Healthcare is a complex business. Whether you are a healthcare payor or a provider, you have cost and revenue/funding complexities that are difficult to track—and therefore, difficult to change. So how can you simplify those complexities to ensure you are getting the biggest bang for your healthcare buck?
Put the power in the hands of the business users—not IT. Enable them to analyze data and test scenarios to determine the best ways forward without having to depend on IT (they have enough to do!).
Does this sound like you?
You need to gain visibility and understand the cost to serve different healthcare plans, groups, and members. Getting an accurate understanding of profitability by member segment, healthcare plan, and distribution channel is where you can start. But based on this new insight, you need to improve your marketing programs through better member
What if you could also provide finance and operating staff with more complete documentation and audit trails for regulatory reporting, and visually justify medical loss ratio results?
Is this what you’re experiencing?
Everything is constantly changing, but yet you need to continue to provide superior healthcare to your patients.
Overhead costs are increasing. Administrative costs, IT, malpractice insurance, equipment, and staff are all overheads that continue to rise. If you could test different ways of lowering the cost of overheads, this could lead to a change in practice and an actual reduction in overhead costs.
You must compete on service, portfolio, and brand. Individual procedures alone don’t make a competitive difference anymore. The service and prestige that come with the procedure make the difference. You need a solution to help sort out the relationship between resources, activities, and revenues that are not always easy to figure out.
You need transparency. Patients, suppliers, shareholders, and regulators all demand more transparency. Executives cannot allow surprises regarding their profitability—it could cost them dearly. They need to ensure that both cost and revenue are managed, and in alignment throughout the healthcare organization. Price transparency is a big issue as well. Charge information often bears little relationship to the price that most patients are actually asked to pay.
6 Things Finance Teams in Healthcare Should Do
Although payors and providers are different parts of the healthcare system, it is easy to see they have many common needs. Both have scarce resources and need to allocate them where they will have the biggest impact. Both must understand their sources of cost and minimize them while maintaining efficiency and effectiveness. This must be done on a fairly frequent basis as procedures and health needs change. Both must promote a culture of accountability for everyone to ensure favorable outcomes while keeping costs in line. Both must have adequate tools for analysis and scenario testing, but they also need to keep the total cost of ownership (TCO) low—spending less time on data sourcing, spreadsheet wizardry, and coding changes.
Although healthcare payors and providers have different purposes, they have similar needs. So, what are the 6 important things healthcare payors and providers must do well in order to succeed?
- Identify sources and attributes of cost and profitability with multidimensional analysis
- Accurately allocate costs with a flexible allocation engine that supports their method of allocation; this includes overhead costs as well as direct costs
- Gain confidence and transparency in cost allocations (and revenue flows) with traceability reports (no black box allocations)
- Strategically allocate resources with accurate profitability and cost information
- Improve marketing programs through customer/patient segmentation
- Enable management best practices by leveraging profitability and cost as a performance metrics
Oracle has worked with healthcare payors and providers for many years and understands these important needs. Oracle Profitability and Cost Management Cloud can address all of these needs and more, and provide more complete documentation and audit trails for regulatory reporting at the same time.
To learn more, I invite you to read the following papers:
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