One revenue enhancing ap proach some health systems use is to expand surger y hours in their h ospitals. Studies show that man y patients are willing to have surgery at 9:00 P .M. if there is a discounted price associated with it. 2 This is one of the man y cr eative ways healthcar e or g anizations can adapt to ensur e high utilization of doctors , rooms, and equipment. A Dri v e T owards Efficiency All industries perpetually sear ch for ways to increase efficiency , but the healthcare industry ’ s unique duty to further public health despite limited resources mak es this drive urgent and essential. One major efficiency upgrade across th e industry in recent decades is the transition to electronic medical records (EMR). One study in volving emergency departments showed that emer gency rooms with fully functional EMR had an average stay 22. 4% lower than emergency rooms withou t them, and a 13.1% lower diagnostic time. 3 A separate study showed EMR can reduce nursing documentation ti me by up to 30%. 4 E fficiency is also important to allow f or adaptation to new regulations and requir ements. Government standards continue to evolve, forcing health systems to rearr ange processes and s ystems to meet the new requirements. This continuous upheav al can also neg atively impact efficiency if the changes are not manag ed pro perly . The Shifting Pay er Landscape In addition to financial and operational shak e-ups, health systems must closely monitor and react to the shifting pa yer landscape. Many insur ance and Medicar e pa yer s now pay for outcomes r ather than specific activiti es, which often results in hospitals feeling squeezed by b oth groups. To avoid this and instead incr ease r ev enue, health systems must impr ov e price transpar ency and patient billing processes. For e x ample, giving price estimates bef ore the point-of-service, off ering convenient pa yment options, and automating medical billing helps providers collect quickly from patients. T echnologies that link provider s to pa yers without multiple phone calls and website searches can enable r eal-time cost estimates, allowing staff to eng age in mor e meaningful patient collection discussions bef or e medical bills turn int o provider bad debt. And finally , linking back to the importance of efficiency , health systems must automate wisely . The Council for Affor dable Quality Healthcare (CAQH) found that pr ovider s could sa ve $8.5 billion annually 2 T o W ea ther Long - T er m Chan g es to H ealthc a r e d ue to C O VI D -19, C F Os N eed an Action P lan : h  t  tp  s://www  .h  ealthc  ar  e  finan  cene  ws  .c  om/ne  ws  /w  ea  ther  -  l  ong-t  erm  -chan  g  es  -healthc  ar  e  -due-c  ov  id-  19-  cf  os  -ne  ed  - action  -p  lan 3 Electr onic Medic al R ec or d s and the E f ficiency of H os pit al E mer g ency Departm en ts : h t tp s://www .r esear chg a t e.ne t/publica tion /446799 01_El ect r onic_Medi c al_R ec or d s _an d_ the_E ffi ciency_o f_Hos pit al_Emer  g  ency_  Departm  en  ts 4 E lectr onic Medic al R ec or d s and Cos t E f ficiency in H os pit al Med ic al - Sur gic al Un its : h  t  tp  s  ://journals  .s  ag  epu  b.c  om/doi/pd  f/10.50  34/inquiry  jrn  l_  47.02.1  10

Budgeti

ng Appr

o

aches

As your org anization r eacts and r esponds to these strategy challenges, it is crucial to hav e a budgeting method in place. Listed below are a few examples of popular approach es, sometimes combined, that help with budgeting and for ecasting for the futur e.

R olling F or ecast A r olling f orecast budgeting approach enables organizations to continuously plan over a set time horiz on. For e xample, if y our org anization produces a plan f or the calendar y ear 2021, a rolling f orecast re-f orecasts the next twelve months at the end of each quarter . This approach is esp ecially helpful during unpredictable ti mes or crises as it allows for adaptati ons as cir cumstances change. Be aware that it r equires a lot of meeting and analysis to update budget and change cour se, but ultimately , it is good pr actice to meet regularly to evaluat e recent information and adjust accor dingly . Basel ine Bud get ing This approach us es current spending levels as the "ba seline" for establishing future funding requirements and assumes future budgets will equal the current budget times the inflation r ate times the populati on growth rate. Futur e budg et = Curr ent budg et x Inflation r ate x P opulation gr owth r ate This approach is best used during times of relative stability , with no expected rises in costs or expenses or une xpected crises aff ecting the industry at large. Initiative/Priority Based Budgetin g This appr oach prioritiz es the impact diff erent str ategic initiatives ma y ha ve on your budget and allocat es budget to specific initiatives or priorities. Differ ent initiatives ma y increase or decrease revenue and reimbursements, r aise or lower volumes, and drive the cost of delivering care up or down. Healthcare organizations should identify the k ey drivers associated with each proposed initiative and then model the financial and operation al impacts of the initiati ve over time.

Linking

Budget a

nd Str

at

eg

y

The Balanced Scorecar d Fr amework A str ategy fr amework lik e the Balanced Scorecar d (BSC) will help your or g aniz ation build and e x ecute a str ategy to achieve its goals and address the challenges described above. The BSC fra mework is base d on the balance b etween l eading and lag ging indicators, which can respectively be thought of as the d rive rs and outco mes of your company goals. When used in the Balanced Scorecar d fr amework, these k ey indicator s tell you whether you’ r e accomplishing y our goals and whether you’ re on track to accomplish future goals. A Balanced Scorecard includes goals acr oss four k ey categories, link ed measures to help g auge progress toward those goals, and link ed initiativ es that help further ea ch goal. By adding initiatives to you r Balanced Scorecard aimed at resp onding to the chall enges and trends above, you can ensure you’re on tr ack to achiev e your long-term goals r eg ar dless of ext ernal c ons tr aints. Once you understand how these str ategic elements fit together and inform each other , you can build a str ategy that enables your health s ystem to meet an y challenges. Y ou can then choose a budgeting approach to ex ecute on this str ategy and use some of the innovative budgeting methods d etailed above to e v alua te progr ess. Communicatin g the Strate gy and Budget Creating a str ategy and choosing a budget approach to ex ecute it is just half the battle. It is equally crucial to explain strategy a nd budgeting process clearl y to departments and teams and implement it at ev ery level of the organization. Y ou must communicate the plan to all departments and e xplain that all funding requests from departments must directly link to a str ategic priority or goal. This ensures future funding r eques ts align to your s tr at egy . Managing your Budget within a Regular Strate gy M anagement Cadence After creating a str ategic plan with an accompan ying budget and communicating it across the organization, you need to implement and carry out strategy reporting, which is a k ey factor in the success of your decisi on-making proce ss. R egular reporting requires leader s to adapt and change the str ategy and budget during leadership meetings, after data and r eports are r eviewed. Be especially prepared to adjust if y ou are using a r olling f or ecas t budgeting model. It is also essential to pr ovide an appropriate reporting template for decision-making, one that will present clear and timely information, so your executive team spends more time making good d ecisions and less ti me trying to decipher the reports. Finally, d esign and implement a rep orting schedule wi th regular meeting times so that nothing slips thr ough the cr acks.

San Juan Regional Medical Center (SJRMC) is a n on-profit, community owned hospital providing healthcare to the Four Corners region of New Mexico, Ariz ona, Utah and Color ado. At SJRMC, reporting is carried out at the committee level. Each committee then reports up to senior leadership, which is ultimately responsibl e for making decisions. SJRMC also empl oys a baselin e budgeting approach, which means the budget is based off the previous year ’s budget and adjusted for any changes in the coming y ear . In response to COVI D-19, SJRMC had to us e furloughs to cu t costs, while also facing a loss of revenue due to the stopping of elective surgeries. In the short-term, SJRMC ’s main challenges involve PPE and supply shortages, as well as ICU bed capacity .

Budget

Bala

ncing

During

and Aft

er

Crises s

uc

h as C

O

VID-19

The A merican Heart Associ ation estimates American h ospitals lost $202.6 billion from March 1, 2020 to June 30, 2020, ex acerbating financial pressures hospitals were f eeling even before the pandemic beg an. COVID-19 e xposed g aps in our healthcare sy stem in a v ariety of wa y s – from who can access car e, to physical space issues, to th e paradox of hospitals losing money in a ti me when th ey are highly needed and in demand. Many larger hospitals were able to be flexible with their space an d expand their ability to service patients with COVID-19, or even create dedi cated COVID-19 free spaces, while small er hospitals and clinic s were u nable to do this. Given that treating COVID-19 patients comes at a net financial loss for hospitals, the influx of CO VID-19 patients is dominating hospitals’ available space and some government legislations mandated at v arious st ages that all volunt ary sur gery be paused, healthcare s y stems hav e had a lot to na vig ate and o ver co me. The pandemic introduced unpr ecedented demands on hospit al systems, but ther e is no clear pa yer behind these demands. At the same time hospitals are providing these unpreced ented but costly services, they are unable to provide the most revenue-generating ser vices (such as elective surgery). They are losing more money than ever before, which mak es the budgeting pr ocess very difficult. Thus, in the wak e of COVID-19, hospitals and health systems must rethink not just the clinical model, but the entire financial model ar ound it. Many experts agree traditional budgeting models are obsolete as there is so much unknown in the health industry today (volume, revenue, expenses, cash flow , etc .). Right now , health s y stems need a structur ed, car efully orches tr at ed rolling f or ecas t pr ocess to frequently and consistently dr aw on the most recent inf ormation to mak e the next decision. In f act, healthcare providers acr oss the country are seeing that consumer s now expect virtual care as the pref erred method of receiving treatment given the ongoing prev alence of the COVID-19 virus. Healthcar e s ystems needed to quickly adapt to better support—or ev en unv eil for the fir st time — teleheal th ser vice s to meet this new de mand.

In the long-ter m, Carili on C linic is concerned ab out the many underl ying conditi ons that will go undiagnosed or unmanaged during the pandemic. It will require many resourc es to heal and care for those patients, and healthcare s ystems need to mak e sure both their str ategy and budget ar e prepared to handle this over the next two to five year s.

Co

nclusion

All things considered, health s y stems couldn’t afford to just bunk er down during the CO VID-19 pandemic. There will be effects for year s to come that need to be planned out and dealt with accordingly . Ther e is no one-siz e-fits-all approach to ensure healthcare or g anizations success into the future, but having a sound str ategy and budget in place, and making sur e they are aligned, is a gr eat s t arting place. As we see with Jefferson Health, Carilion Clinic, and San Juan Regional Medical Center , transparency in the strategic planning process was crucial as they reacted and adapted to the cha nging healthcare en vir onment of COVID-19. Mak e sure your organization is ready to f ace the industry’ s str ategy challenges head on, equipped with a budget and th e techn ol ogy to manage it all.

CLE ARPOINT F OR HE AL THCARE S TRA TE G Y AND BUDGETING Implementing th e right technology tools is crucial to successfully imple ment and manage a str at egic budget. It is import ant to link to financial and patient-centric dat a sources and incorporate input from mul tiple individuals, teams, an d departments. ClearP oint is a compr ehensive str ategy management system with robust reporting t ools. Our software is designed to help healthcare s ystems build, manage, e xecute, and report on their str ategic plans and link ed budgets. Some of ClearPoint’ s top f eatures for hospital reporting include: Cus tomiz able templates and la y outs Data visualizations (dashb oards, charts, and more) Automatic dat a uploads, calculations, and aggreg ation A t-a-glance s t atus indic a tors Inter active, click able f ormats Ability to combine both quantit ative and qualitativ e inf ormation T o learn more, visit www  .clearpointstr  ategy  .com.