Revolutionizing Healthcare Finance in 2024

By Rachel Gonner, CPA, CPP, Business Assurance & Advisory Services Manager

Revolutionizing Healthcare Finance in 2024

Navigating opportunities, digital adoption, and financial resilience strategies

Embracing disruption—The new normal

Adopting new technologies and innovative business models may present the top challenge for healthcare organizations in 2024. Organizations are shifting to outpatient care due to increasing financial pressures, telemedicine, ambulatory surgery centers, and advancements in medical technologies (IBISWorld, 2023) and this trend is expected to continue. A 2023 report from Strata Decision Technology and Syntellis Performance Solutions indicated a 10% increase in outpatient revenue August 2023 annualized compared to 2022, and consistently higher, positive margins over recent years for outpatient primary hip and knee replacement procedures compared to their loss-generating inpatient counterparts for hospitals. Concurrently, a surge in consolidations is being driven, in part, by the cost of embracing technological advancements and opportunities for strategic partnerships with non-traditional disruptors like retailers and tech companies. In this landscape, integrating digital technologies seamlessly and leveraging generative AI to address critical issues are essential steps for staying ahead.


Strategic Insights: The financial investment required for technological adoption can be substantial. However, recognizing the long-term financial gains and improved patient outcomes can justify these expenditures.


Workforce dynamics—Balancing talent retention and efficiency

As talent shortages and workforce challenges persist into 2024, attracting and retaining clinical staff remains a top priority (IBISWorld, 2023), although, positively, healthcare organizations have reported lessened dependence on staffing agencies to fill various critical positions (Strata). Healthcare organizations face a significant challenge as 77% lack a formal physician retention strategy, according to a May 9, 2023, MGMA Stat poll (LocumTenens). While higher compensation, flexible hours, and additional paid time off are identified as key retention factors, understanding clinicians’ attitudes about their work is a critical first step to building effective strategies. Yet, surprisingly, almost half of healthcare organizations surveyed by LocumTenens do not use engagement surveys. Additionally, establishing a clinician retention committee to analyze turnover data and implement targeted improvements is not only a crucial first step, but it also signals the organization’s commitment to addressing these challenges, potentially reducing turnover rates instantly by 5% to 10%. Strategic workforce planning is key to navigating the evolving healthcare landscape, retaining skilled employees, and supporting digital transformation.


Strategic Insights: Workforce strategies may face resistance or doubt. Overcoming these challenges requires open communication highlighting the long-term benefits of change. Influential critics, when engaged in the process, can become advocates promoting positive results (LocumTemens).


Financial resilience—Navigating rising costs and outsourcing strategies

Rising labor costs and high-interest rates create financial strain, though sector revenue is expected to grow in 2024 and beyond (IBISWorld, 2023). August 2023 annualized median investment per physician increased 12.1% from 2021, following closely behind the 12.7% increase in net revenue per physician (LocumTenens). Government initiatives and financial support eased the initial financial impact of the pandemic, however, the continuous surge in costs and staffing challenges has prolonged the sector’s ongoing instability (IBISWorld, 2023). Not surprisingly, healthcare organizations are increasingly turning to outsourcing, with the U.S. hospital outsourcing market projected to grow at a CAGR of 10.8% from 2023 to 2032 (Precedence Research). Outsourcing administrative and back-office functions such as IT, revenue cycle, billing, claims, and supply chain management to third-party providers offer benefits such as time savings, cost reduction, and staffing flexibility, addressing challenges in managerial efficiency and limited budgets.


Strategic Insights: Conducting a thorough cost-benefit analysis will be key to maximizing efficiency and cost savings. Additionally, organizations must be mindful that ensuring a smooth transition and upholding the data security and quality of outsourced services may pose challenges.


Technological innovations—Unleashing the potential of Generative AI

Generative AI in healthcare promises significant breakthroughs in 2024, from reducing administrative burdens to improving overall outcomes for public health by enhancing clinical decision-making, identifying and treating high-risk patients, predicting heart attacks, forecasting chronic kidney disease, and ensuring the standardization and protection of patient and medical data (IBISWorld, 2023). As healthcare organizations explore and implement generative AI, the source and quality of underlying data becomes essential. Investing in resources and training to harness AI’s potential is a strategic priority for organizations aiming to stay at the forefront of technological advancements.


Strategic Insights: Ensuring data security and privacy in the era of AI is a major concern. Organizations must invest in robust cybersecurity measures to build and maintain trust among patients and staff.


Consumer-centric strategies—Addressing affordability and digital tools

Consumer-centric approaches take center stage in 2024, as affordability issues and increasing consumer demands impact strategy. Medical inflation and rising coverage costs may lead to higher premiums and out-of-pocket costs for consumers, further compelling consumers to carefully choose healthcare providers based on price and quality. Health care leaders can strengthen loyalty and increase access and affordability by providing digital tools, including telehealth and wearable technologies, that enhance the consumer experience (IBISWorld, 2023). Empowering consumers to take an active role in their health and offering more affordable treatment options ensures continued access to healthcare, improved patient outcomes, and strengthens an organization’s position in this competitive market.


Strategic Insights: Implementing digital tools requires not only financial investment but also cultural shifts within organizations. Training staff and educating consumers on these tools is critical.


Healthcare ecosystem—Meeting the needs of an aging population

Demographics and rising incomes will continue to drive increasing healthcare spending in the US (IBISWorld, 2023). An aging population’s expanding medical needs, coupled with broader insurance coverage, has led to a surge in healthcare consumption. Beyond hospitals and ambulatory care, nursing and residential care facilities play a crucial role in catering to the needs of an aging population. Yet, these facilities are some of the hardest hit by staffing shortages.


Strategic Insights: Demographic trends will continue to shape the demand for nursing and residential care facilities. Investing in staffing, quality, and technology initiatives is crucial for addressing the challenges posed by an aging population.


Social assistance providers—An outsized role post-pandemic

Social assistance providers have seen a significant role in the aftermath of the COVID-19 pandemic, delivering a range of social assistance services directly to individuals and families (IBISWorld, 2023). Demand for these services will continue to surge. However, in mental health and substance clinics, the challenge of staffing shortages pre-dates the pandemic and remains particularly pronounced. While the sector received substantial federal funding during the pandemic, this funding has since dried up. Yet, challenges such as inadequate reimbursement rates, complex billing, and disparities in coverage persist, affecting accessibility and affordability.


Strategic Insights: Ongoing advocacy and reform efforts are crucial to address these issues and enhance the quality of behavioral health care. Additionally, to ensure long-term sustainability beyond government assistance, social support providers must seek diverse funding sources. Forming partnerships with private organizations and community networks can significantly contribute to the financial stability of these providers.


Conclusion

2024 calls for healthcare organizations to strategically adapt to innovation, address workforce challenges, build financial resilience, and embrace technological advancements in order to thrive. Here’s to a year of innovation, resilience, and impactful healthcare solutions.

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About the Author


Rachel Gonner

Rachel Gonner, CPA, CPP, Business Assurance & Advisory Services Manager

Rachel is a Manager in Keiter’s Business Assurance and Advisory Services department. She brings a passion for providing superior value to her clients through the highest form of quality service. Understanding her clients’ organizational missions and providing tailored engagement services is paramount to her approach.

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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.

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