CHICAGO--(BUSINESS WIRE)--Syntellis Performance Solutions, the leading provider of enterprise performance management software, data and intelligence solutions, today released its sixth annual CFO Outlook for Healthcare report, which finds that despite declining operating margins over the past year, nearly nine in 10 (89%) finance leaders remain confident in their organization’s ability to quickly adjust to changing market conditions as they head into 2023, down slightly from 92% the previous year.
The report combines Syntellis’ year-end key performance data from thousands of providers nationwide with survey results from more than 200 healthcare finance leaders to highlight key challenges and priorities facing healthcare in 2023.
“Healthcare leaders feel positive about their ability to adjust to changing market conditions, but there remains room for improvement when it comes to solutions they use to guide operational, financial and strategic decision-making,” said Flint Brenton, CEO of Syntellis Performance Solutions. “The findings of this year’s report underscore the need for healthcare leaders to adopt modern data and analytics platforms to solve for the biggest issues facing their organizations — including workforce productivity and cost management.”
Key findings of the report include:
Workforce Challenges Persist
Healthcare finance leaders are in near complete agreement that workforce optimization and productivity are a major concern, with 98% citing it as a top or high priority for 2023. When asked which additional matters keep them up at night, respondents reported:
- Employed labor (67%)
- Contract labor (61%)
- Inflation (55%)
- Supply chain expenses (39%)
To address these concerns, finance leaders cited reducing costs (67%), managing improvement initiatives (63%), and measuring and managing productivity (52%) as top departmental goals for 2023.
Operating Margins Continue to Fall Amid Rising Expenses and Labor Costs
Healthcare providers nationwide faced a conflux of challenges in 2022, including decreased federal aid, inflation, rising labor costs, and other repercussions of long-running workforce shortages. The combined impacts of these and other challenges contributed to a very difficult year for the industry as operating margins narrowed and labor and non-labor expenses increased.
Syntellis data finds operating margins fell below 2021 levels each month throughout 2022. Year-over-year median Operating Margin declines by month ranged from –7.7 percentage points in April 2022 versus April 2021, to a decline of just –0.7 percentage points for November 2022 versus November 2021. Not surprisingly, expenses rose throughout 2022. Median total expense rose to a high in January of 11.5% above January 2021 levels, while labor expense climbed to a high in February of 13.7% above February 2021.
Revenue Growth Failed to Keep Up With Expense Increases
Although hospitals and health systems experienced a 4.7% increase in gross operating revenue from 2021 to 2022, the gains failed to keep up with expense increases. Total expenses rose 5.7% from 2021 to 2022. Throughout 2022, gross operating revenue was up 18.9% compared to 2020 and 16.3% from pre-pandemic levels in 2019. Outpatient revenue continues to drive this growth — increasing 7.5% from 2021 to 2022 — reflecting an industry-wide shift from inpatient to outpatient care.
Healthcare Organizations Fall Short in Using Data for Decision-Making
While healthcare organizations largely take advantage of benchmarks to monitor performance, a vast majority of finance professionals (78%) said their organizations should do more to leverage financial and operational data to inform strategic decisions. Less than a quarter (22%) of respondents said their organizations do not need to do more to leverage data for strategic decision-making. However, among the organizations that do use benchmarks, 40% are not satisfied with their data submission process.
U.S. hospitals, health systems, physician groups, and other healthcare organizations face a multitude of challenges, including inflation, ongoing labor shortages, evolving consumer preferences, and other market shifts. Five imperatives drawn from Syntellis’ latest data and survey results include:
- Optimizing the Workforce – With no end to widespread labor shortages in sight, healthcare leaders must make optimizing their existing workforce a major organizational priority. This includes monitoring and managing workforce productivity, as well as providing incentives to help retain and empower employees.
- Ensuring Effective Cost Management – Many healthcare organizations are confident in the accuracy of their cost accounting data but unable to use it to implement meaningful cost strategies. Organizations need reliable and efficient cost accounting solutions to help finance leaders analyze cost trends, pinpoint variances and the underlying causes, and drive effective, ongoing cost management.
- Continuously Monitoring Performance – Healthcare leaders need to understand the many factors driving performance, such as rising costs, shifting volumes, and fluctuating revenues. Tracking performance relative to internal and external financial and operational benchmarks helps leaders better gauge how their organizations are faring relative to historical performance and the broader market.
- Deploying Comprehensive Decision Support Solutions – In today's rapidly evolving market, healthcare leaders need to make decisions based on current, sound data and analyses. Now is the time for healthcare finance leaders to elevate their analytics capabilities to optimize data-driven decision-making for their organizations.
- Understanding Your Organization's Place Within Its Market – In addition to broader economic forces, healthcare leaders must contend with intense competition and changes occurring within local markets. They need access to reliable insights into these and other market dynamics to help make critical decisions, such as where to grow services, shift care delivery models, or close or consolidate underused or duplicative facilities.
“In 2022, healthcare leaders experienced turbulent market conditions and we expect these challenges will persist in the year ahead,” said Steve Wasson, EVP & General Manager, Data & Intelligence Solutions of Syntellis Performance Solutions. “To navigate these uncertain times, it’s essential for healthcare organizations to make data and intelligence core to their strategic planning and decision-making. Having access to diverse data from trustworthy sources in and outside of their organizations will provide vital context to improve financial forecasts and budgets while driving strategic and operational decisions.”
Download the full Syntellis 2023 CFO Outlook for Healthcare report here.
About Syntellis Performance Solutions
Syntellis Performance Solutions provides innovative enterprise performance management software, data, and intelligence solutions for healthcare organizations. Its solutions include enterprise planning, cost and decision support, and financial and clinical analytics tools to elevate organizational performance and transform vision into reality. More than 2,800 organizations and 450,000 users rely on Axiom, Connected Analytics, and Stratasan software. With an HFMA Peer Review designation for nearly a decade and No. 1 rankings from Black Book Research multiple years running, Syntellis helps healthcare providers acquire insights, accelerate decisions, and advance their business plans. For more information, please visit www.syntellis.com.
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