Financial management of healthcare organizations is a highly fraught subject, and has become more so in the past few weeks. How do you run the finances of a big organization when the only measure of the value of your products is the reimbursements you are paid for them – and those reimbursements are all over the map, bear little resemblance to any underlying value, and are decided by faceless bureaucrats and committees someplace?
How can you put a real price on things when you are not selling what the customer wants – the customer wants a fixed heart, a birthed baby, or help managing their diabetes, but what you are selling is nights in the hospital, tests, and home visits?
How do you run the finances of an organization when most of the people whose decisions and processes deeply effect your costs, your revenues, and your quality (the doctors) don't work for you – and in fact often have interests that contradict yours? How do you plan for a very turbulent future when the predictive analysis tools you have are so poor, and when the supposedly best predictive analysis tools in the world – the risk management software of major banks and financial institutions – have shown themselves completely unable to deal with the simplest outliers, multiple variables, or changed assumptions?
How do you plan for a future in which an emboldened Democratic Congress and a new president will confront the growing fear (indeed the boiling rage) about healthcare insecurity in this country among an increasing fraction of the population – including most of the insured, who are one layoff, one serious cancer drug, or one arbitrary rescission away from bankruptcy – at the same time that they deal with a financial crisis which not only robs them of any funds to throw at the problem but greatly increases the very healthcare insecurity that they are trying to solve?
You can see why hospital CFOs sleep like babies – they wake up every two hours and cry. The industry desperately needs to get a much more modern handle on its processes, to be able to tell what they do that makes money and what doesn't and why, what is a true asset and what isn't, what their real risk exposure is. As we head into the vicious season of long knives represented by the coming new Congress, that is exactly what we don't have.