percent said technology to automate administrative work would help improve productivity.
So, my advice to hospitals is simple: now is the time to give technology and automation a chance. Even in the world of automating physician contract and payment processes – the segment my company Ludi focuses on – when hospitals introduce automation here, they typically see a major reduction in administrative burden on their teams and a 5-6x ROI on their initial investment. Hospitals need to make these and other kinds of tech investments now if they have any hope of chipping away at and counteracting the forces driving down their margins.