Why is financial planning a must for hospitals these days?
Hospitals are becoming increasingly dependent on the health insurance providers when it comes to cash flows as insurance providers are increasing their depth in the market.
The ratio of reimbursements from insurance providers will grow at a much faster rate as insurance awareness and the overall economy grows. This dependence on the insurance providers who operate under different service frameworks can lead to gaps in the cash flow cycle. Any further change in the turnaround time for reimbursements can lead to temporary cash flow disruptions and hence requires active planning.
Standard Chartered Bank is closely involved with some of the leading players in this industry to help hospitals efficiently manage their cash flows – both on the collection side and on the payment side, thereby enabling hospitals to have an optimised cash flow cycle.
What are the financial challenges that hospital CEOs and CFOs face today?
One of the biggest challenges that any hospital faces is that of reconciling multiple receivables coming from various intermediary players (Insurers etc.,) due to which accurate forecasting of cash flows becomes difficult for hospitals. CEOs and CFOs also face the challenge of technology obsolescence and hence, there is a constant pressure to increase capital spend on high-tech medical equipment and related infrastructure. Other challenges include agility in adapting to the newer methods of payments and collections.
What are the key things that hospitals should look for while selecting banking solutions?
The key aspects that hospitals should look at while choosing their banking partner are:
- Ability to customise solutions
- Robust coverage with market leading relationship managers who can serve as trusted advisors
- Digital capabilities to help ease of doing banking
- Ability to tailor best practices from across the globe
- Fast turnaround time
- Improvement in operational efficiency including reduction of man hours on banking thus saving cost
- Innovative banking solutions aimed at cost reduction
How can hospitals brace themselves for future financial disruption?
Financial disruption is increasingly happening at multiple levels as far as hospitals are concerned. Firstly, there are significant developments happening in the payment / collection infrastructure of the hospitals. Secondly, patients also now have multiple options in the form of digital platforms leading to better access to credit and creative insurance products from new and emerging fintech players leading to massive multiplication of health coverage to hitherto uncovered population.
Hospitals should brace themselves by
- Active financial planning reviewed annually
- Establishing relationship with banks who can help with advice on the latest innovations and regulations in the financial sector
- Adopt and adapt technology to deliver better patient experience and
- Build flexibility in operations to ensure smooth transition to newer technologies and innovations; for e.g., open up to new digital payment methods which are cost efficient such as UPI & IMPS.
How has banking activities evolved over the years in healthcare?
There has been a sea change in the way hospitals are looking at banking partners, who today are not seen as standalone operational process partners. Today hospitals see banking arrangements as a vital element in providing enhanced patient experience. Banks are not just expected to handle collections and payments but also manage downstream processes like reconciliation and be agile enough to customise solutions. Banks are also expected to be technology partners where new ideas like co-creation of platforms to deliver world class patient experience are discussed and are now the pivot around which decisions are made.
Going forward, in addition to being a conventional banking partner (lending bank / collection bank), banks will also play the role of a tech enabler. Ease of operations and enhanced patient experience will be key to enduring partnership between banks and hospitals.
Most patients are eager to have online access to lab results, account information and costs of common procedures. They also want a consolidated bill and a system that makes it easy for them to pay (i.e., a wide range of payment options that includes secondary insurance, credit cards and/or a payment plan). With multiple digital payment options at patients’ fingertips in recent years, paying bills has become that much simpler. For the consumer, this approach makes the payment process easier and seamless.