How Do You Incorporate New Service Lines Or Changes When Preparing The Forecast

Healthcare finance leaders are under more pressure than ever to support their organizations by managing uncertainty, volatility, and risk. Every bit a result, fiscal planning is more than circuitous than ever, evolving from a function-focused activity into integrated financial and operational planning that touches the entire organization.

As both payment and strategic planning shift to go more service- and population-centric, financial planning methodologies are shifting as well. Increasingly, fiscal planning uses driver-based approaches to help organizations model the touch of possible changes in book and mix of patient populations (often referred to as clinical service lines) on acquirement and expenses.

These projections can also be used to make up one's mind departmental targets, adjusting workload drivers to projection the relative impact across various components of intendance.

The importance of the service line perspective

For many organizations, planning based on service lines is a divergence from current functional views of their business. In that location are several advantages to moving to a service line approach.

Service lines are the most comprehensive fashion to understand operating results, and therefore they should grade the basis for strategic planning, capital planning, almanac budgeting and forecasting, and performance analyses. Only by using a service-line view can all activities inside a hospital or health arrangement be accordingly aligned and performance outcomes better understood.

A await at the budgeting and forecasting procedure confirms this perspective. In the absence of a service line approach, each department decides on its volumes independently based on intuition or historical trends. What is missing is a connection to the patients, and thus the services, the hospital is currently offering, planning to focus on, or building for the future.

For case, if a hospital is developing a strategic plan to increase cancer services and eliminate pediatrics, the budget and forecast should reflect that change. In the absenteeism of a service line approach, the departments would not suit their forecasts appropriately, and resources would exist ineffectively allocated based on historical data.

Putting the service line perspective into activeness

The hospital's planning procedure, both long and short term, is greatly enhanced by beingness viewed through the lens of effective service lines. The diagram below represents a service-line-based process that can be used for long-term strategic planning and for annual budgeting; the only difference is the time element. Case volumes are the starting bespeak, driving net acquirement based on payers and driving departmental budgets based on utilization.

The strategic plan is the centerpiece of the process and should generate significant portions of the capital plan and annual upkeep. It should also be a major source of data for understanding operating performance.

Diagram: Service line-based planning

Strategic and uppercase plans integrated at the service line level should then be meshed with the annual operating budget and forecast. Patient-driven supplies and staffing are variable and should reflect the anticipated volumes in the strategic plan. As noted earlier, departments will budget based on historical trends if there is no data suggesting changes in example volumes or mix.

The almanac budget should derive its variable expenses direct from the strategic plan for the post-obit reasons:

Department volumes are driven by service line and tin vary significantly with a major change in case types or volumes.

Productivity planning as part of the budget process is all-time analyzed at a lower level, such as the production (or charge main code) level. If orthopedics volume is declining merely cardiology increasing, for example, that change could strain the resources of some nursing units and underutilize others. Information technology could too consequence in shifts in production mix in ancillary departments that require very different supplies and time.

Major supply expense is driven directly by the volumes of specific case types. If demographics suggest the market place catchment expanse is getting younger, for example, in that location could exist a dramatic decline in orthopedic hip implants. Variable supplies should be derived straight from projections of cases by service line.

Overcoming barriers

Fifty-fifty hospitals that employ the service-line perspective in their planning oft practise not incorporate it fully. The well-nigh often cited barrier is a lack of data to support accountability.

A arrangement must be in place that provides the tools necessary to project assumptions and integrate the various plans. That requires a robust data store with meaning capabilities for what-if modeling and plan consolidation.

Having a reliable solution to facilitate integrated planning and analytics is critical to success in today's environment. Competitive pressures, payer demands, and the emergence of value-based payment all require that successful organizations access timely and robust functioning data and convert that data in actionable information to support efficient operation and high-quality outcomes.

Although the transition to service-line planning may seem daunting, committing fully to that approach is imperative to truly achieve high performance.

Jay Spence is vice president of solutions marketing with Kaufman Hall's Software Sectionalization.