Healthcare Industry Insights: A CFO's Perspective

‍The Financial Landscape

The healthcare industry continues to face significant financial pressures, particularly in the wake of the COVID-19 pandemic.  Labor and non-labor costs have increased dramatically, at levels well beyond what we've seen in the past 20 years.  This surge in costs is driven by a number of factors, including general inflation, increased demand for scarce resource, increased regulation and the introduction of innovative and very expensive treatments.

For instance, supply chain disruptions can have far-reaching consequences.  The recent hurricane that affected a major IV manufacturing facility in North Carolina highlighted our industry’s vulnerability to such events.  Replacing 60% of the demand for a critical medical supply overnight is no small feat.

The Operating Room: A Microcosm of Healthcare Challenges

The operating room (OR) serves as an excellent example of the complexities in healthcare operations and finance. ORs are among the most capital-intensive areas in a hospital, requiring significant investments in infrastructure, equipment, and highly skilled staff.  They are also critical revenue and margin generators, often supporting the financial viability of other hospital functions departments.

However, OR efficiency remains a persistent challenge.  Unused OR time represents a substantial opportunity cost, while overbooked schedules can lead to staff disruptions and burnout and patient dissatisfaction.  Balancing these factors requires sophisticated planning and resource allocation.

The Role of Technology in Improving Efficiency & Effectiveness

Unlike many other industries that have leveraged technology to reduce costs and improve quality, healthcare has lagged behind.  Too often, our industry throws significant labor at solving a problem, rather than effectively using technology to address the problem.  Additionally, in the past, when we have added technology, it frequently results in adding staff rather than using technology to improve efficiency and effectiveness.  This approach is not sustainable, especially in the face of growing demand, scarcity of labor and rising costs.

The good news is that we are beginning to see a shift.  New and innovative technologies, particularly in areas like OR scheduling and resource management, are helping us optimize our operations.  These solutions allow us to make better use of our expensive assets and highly trained staff, ultimately improving patient care and financial performance.

The Human Element in Healthcare

While technology is crucial, we must always keep in mind that healthcare is fundamentally about people.  We need to use our human resources more effectively, ensuring that all staff are working at the top of their license or expertise.  This means delegating tasks appropriately and providing opportunities for growth and development at all levels.

Moreover, we must recognize the impact of inefficiencies on patient experience and clinical and operational outcomes.  Unnecessary delays in elective procedures, for example, can lead to deteriorating health conditions and increased costs in the long run.  By improving our operational efficiency, we can provide better care sooner and realize better outcomes for our patients.

Looking Ahead

As I prepare to retire at the end of 2024, I am excited about the prospects for the future of healthcare.  The challenges we face are significant, but so are the opportunities for improvement.  By embracing new and innovative technology, optimizing our operations, and focusing on improving the efficiency and effectiveness of our care delivery processes, we can create a more sustainable and effective healthcare system.

The key lies in being open to new ideas; a willingness to challenge the status quo, and always keeping the patient at the center of those efforts.  As healthcare leaders, it is our responsibility to drive this change and ensure that we are delivering the best possible care in the most efficient manner possible.