TREND #1. DATA-DRIVEN DECISION MAKING: BUILDING A PARTNERSHIP BETWEEN CLINICAL AND FINANCIAL LEADERS
Performance management is a series of business processes to correlate financial and operational data to manage the margin and drive informed business decisions that support sound strategic and tactical planning and execution. Many healthcare organizations are in the midst of a transformation that requires finance to transcend from the typical focus on aggregating data to a value added “analytic team” that provides greater visibility into changes in variables and assumptions.
This performance management culture benefits the organization as it begins to speak a common language of accountability and front-line managers begin to understand the relationships between drivers and departmental workload leading to increased ownership of controlling these variables. Examples are provider productivity (optimizing revenue), labor productivity (optimizing overtime hours for nursing, pharmacy or other services), service line margins, and payer contract analysis.
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Performance monitoring within a hospital can be accomplished through strategic partnerships between finance and operations. More fully integrating clinical and financial teams can serve an organization well and lead to financial strength which in turn leads to optimal patient care. Let’s examine how this might work.
A case study in HFMA Magazine featuring Mary Lanning Healthcare, an acute care facility in Nebraska with 20 medical specialties, showcased how data-driven decision making has elevated the role of the hospital finance department from a back-office operational function to a strategic advisor. This was accomplished by strategically delivering data that drives informed business decisions to support sound strategic and tactical planning and execution.
Embracing data-driven decision making requires agile thinking to pinpoint and respond to the short-term and long-term needs of the organization. This shift requires finance to transcend from the typical focus on aggregating data to a value-added analytics team that could provide greater visibility into changes in variables and assumptions.1
- Establishing an effective planning framework to promote efficient and realistic processes that foster accountability is necessary.
- The planning framework should include multi-year financial forecasts that link strategic assumptions to operational budgets, streamline capital planning, use performance reporting and impact analysis (IA) tools.
- The multi-year forecast should be integrated with operational initiatives and data.
- The operational budget should be driver-based, utilizing key global and organization-specific operational metrics.
- Operational metrics and global drivers should be continually evaluated and adjusted over time.
This is just one of the healthcare enterprise performance management trends. In our new guide, we take a look at six performance management trends healthcare executives need to be thinking about in 2016 and beyond. We’ll identify technology strategies and solutions that will help healthcare organizations succeed in a data-driven, cost-management culture.
1 HFMA Strategic Financial Management, Summer Edition, www.hfma.com/sfp