In today’s increasingly challenging healthcare environment, finance leaders are seeking ways to evolve their operations to drive innovation and elevate performance. In fact, according to a 2016 survey by the American Productivity & Quality Center, 75 percent of finance leaders believe finance function process improvement is of chief importance, with areas such as improved planning and analysis and staff productivity seen as top priorities.1
Here is a checklist of five steps leaders can take as they approach finance function process improvements in their organizations.
1. Understand Where the Organization Is Now
To make improvements, leaders must first understand where their organization stands on the spectrum of performance – and know where they want the organization to be. To do this, leaders first should perform an honest assessment of where the organization is today.
Leaders must assess the organization through two lenses: through their personal lens as finance leaders and through the lens of the organization’s customers, meaning the end users of the information or service provided by the finance function. When leaders look at the organization’s spectrum of performance through these two lenses, the true gaps in performance will appear, making it easier to gain a sense of the opportunities for improvement.
When evaluating performance, it’s common for leaders to find the organization has varied levels of performance within the same function. For example, in an evaluation of the net revenue accounting function, an organization might be found to have superior performance in the ability to accurately explain and project net revenue and expenses at any time during the month. However, that same organization might underperform in its close process, which might be undesirably lengthy.
After getting a sense of where their organization is on the performance spectrum in certain process areas, leaders must then look at those functions – again through the two lenses – to identify where they want to be as an organization and where their customers want them to be. This provides both direction and purpose for transformation efforts.
2. Use Comparative Analytics to Track Performance
It is helpful for organizations to use a quantitative process, such as comparative analytics, to measure performance. Using comparative analytics offers several benefits. It can:
- Help facilitate transformation by quantifying the organization’s current state of performance (or baseline) and by setting quantifiable goals for desired future performance
- Reinforce the notion that changes need to be made based on performance relative to established benchmarks
- Attract buy-in from stakeholders throughout the organization, as analytics are collected and evaluated across departments and geographies
- Unveil performance gaps
- Uncover leading practices that already may exist at the organization
There are three basic types of comparative analytics:
- Internal, in which an organization looks at its own performance. This process may be formal or informal. An ideal outcome from conducting internal comparative analytics is that it reveals leading practices within the organization that can be replicated.
- Competitive, in which the organization compares itself to others within the industry. To allow the comparison between the organization and its peers, a sufficient number of comparable health systems is needed, as is a predefined taxonomy of tasks, processes, and objectives. Once comparability is established, the insights into an organization’s strengths provide a clear indication of improvement opportunities.
- Strategic, in which the organization looks at its own approach to finance transformation relative to peer organizations. Informal strategic comparisons commonly occur at CFO roundtables or other peer-to-peer industry or networking events. A more formal approach using outside resources may allow for insights into organizations outside a CFO’s professional network.
3. Identify Gaps and Improvement Opportunities
After leaders have assessed the current state of affairs and gained insights about their standing relative to peer organizations, the next step is to review the information gathered in the first two steps and identify improvement opportunities.
When reviewing the data, first consider it from a process improvement perspective – keeping the areas of business operations, tools and systems, and human capital in mind. Some questions to consider:
- What non-value-added activities and manual tasks exist that can be eliminated?
- What bottlenecks and issues in existing processes decrease the organization’s internal effectiveness and ability to serve its customers?
- Are workflow and automation technologies in place?
- Is technology used effectively, and are systems scalable for growth?
- Does the organizational design support the organization’s processes and allow individuals to thrive?
- Are effective individual and organizational performance metrics in place?
Next, review performance data through the two lenses mentioned earlier: the leader’s perspective and the customer’s perspective. Leaders should adopt a customer-centric approach: Who are the users (“customers”), and what information (“services”) do we need to deliver? Which services need to be improved, and which services could be delivered more quickly?
4. Build a Holistic Framework for Sustained Implementation
For process improvement processes to succeed, organizations must put a framework in place for sustained implementation. Four fundamental steps exist for building such a holistic framework:
- Make sure senior leadership drives and supports performance improvement initiatives and change.
- Combine centralized governance – such as forming a performance improvement steering committee – with decentralized implementation, such as assigning different parts of the initiative to different organizational leaders.
- Engage employees throughout the transformation journey through open communication.
- Build in periodic reporting on tangible key performance indicators (such as the number of days it takes to close the books) and intangible measures (such as employees’ fatigue level and ability to take on new work) into the process.
5. Invest in Technology
Technology’s important role in finance transformation endeavors cannot be overlooked. The goal of finance function process improvement is to elevate finance managers’ analytic capabilities and minimize the clerical steps needed before analysis can occur. Today’s innovative technologies need to be fully optimized to serve the needs of their users. These are three transformation best practices with technology:
- Understand significant workflows and how data is managed in and out of the organization.
- Identify transformative technology that can change the way a process works.
- Take full advantage of existing IT infrastructure.
Seek Out Resources and Support
As healthcare finance leaders continue looking for ways to improve performance and meet the demands of a changing healthcare landscape, they may realize that incremental changes do not allow them to keep pace with the speed of healthcare. An accelerated transformation of financial operations, using all necessary tools and resources, often is essential. Leaders should consider finding qualified performance improvement professionals who can identify various transformation methods to help the organization improve – and sustain – performance and prepare for the changes that lie ahead in this dynamic industry.
1 "Finance Improvement Today – Plan to Apply Beautiful Minds, Survey Summary," American Productivity & Quality Center, May 2016, https://www.apqc.org/knowledge-base/documents/finance-improvement-today-plan-apply-beautiful-minds-survey-summary