U.S. healthcare CFOs embrace new profit strategies, says Deloitte
NEW YORK, UNITED STATES — Healthcare chief financial officers (CFOs) in the United States (U.S.) are increasingly adopting comprehensive strategies to enhance profitability, moving beyond traditional cost reduction methods.
According to recent research by Deloitte, finance leaders in the healthcare sector are now prioritizing a diverse range of tools and methods to stabilize and grow operating margins amidst ongoing economic and operational challenges.
Prioritizing operating margin improvement
Deloitte’s survey of over 60 finance leaders from U.S. health plans and health systems revealed that cost reduction, once a primary focus, has now become less of a priority.
Instead, 78% said that improving their organization’s operating margin is among the top three of their priorities this year. To do this, finance leaders are exploring a mix of strategic growth, revenue growth, cost reduction, and capital deployment.
This shift is driven by the realization that solely focusing on cutting costs is insufficient to meet profitability goals in the current economic climate.
Strategic growth and revenue enhancement
Marketing and branding emerged as key strategic growth priorities for healthcare CFOs. Better network management, member retention, and cross-selling opportunities are also high on the agenda, particularly for health plans. Additionally, many healthcare organizations are investing heavily in digital marketing and tailoring their online presence to better engage with patients.
Health system CFOs are also exploring nontraditional revenue models, such as venture investments in startups, to diversify their income streams. This approach is seen as crucial for adapting to evolving market conditions and patient needs.
Leveraging technology for financial growth
Deloitte’s survey also highlights a significant investment in advanced technologies. Around 84% of finance leaders said that they are investing in advanced cybersecurity technologies, and 60% are prioritizing investments in core technologies like customer relationship management solutions.
Healthcare CFOs also recognize the potential of emerging technologies like generative artificial intelligence (GenAI) to streamline operations and reduce costs. For instance, AI can enhance workforce management by reducing employee turnover and burnout, ultimately leading to substantial cost savings.
Capital deployment and financial restructuring
Financial restructuring is another critical lever for healthcare CFOs. Many organizations are reassessing their assets and liabilities to strengthen their capital structure.
This includes optimizing real estate plans and consolidating services to create more cost-effective facilities.
For health plans, financial restructuring involves determining which assets to grow or phase out to meet growth goals.
Untapped opportunities for profitability
Despite the broad range of strategies being employed, some potentially impactful areas remain underutilized.
Optimizing the product and service mix, forming alliances and ecosystems, and exploring outsourcing and offshoring opportunities are identified as areas that could significantly improve profitability but are currently low priorities for many CFOs.
The future of healthcare finance
Healthcare CFOs are at a pivotal period where embracing a comprehensive approach to profitability is essential.
By expanding their focus beyond cost reduction and leveraging a mix of strategic growth, revenue enhancement, technology, and financial restructuring, finance leaders can guide their organizations toward sustainable financial health.
With Deloitte’s latest survey, this is now the time for CFOs to challenge the status quo and explore innovative strategies that will reshape the financial landscape of the healthcare industry.
