Cashflow is a seldom-discussed yet immensely important function in the average hospital. Considering that health care costs are rising rapidly, legislation is getting more intense, technologies are evolving quickly and accounting departments in the medical department have traditionally struggled to get the job done, cashflow can also be a major issue without many individuals being aware.
Because health care facilities are far more focused upon patient care and other medical matters than accounting and finance, it might be helpful to consider entrepreneurial firms and other businesses that have complex demands and how they optimize their processes and policies.
Let's take a look at five steps all hospitals can take toward more consistent, predictable cash flow from an operational standpoint:
"Cashflow visibility can directly improve financial decision making."
1. Maximize visibility, transparency
Inc. argued that the most important step is to completely open the books, ensuring that managers and decision-makers have exceptional visibility of the data contained therein. This information can range from average weekly cash in to accounts that are severely delinquent and beyond. The idea is to have perspective of where cashflow is at all points in time, and some strong forecasts of where it might stand a few weeks, months or years down the road. This directly improves financial decision making accuracy and outcomes.
2. Integrate disparate systems
Cashflow is dependent upon a range of mitigating factors and external forces. Many hospitals will silo this information, keeping data in various pieces of software or other environments and never truly seeing the big picture. Forbes once explained that too many silos will increase the risk of poor collaboration between departments and a lack of unification across policies and leadership frameworks. Use solutions that help to integrate all financial data that could potentially impact the view of cashflow.
3. Leverage analytics tools
Once those disparate systems have been unified, hospitals should seriously consider utilizing analytics tools that help to better evaluate cashflow in a more efficient fashion. Crunching numbers has long been a task in the accounting department, but it does not necessarily yield the best results. Rather, consider deploying cashflow analysis tools that keep transparency up and information in real time, as this will generally yield a tighter and more comprehensive understanding of the hospital's finances.
4. Get control of accounts payable/receivable
When AP/AR is not functioning like a well-oiled machine, it might be impossible to create forecasts. Money in and money out is the fundamental activity involved in cashflow, and too many medical facilities are struggling to collect the dues owed to them in a timely fashion. In many instances, this could be a relatively easy fix, potentially with a policy overhaul or the introduction of new strategies to keep investments and revenues flowing in a more steady fashion. At the end of the day, leaders in the department need to step up and evaluate AP/AR, then decide what can be improved.
5. Outsource collections
Debt collection has been an ongoing issue in the health care community, and it appears as though this problem is only going to intensify in the coming years. Because accounting departments have more important tasks to focus on – such as monitoring cashflow – than reaching out to patients with outstanding bills, outsourcing can be an extremely positive move. This can alleviate the strain placed on accounting professionals who might have virtually no experience in collections, and leaves that to a company that specializes in such activities.
Do not wait to improve your accounting performance – outsource collections today!