The Happy Marriage of Hospital Finance and Frontline Operations
Many finance offices within the healthcare sector are facing a dilemma. I have worked with quite a few and I see how they are consumed with the daily tasks of accounting for the revenue and expenses of the organization, keeping up with new and changing regulations, and simply closing the books. Unfortunately, this leaves little time for them to partner with the operational frontline, but there are remedies for improvement.
I was with a finance department that sought to better understand what operational customers valued and needed. By initiating dialog, we heard directly from frontline leaders that the tasks consuming finance were those that operations considered “administrative” or “controller-type.” Although vitally important and necessary, these activities weren’t what the operational frontline valued. Operational stakeholders were surveyed to gather direct feedback. The ultimate goal of the exercise was to:
- Improve communication between finance and its stakeholders, and understand the needs and requirements of their constituents
- Provide information on how effectively finance was meeting its stakeholders’ needs
- Help the finance department identify roles/services that stakeholders desire from them
- Establish a baseline for developing the appropriate transformation strategy and associated delivery service model
I’ve learned that the survey results gathered at one healthcare organization seem to closely represent where many other healthcare organizations are today. Below is a summary of the results. Through this effort, we found that stakeholders perceive that finance spends over 60 percent of its time on administrative and controller-type tasks. The remainder is spent on tasks viewed as highly valuable by the stakeholders (good news!).
|Finance Task||Stakeholder perception of time spent|
|Administrator||Spends time processing transactions and is tactically focused on fulfilling requests.||38%|
|Controller||Spends time setting policy and ensuring process and policy compliance.||24%|
|Valued Business Partner||Spends time with other business/functional heads. Interested in improving my business metrics rather than finance’s agenda.||20%|
|Finance Expert||Spends time providing insight and information to managers on finance issues.||18%|
The trick is to figure out how to maintain the critical “administrator” and “controller” activities, yet begin to augment them with resources that can work elbow-to-elbow with operations as their valued business partner and finance expert. Feedback from the operational frontline included comments like (beware, some of these cut straight to the heart):
- Stop assuming you know what we need
- Become less siloed
- Stop withholding information
- Stop changing the operational definitions and be more transparent about how the data is derived
- Help us to understand the targets and what is driving the variances
- Eliminate your paper processes
- Standardize on a process; it’s tough to manage to targets and processes that continually change
Without the right context, this feedback can be demoralizing to the hardworking finance staff. Unfortunately, sometimes the truth hurts! The feedback, however, speaks to the reality of the situation. I can honestly say, staff in finance offices across the country are working incredibly hard just to keep the lights on… and it’s never enough. It’s a daunting task. The first step is to admit there is a problem. If the organization supports a transition from the current reality to a finance team that not only keeps the lights on, but also teams up with operations to elevate performance across the organization, then it’s time to begin the journey toward reinventing the finance office.
Get the Finance House in Order
Create Simplicity, Transparency, and Trust
Cleaning up the hospital finance department back office starts with removing the spaghetti flow of information, where numerous requests for reports overwhelm analysts as they sift through disparate systems to surface information that will help tell the financial story. Figure 1 illustrates a complex data flow. This is a painstaking process and one that repeats itself each and every month. It definitely creates job security, but there is a better way to redirect this effort from number crunching to one valued by frontline operations. The finance department can work to transform this.
Figure 1 Data complexity and the spaghetti flow of information.
As I wrote in a previous article, the Enterprise Data Warehouse (EDW) is a safe, central repository of data that is organized and optimized for measurement, analysis, and reporting. The true value of the data warehouse is to organize data, provide links across disparate data sources (so the analysts don’t have to), and provide access so analysts and clinicians can “fish for themselves.” Each component of the analytic framework must be studied, assessed, and a determination made as to its role in the future state. Directing analysts to a single source of truth will pay dividends in terms of standardization and consistency. This becomes a rare opportunity to step back and look not only at technology, but also at how data is generated and consumed. Adding another layer of technology will only exacerbate the situation. This work can pay dividends from an information transparency perspective, and can also redirect valuable time spent moving and modifying data, toward supporting operations. It’s a win-win!
Liberate the Financial Analysts
The finance office needs to liberate financial analysts from their number crunching activities. Assembling a finance team that demonstrates high-level analytic skills, a thorough understanding of the business, and communicates financial knowledge across the organization is what most operational leaders desire. Giving them access to a single source of truth where information is standardized and organized for fast access will greatly enhance their support.
I like to reference Jeremy Hope, the founder of the Beyond Budgeting Roundtable, and his book, “Reinventing the CFO,” in which he wrote, “…companies today demand far more from their CFOs than simply managing the numbers. They expect strategic support and leadership that can boost manager’s performance throughout the firm and enhance the bottom line.” Begin to reduce the complexity of the analytic infrastructure to start seeing a more controlled and predictable process, and one that improves the job satisfaction of all involved. Instead of waiting for the local Excel guru to export the data to his PC, reformat it, manipulate it, and publish it, the information will be available every morning upon login.
Understand Where You Stand in the Eyes of Your Customer – What Do They Value?
Have you asked clinical and operational leaders how well the finance team is meeting their needs? I suspect not, but I bet the feedback would align pretty closely to the numbers quoted earlier. There is such variability across clinical operations in its ability to understand basic financial concepts. This isn’t surprising since most started as compassionate clinicians who treat patients. I bet most of them dread the finance aspect of their jobs because we provide them with reports they don’t understand, from a myriad of disconnected systems, in terms they don’t recognize, and ask them to explain variances without access to the information they need. Just when they finish one month, they start the process over the next month. I think they want help! Finance can step up and help them enhance their basic financial acumen, help them find information to tell the story and help them to run and elevate the performance of their business. Jeremy Hope adds another piece of valuable insight when he sums up the challenge like this: “The first task for the CFO is to liberate both finance and business managers from huge amounts of detail and the proliferation of complex systems that increase their workload and deny them time for reflection and analysis. This means purging their systems, measures, and reports and eradicating work that adds little value (e.g., detailed planning processes, redundant systems and irrelevant reports).”
Reinventing the Finance Office: Let the Journey Begin
Pick a seasoned financial analyst to pilot a financial liaison role. Consider co-locating that resource with the clinical/operational leader(s) they will support. They can sit side-by-side with the leader during the preparation and delivery of the operational/financial reviews. They will quickly begin to understand first-hand how they can better support these leaders. I’m confident clinical operations staff will appreciate the help and will begin to step up their game in terms of running their businesses. This will also allow the operational leader time to reflect on their business and how to enhance their performance.
Would you like to use or share these concepts? Download this quality improvement presentation highlighting the key main points.