Healthcare providers are facing significant challenges as economic uncertainties impact the sector. Pressures from government shutdowns and trade tensions are creating a tumultuous environment for hospitals and healthcare systems. With thinner margins and shifting reimbursements, providers are increasingly looking for innovative financial strategies to ensure stability.
Financial Pressures Intensify for Providers
According to Adam Keck, Senior Vice President and Director of Managed Service Solutions at Fifth Third Bank, healthcare systems are navigating a landscape filled with uncertainty. Many are operating on “razor-thin margins,” and the situation is exacerbated by coverage losses that are expected to lead to decreased preventive care visits. Keck noted, “You’re going to see less preventative care visits from that population. That will lead to an influx of people coming into emergency rooms.”
This shift significantly impacts healthcare costs. Legal obligations require hospitals to treat all patients, often leading to higher care costs. Keck highlighted that this situation results in increased bad debt as patients may struggle to cover expenses out of pocket. In this challenging financial climate, access to liquidity and specialized credit facilities has become crucial for healthcare organizations.
Transforming Payables into Strategic Advantages
Historically viewed as a cost center, the accounts payable function is being reimagined as a potential profit center. Keck emphasized the importance of automation in optimizing payables, enabling healthcare clients to negotiate early-pay discounts and improve financial visibility. “When you start thinking about getting better visibility to invoices sooner and taking advantage of early pay discounts,” he explained, “three pillars — liquidity, revenue cycle, and payables — are critical to financial capability.”
Fifth Third Bank has developed tailored solutions that address these areas. Keck explained the bank collaborates with healthcare clients to enhance their financial operations, focusing on the integration of industry expertise that allows for dynamic interactions among key financial elements.
Chief financial officers (CFOs) are advised to monitor various metrics, such as denial rates and patient collection percentages, to identify early warning signs of potential cash flow issues. Keck stresses the importance of proactive action plans based on these indicators to maintain financial health and ensure patient care remains at the forefront.
Embracing Automation for Operational Efficiency
Keck pointed out that healthcare systems can significantly benefit from implementing automation at scale. Many providers still depend on outdated methods, such as spreadsheets or bespoke solutions, which can falter with staff turnover. Scalable automation enhances accuracy, allowing organizations to redirect staff toward more critical challenges, such as patient engagement and denial management.
For those CFOs who have already invested in technology but have not seen desired outcomes, Keck suggests starting with thorough change management and process evaluations. “Once the technology’s put in place, has the right change management structure been established to ensure it’s being fully embraced?” he asked.
Fifth Third often provides modular solutions, enabling clients to gradually develop their capabilities. Keck stated that establishing a strong operational foundation is essential before adding advanced analytics and additional features.
Real-Time Visibility: The Future of Healthcare Finance
Looking ahead, Keck believes that “real-time visibility in healthcare is going to continue to be the name of the game.” Executives are moving towards embedded, data-driven systems that provide immediate insights into liquidity and financial operations.
To achieve this, he encourages healthcare CFOs to “think slow, act fast,” emphasizing the necessity of thorough planning before execution. He noted, “The preparation that you put in, ensuring you have the right structures ahead of starting actual hands-on integration work, is the most critical thing you can do.”
As healthcare systems adapt to these economic pressures, the focus on innovative financial strategies and operational improvements will be vital for maintaining stability and ensuring quality patient care.
