The healthcare industry continues to grow year over year, to the surprise of no one. In fact, with a massive anticipated global market cap of over $665 billion it remains one of the largest overall sectors worldwide in terms of market share; an incredible feat. In 2023, the total amount spent on healthcare in the U.S. alone was more than the entire GDP. It may sound impossible, but healthcare costs in the last year alone exceeded almost $5 trillion.
On the flip side, costs associated with healthcare have also increased, creating the need for balance in terms of revenue and expenses. That’s where financial management in healthcare becomes such an important factor. In spite of massive growth, it’s important to understand the facts about financial management in healthcare as the sector continues to grow and evolve into the future.
What is Financial Management in Healthcare?
The intent of financial management in healthcare is the established process to plan and organize the financial resources—both incoming and outgoing—of an entire healthcare organization. This often includes detailed analytics and reporting on all revenues and expenses for the organization, with the goal of sustained financial growth while still maintaining quality healthcare to patients.
- Budgeting – It’s important to develop and maintain a proper budget so that a healthcare organization’s resources are being allocated properly.
- Compliance and Regulatory Requirements – In healthcare, you will need to ensure compliance with financial regulations as well as local, state, and federal regulatory requirements.
- Cost Management – By identifying and managing rising costs in the industry, you can improve efficiency and profitability of the organization across the board.
- Financial Reporting – With proper financial reporting you can prepare and analyze the performance of a healthcare organization with ease.
- Revenue Control – Processing billing, invoices, and recurring payments from patients and insurance providers is a crucial element in healthcare.
- Risk Management – The process of identifying and then mitigating potential financial risks that are commonplace in healthcare.
It’s a smart idea for a financial manager in a healthcare organization to utilize efficient payment solutions to assist with payment processing and financial reporting. This can cut down on time and costs, while increasing revenue potential.
Financial Reporting and Analytics in Healthcare
It’s incredibly important for financial management to maintain an efficient and up-to-date balance sheet in the world of healthcare. Ideally, with proper financial reporting, you should be able to keep track of a healthcare organization’s incoming and outgoing transactions at a glance. This should also detail any revenue, expenses, and net income from a variety of sources.
If everything is being accurately reported, you should have full access to every facet including patient billing—both inpatient and outpatient services—as well as insurance reimbursements, government grants, and other revenue streams such as donations and ancillary services like the organization’s cafeteria or gift shop.
With a payment solution like Paysley that prioritizes healthcare financial management, you can even analyze expenses across the board for things such as employee salaries and wages, medical supply costs including everyday supplies, medications, and equipment, facility rental and utility fees, insurance costs, taxes, and much more.
Effective and efficient analysis of revenue and expenses for healthcare organizations allow you to key in on potential areas for cost reductions and increased profitability. This creates the possibility to form data-driven decisions on the overall operations for your healthcare organization based on successful financial management.
Rising Costs in Healthcare
Despite the massive growth, healthcare has to keep in mind the rising costs across the industry. Unfortunately, the healthcare system has become extremely splintered over the years, leading to inefficiencies across the board resulting in higher costs. With so many different healthcare systems in place as well as a broad range of providers and insurances, the system simply lacks coordination and often leads to unnecessary expenses.
Also, healthcare has seen tremendous breakthroughs in technological advances both in terms of treatments and equipment. While this is great for society and humanity, it’s also expensive. Advances in technology often have to recoup research and development costs, leading to higher healthcare costs for providers and patients. This also requires providers to continuously upgrade and maintain medical equipment. Recent breakthroughs in robotic systems for analysis, prevention, and treatment have created much more expensive machinery and systems compared to the older less effective options.
Various administrative costs must also be considered when analyzing the financial management in the field of healthcare. As local, state, and federal systems continue to grow, so does the complexity in adhering to compliance and regulatory requirements. This has led to an increase in labor and software costs as they are required to process payments, track financial transactions, and the handling of insurance claims and patient billing. Thankfully, there are high quality payment services that offer all-in-one solutions to handle these tasks at an affordable monthly rate.
How can a Payment Solution Assist with Financial Management?
For anyone looking to increase the efficiency and profitability of a healthcare organization via proper financial management, you should consider using a payment solution that is built for healthcare. By making use of such solutions, you can provide instant benefit to your healthcare organization by improving the financial management in a multitude of ways including:
- Better Patient Satisfaction – The convenience of using a secure quality payment solution with convenient options like mobile payments, invoicing, and more can increase patient satisfaction and cut down on human-made billing errors.
- Enhanced Financial Reporting – With integrated data analysis, you can generate real-time financial reports to gather key information related to payments, recipes, refunds, and more.
- Improved Cash Flow – By instituting a more accelerated and streamlined process for collecting payments, a healthcare organization can improve cash flow while reducing payment delinquencies with follow-up payment requests and reminders.
- Reduced Administrative Costs – Using a professional payment solution can cut down on required manual labor costs for sourcing and processing payments as well as resulting in fewer accounting errors.
- Secure Payment Transactions – Allowing online, in-person, and even mobile payments allows an organization to automate the payment process for a wide variety of payment types including credit and debit cards.
Once you’ve integrated the right payment solution to assist with the financial management of your healthcare organization, you can implement further strategies in terms of both budgeting, cost reduction, and reporting analytics to further elevate the financial goals of your organization.
