By Justin Hubbard
The COVID-19 crisis of 2020 has impacted all industries. However, few industries have been impacted as severely as the healthcare industry. Consider the following situations that have impacted many healthcare organizations:
- Emergency rooms furloughed employees due to low census levels, in the middle of a pandemic.
- Thousands, if not millions, of elective procedures could not be performed due to social distancing requirements.
- Patient safety was threatened by supply chain issues and visitation policies.
- Administrative duties within healthcare organizations have been moved to remote work environments.
- Healthcare administrators wrestle with regulations that appear to change daily.
- Finance teams struggle to stay informed on various government stimulus packages while trying to manage a precarious cash flow situation.
2020 has been multiple months of Shakespearean drama wrapped up in, of all things, an election year!
At the date of this writing, we are weeks into the second half of 2020. Most healthcare organizations have restructured operations to ensure patient safety, protect employee health, comply with regulations and triaged key business functions to ensure adequate support.
However, many are struggling to understand the financial health of their organization. Accounting and finance teams have been decimated by COVID-19. Many organizations have struggled to understand their financial health for a while now, but the COVID-19 crisis has increased the risk of this lack of understanding to an uncomfortable degree. Providers and administrators are asking themselves “Are we profitable and if not, why?”
Regardless of the impact of COVID-19 on healthcare organizations, the one universal challenge in reaching a new normal is trying to gain visibility and transparency of information across the organization in order to better manage costs and link cost to outcomes and industry performance – without negatively impacting revenue and growth.
One of the ways healthcare organizations can avoid over-investing in human and IT resources is to cost-effectively scale or outsource their IT systems, including their financial management systems.
As healthcare organizations strive to cost-effectively scale their business, cloud-based accounting solutions are being recognized as viable solutions. Small offices and mid-sized partnerships, practices with hundreds of specialists, plus laboratories, surgical and urgent care centers and assisted living facilities are all looking for ways to increase revenues through faster and more accurate billing.
Healthcare organizations must also reduce costs by automating manual processes, mitigating the risk of employee turnover or shortages, and making better, faster business decisions by gaining real-time visibility into operational and financial data. Outsourcing the accounting function can be the key to financial health and an efficient solution for the accounting and administrative cycle that is vital to success.
A good outsourced partner is comprised of experienced professionals that will evaluate your financial processes and controls, implement a secure, cloud-based software and manage the accounting and reporting functions to provide you real-time results.
However, the right partner also brings professionals with a deep understanding of the business of healthcare. Some of the benefits of a strong outsourcing relationship include:
- A collaborative environment with improved visibility into an entity’s performance via dimension-based reporting (e.g., by physician, physician’s assistant, office location, service line / revenue stream or another category).
- Key financial information available on dashboards accessible from any device at any time with an Internet connection.
- Strong internal controls and segregation of duties to minimize the potential of fraud.
- A team of professionals committed to your success.
- Standardized, automated workflows and processes for accounts payable, employee expense reports, credit card transactions, payroll cycles, fixed asset tracking and bank reconciliations.
- Integrations with other critical business applications to reduce time and costs involved in accounting operations.
- Timely monthly reporting packages with variances to budgets and prior period results.
- An outsourced CFO, who understands the business of healthcare, that interprets financial information, performs profitability analysis, creates cash flow forecasts and adapts business processes to changes in the operations.
Insight Driving Agility
Owners of medical practices that utilize strong outsourced accounting services experience many of the following benefits that allow them to move away from manual processes and alternatively analyze key metrics instead of spending hours on computing:
- More time to focus on operations, patient care, cost control measures, training and retention of employees, compliance with regulatory requirements and other core processes essential to the success of the practice.
- Ability to react to emerging concerns, identify trends, and anticipate strategic requirements.
- Lower investment in technology, software and infrastructure.
- Safeguarding of assets due to improved internal controls and segregation of duties.
- Real-time visibility into key operational metrics and streamlined processes, eliminating manual data entry and Excel-based financial reporting.
- Predictable monthly cost of accounting services.
- Additional value in the overall business resulting from timely, quality financial information and sound financial practices (e.g., to potential lenders, to new investors or for merger and acquisition opportunities).
Establishing streamlined, embedded processes also allows healthcare organizations to easily comply with auditors’ requirements for complete transparency.
If you outsource pieces of your accounting functions with a qualified CPA partner, you should benefit from improved financial controls that are maintained right within the system and be able to centralize everything you are doing offline into one place.
Healthcare organizations that utilize accounting systems which emphasizes flexibility and delivers timely data will be best suited to navigate future uncertainty and take advantage of growth opportunities as they arise.
-Justin Hubbard is director of Accounting and Financial Outsourcing Services at Dean Dorton.