Planning and Budgeting for Hospitals and Healthcare Delivery Systems is Badly Broken
Thousands of hours are spent creating a budget that is typically tens of millions of dollars off the mark and cast aside almost as soon as it is submitted. Rather than helping to control costs and build strategic alignment, the budget is viewed as a distraction, providing little to no value and even negatively impacting performance.
- The typical large healthcare delivery system spends four to six months and up to 20,000 hours building their annual budget.
- Senior executives and financial managers devote up to 30 percent of their overall time throughout the course of the year to this process.
- 66 percent of healthcare chief financial officers say their organization’s budget is irrelevant within the first three months due to built-in inaccuracies and the difficulty of adjusting the plan to changing conditions.
A Planning Approach that is Accurate, Efficient, Agile and Accountable
As health systems continue to navigate fee-for-service while preparing for the next generation of full value-based payment, they must be able to plan and perform based not only on department verticals, but also horizontally across patient populations, service lines and payors. OnePlan is the first and only planning platform that enables organizations to plan and manage the full Income Statement on both a vertical and horizontal basis. As a result, OnePlan helps hospitals and health systems rapidly shift toward an Advanced Planning approach that is more efficient, accurate, agile and accountable.
- Accurate—OnePlan provides new, advanced budgeting methods, such as Patient Activity Flexing, an approach that leverages accurate and detailed data in Strata’s cost accounting solution to automate and increase the accuracy of the budget process. As compared with a traditional flex budget, Patient Activity Flexing has proven to be significantly more accurate, revealing that up to 50 percent of budget variance can be attributed to the lack of accuracy in traditional budget models versus a true deviation from the plan.
- Efficient—With OnePlan, finance administrators can develop accurate projections and set targets in days rather than weeks. A 5-hospital health system based in the Southeast compared the results of a 5-month budget process developed in their old system to an automated projection developed in minutes with OnePlan. The OnePlan projection proved to be 10x more accurate than the budget they had built over 5 months and thousands of hours with the prior system.
- Agile— No planning solution has ever made pivoting between traditional hierarchies and horizontal perspectives so simple, or even possible. Within minutes, analysts can translate the impact of service line strategies, patient utilization changes and shifts in payor mix across the full P&L and down to a granular, operational level. Sophisticated algorithms translate volume shifts modeled by the finance team into variable staffing and non-staffing expense targets at the department level. Department managers then have a simple interface to react to, adjust and itemize the fixed staffing and non-staffing expenses within their control.
- Accountable — Following the planning process, targets seamlessly flow into the StrataJazz Management and Productivity Reporting modules to be compared against actual results. The monthly variance commentary process solidifies ownership of the budget and plan by front-line managers and quickly highlights areas where the organization is deviating from the plan, so corrective actions can be documented, taken and tracked.
A Single Platform Approach to Financial Planning
Over the last decade, healthcare providers have made significant investments in Electronic Health Records to provide a single clinical platform for their organization. Hospitals and health systems have now concluded that they need to get rid of the many disconnected applications that they use for the financial side of their organization and move to a similar platform approach. OnePlan provides a single platform approach:
- Short and Long Term – Combines long-term planning and short-term budgeting with the ability to apply different lenses and levels of detail. Supports a rolling approach to planning with annual, monthly and/or quarterly budgeting.
- Department and Service Line – Leverages patient-level data that already exists in the StrataJazz platform. Easily pivots to view P&L’s by entity, service line, physician, department, etc.
- Finance and Cost Accounting – Aligns finance and cost accounting teams by leveraging cost data to drive and automate more of the budget process.
- Planning and Performance Management – Provides the ability to adjust the plan as needed and seamlessly update targets, react to financial adversity and drive intervention immediately, as opposed to waiting for the next planning cycle.
- Capital and Operational – A single model provides the ability to layer initiatives and the impact of capital projects on or off of the baseline plan.
- Enterprise-wide Support – Encompasses budgeting for the entire organization, including provider, acute, post-acute, health plan, etc.
- Manager to Executive-Level Accountability – Quickly identifies and escalates performance issues via Management Reporting to help understand root causes, drive corrective action, and track progress.
Join the Webinar
To better understand how the integrated OnePlan platform can help your organization, schedule time with a Strata representative. During this one-on-one session, our Strata Expert will deep-dive into how OnePlan has helped many organizations achieve a more accurate, efficient, agile and accountable planning process.