Table of contents
- What Is Healthcare Financial and Strategic Planning (FP&A), and Why Do You Need It?
- What Are the Key Components of a Successful Healthcare Financial and Strategic Plan?
- How to Create a Financial Plan for Your Healthcare Organization
- How to Maximize the Results from the Financial Plan
- Real-World Example of Effective Healthcare FP&A
- Optimize Your Healthcare Strategic Planning
- FAQs
Ready to leverage healthcare financial and strategic planning methodologies but unsure where to begin? Have you been exploring ways to help your organization achieve its goals while simultaneously enhancing the patient experience? Want to learn more about the importance of financial planning in healthcare organizations?
If any of this sounds familiar, then this guide is for you. Below, we take an in-depth look at healthcare financial and strategic planning.
We explain what this process is, why your organization needs it, and much more. From there, we outline the key components of financial planning in healthcare organizations so that you can begin utilizing this effective strategy.
What Is Healthcare Financial and Strategic Planning (FP&A), and Why Do You Need It?
Before we examine the importance of financial planning in healthcare organizations, let’s recap what “financial and strategic planning” actually entails. To do this, we will need to address both components separately.
Strategic planning is the process of systematically identifying organizational goals, aspirations, and objectives.
Once these objectives have been identified, organizational leaders can then determine how they plan to accomplish them. Strategic planning can address a broad range of issues, including the patient experience, brand image, and revenue.
The second component of healthcare FP&A is, of course, finances. While it is possible to address financial concerns and strategic goals separately, this approach can be impractical.
Accomplishing any strategic goals will require a financial commitment. Therefore, it is far more pragmatic to combine these two aspects of business management when creating an organizational strategy.
Notable organizations such as the Society for Health Care Strategy & Market Development (SHSMD) strongly recommend that healthcare entities integrate financial and strategic planning. They are proponents of this synergistic approach due to the “interdependence” between the two types of planning.
So why do you need healthcare financial and strategic planning? There is no singular answer, so let’s look at the various benefits that strategic planning can provide. By engaging in healthcare financial planning & analysis, your organization can:
Enhance the Patient Experience
Regardless of which type of healthcare organization you are involved with, the services you provide should be centered around the needs of patients. Proactively working to improve the patient experience can help you better serve clients, which will also improve your brand image.
Increase Competitiveness
The healthcare sector is more crowded than ever before. In light of this, you must engage in healthcare FP&A. Doing so will help your organization identify where it stands within your market and ultimately increase its competitiveness.
Facilitate Collaboration
When your organization engages in healthcare financial and strategic planning, various departments will be able to collaborate more effectively. Your strategic plan will outline each team’s responsibilities and roles within the organization.
When all parties understand their place in the finance teams, they will be able to fulfill their roles and aid the efforts of other staff members more efficiently.
Boost Morale
When employees are provided with clear objectives to work towards, they will be more motivated and engaged. They will exhibit higher morale, better job satisfaction, and more productivity as well.
You can further enhance staff morale by involving them in the creation of your strategic plan. This approach will give them the opportunity to be heard and voice their ideas and concerns. Your organizational leaders may even be able to gain a fresh perspective on existing business challenges.
Unify Your Staff
Among other things, your strategic plan should reinforce your organization’s core values and mission. It should outline ways to live out these values in the way that you interact with patients.
If you address these topics with your healthcare FP&A planning efforts, you will be able to unify your staff. Your team members will be on the same page in terms of your organization’s values and what role they play in presenting those values to patients.
Achieve Meaningful Milestones
Healthcare financial and strategic planning will also help your organization achieve meaningful milestones.
You can establish a variety of different goals and milestones during the planning process. These goals can be fiscally focused, patient experience-centric, or address other performance-related concerns. To learn more about the importance of goal setting, check out this piece on sales planning.
What Are the Key Components of a Successful Healthcare Financial and Strategic Plan?
There is no denying that healthcare financial and strategic planning is a complex process. However, you can increase the efficacy of your efforts by ensuring that you address the following key components:
Clearly Defined Values
Any healthcare FP&A (financial planning & analysis) efforts should start by defining your organization’s values and goals. While you may have previously defined your values, it is always a good idea to revisit them when crafting a new strategy.
Additionally, you should examine ways that you can incorporate these values into your business model. You should ask questions such as “How is the way we are interacting with patients demonstrating our core values?”
Budgetary Limits, Needs, and Goals
Your healthcare financial and strategic planning process should also examine your monetary constraints, needs, and goals. Remember, the spirit of this methodology is to merge these interconnected plans into a singular strategy.
An Accountability Framework
How do you know if your healthcare financial and strategic planning efforts are actually helping you accomplish organizational goals? The answer is that you won’t unless you establish an accountability framework.
Specifically, we recommend selecting relevant key performance indicators (KPIs) and implementing tools to track those KPIs. The simplest way to do this is to invest in dynamic reporting software, such as Workday Adaptive Planning. Here is a link to the various Workday integrations if you would like to explore our product further.
How to Create a Financial Plan for Your Healthcare Organization
Now that we have identified a few key components of successful financial and strategic planning let’s examine how you can create your own. When engaging in healthcare financial and strategic planning, we recommend that you:
Adopt Modernized Budgeting Processes
Creating an annual budget is a tedious process all its own. Integrating your budget and other financial data into your strategic planning process is even more so.
Fortunately, you can streamline healthcare FP&A by modernizing your business budgeting process. This work can be accomplished by investing in quality technology, shifting your focus to business drivers, and incorporating rolling forecasts into your budget.
Define Your Organization’s Mission and Goals
In the early stages of your planning process, you should set both short-term and long-term goals for your organization. You can set goals for the upcoming year and each quarter as well. We also recommend establishing three and five-year objectives.
Keep in mind that these goals should align with your organization’s purported mission and values. If they do not, you should rework them before moving forward with the healthcare financial and strategic planning process.
Identify Ways to Meet Those Goals
Next, you should identify ways to move towards accomplishing your goals. Make sure that your goals, and plans for meeting them, are realistic. Merging financial and strategic planning helps keep your expectations in line with the reality of your organization’s budgetary constraints.
Determine Preferred Outcomes
During strategic planning, determine what your preferred outcomes are. What thresholds do you want to meet in terms of revenue generated, patients acquired, and other metrics. Your preferred outcomes should be commensurate with the amount of funding your organization is willing to invest in these initiatives.
Select Metrics to Measure Performance
As noted earlier, measuring the efficacy of your healthcare financial and strategic planning is essential. It is vital that you choose the right KPIs so that you can gain meaningful insights from these metrics. You should identify a separate group of KPIs for each goal that you established during earlier phases of planning.
Routinely Evaluate Your Efforts
After you have implemented your strategic plan, it is essential that you routinely evaluate its effectiveness. Monthly reporting seems to be the most practical approach for healthcare organizations.
However, you should also conduct quarterly reporting so that you can identify trends. Evaluating your plan will help you determine whether it is effective or if you should modify your tactics.
How to Maximize the Results from the Financial Plan
There are several ways to maximize the results of your healthcare financial and strategic planning efforts, including the following:
Track and Review KPIs
It is impossible to overstate the importance of tracking and reviewing key performance indicators. If you are not tracking KPIs and monitoring the feedback provided by these metrics, then you are essentially flying blind.
Be careful when selecting KPIs, as choosing the wrong metrics can provide insufficient insights to guide decision-making. The exact KPIs that you should select will depend largely on what goals you are working towards.
Be Willing to Adjust Course
Even the best-laid plans may not yield expected results once they are put into action. You must be willing to adjust course if your KPIs reveal that your plan is falling short of expectations.
A modernized budgeting process is critical when modifying your strategic plan on the fly. Advanced forecasting tools can help you understand and account for changing market conditions. This analysis will also shed some light on the long-term consequences of resource allocation choices.
Invest in Quality Technologies
Top-tier financial planning technologies will help you maximize the efficacy of your strategic plan. These technologies include automation capabilities, advanced reporting tools, cutting-edge forecasting features, and much more.
Investing in these solutions is one of the best ways to incorporate healthcare financial and strategic planning into your business model.
Real-World Example of Effective Healthcare FP&A
The efficacy of healthcare FP&A has been demonstrated time and again. For instance, a study published by PubMed in 2008 identified a strong correlation between organizations that had a strategic plan and positive financial performance.
Specifically, 138 hospital chief executive officers were surveyed. Of these, 87% of them stated that their organization had a cohesive strategic plan. Those that had a plan and actively involved the board in the development of said plan exhibited stronger financial performance.
Since this study, there have been numerous other instances of healthcare organizations improving financial performance via strategic planning.
Optimize Your Healthcare Strategic Planning
Financial planning in healthcare organizations is essential if you want to achieve your goals, improve patient care, and protect business continuity.
While there are many ways to enhance your healthcare financial planning & analysis capabilities, the most pragmatic approach involves adopting quality software solutions such as those offered by QBIX Analytics.
If you would like to learn more about our solutions or would like expert guidance from our team, connect with QBIX Analytics today.
FAQs
Financial and strategic planning should guide all of a healthcare organization’s activities, including what technologies they invest in, how they interact with patients, and how they deal with suppliers. In short, healthcare financial and strategic planning should serve as an organization’s roadmap that guides all business operations.
Healthcare strategic planning is the process of identifying an organization’s goals and then determining what steps it must take to achieve these milestones. Healthcare financial and strategic planning merges these goals with fiscal aspirations and needs.
A healthcare organization’s strategic plan may involve identifying ways to improve brand image and decrease patient wait times. To follow through on this plan, the organization must implement meaningful changes that will help it accomplish these goals.
Healthcare financial and strategic planning is the process of developing a plan that addresses both strategic and financial goals. This methodology treats financial goals and strategic aspirations as intertwined objectives.