Healthcare Forecasting In 2024: An Overview & Key Strategies

By Author: Sumit Kashyap
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The healthcare sector is rapidly evolving, and financial professionals are at the forefront, rewriting the playbook for forecasting demand and care delivery requirements. Imagine a world where the challenges of staff shortages, industry consolidation, supply chain disruptions, and regulatory changes are not obstacles but opportunities for growth and innovation.

In the aftermath of COVID-19, the methods got banished, and healthcare CFOs are navigating through a maze of enduring and emerging challenges. However, in the face of adversity lies the potential for transformation. Dynamic forecasting is the secret solution that sets physician practices, health systems, and hospitals apart in an ever-changing market. It can be achieved with the help of Cloud ERP implementation in the healthcare Industry.

Discover how forward-thinking healthcare organizations turn challenges into triumphs, leveraging forecasting as a key differentiator. Be a part of the revolution that supports executive decision-making, propelling financial performance to new heights while ensuring the delivery of top-notch healthcare.

What Is Healthcare ...
... Forecasting?

In the dynamic world of healthcare, financial professionals play a crucial role in steering organizations toward success. By delving into patient demand, disease trends, costs, and various factors, we employ advanced forecasting techniques to model potential outlooks and scenarios.

It is a strategic parameter guiding healthcare providers in planning and budgeting for patient volume, care-delivery expenditures, staffing, and the essentials of running a healthcare organization.

Think of financial forecasting in healthcare as the cornerstone for managing supply and demand, just as in any other industry. Yet, the healthcare landscape brings unique challenges that include voluminous and intricate data, the current state of forecasting, and the high stakes of patient outcomes. We're here to explore the need for ERP for Pharmaceuticals in the face of uncertainty.

What Are the Challenges of Healthcare Forecasting?

Healthcare CFOs embrace the power of business management software to turn challenges into triumphs. Hindered by disconnected systems and outdated processes, including the enduring use of spreadsheets leads to forecasting obstacles.

1. Data Accuracy Woes

A staggering ninety percent of healthcare executives reported revenue loss due to inefficient data use. The finance team encounters hurdles in aggregating data from various department systems with outdated, incorrect, incomplete, duplicated, or inconsistently formatted data.

Manual spreadsheet reliance creates control issues and complicates collaboration, leading to inaccurate financial forecasts, flawed decision-making, and increased costs. Therefore, it is necessary to opt for ERP Implementation to upscale the healthcare industry.

2. Ever-Evolving Healthcare Landscape

The rapid and complex changes in the healthcare industry are driven by factors like aging demographics, rising costs, and industry consolidation, demand continuous scenario mapping.

CFOs navigate challenges such as cost-cutting strategies, service line rationalization, and adjustments to staffing and compensation, requiring agile responses to intersecting challenges.

3. Regulatory Uncertainty

Regulatory changes can significantly impact financial forecasting, altering financial incentives, payment models, and risk management.

CFOs engage in scenario planning to anticipate potential repercussions, including decreased reimbursements, heightened compliance costs, new care mandates, and other regulatory shifts.

4. Technology Complexities
CFOs confront challenges in determining costs, predicting implementation outcomes, and managing the prolonged decision-making timelines within healthcare organizations.

Compounded by a shortage of IT and data analytics professionals, these challenges drive CFOs to increase capital expenditures on data and interoperability tools, addressing the intricacies of technology in healthcare. Therefore, the need for Cloud ERP is indispensable in the healthcare sector.

What Are The Core Healthcare Forecasting Strategies?

The key to this healthcare evolution lies in synchronizing planning and budgeting within enterprise resource planning (ERP) systems.

1. Driver-Based Planning

A game-changer in financial forecasting, driver-based planning intertwines financial forecasts with operational drivers, aligning with management's strategic objectives. This approach moves beyond the segregation of financial & operational information.

It emphasizes value-based drivers—both internal and external—instead of navigating static annual budget line items.

2. Rolling Forecasts

Recent studies highlight a shift away from static forecasting solely based on historical budget data within healthcare providers. These events such as sudden disruptions in elective procedures, have prompted the adoption of rolling forecasts.

This agile approach addresses the dynamic pace of change in healthcare finance departments fulfilled by Cloud ERP.

3. Scenario Planning

Anticipating the range of possible futures, scenario planning identifies potential impacts, analyzes each scenario, and develops contingency plans to navigate opportunities and challenges.

It's a proactive strategy to stay ahead of uncertainties.

4. Zero-Based Budgeting

Zero-based budgeting resets the financial landscape each year, requiring every function to justify all needs and costs from a 'zero base.' This method involves a time-consuming analytical process and justifies old and new expenses.

It proves effective in identifying cost drivers and promoting financial scrutiny.

What Are The Best Practices of Healthcare Forecasting?

As healthcare forecasting undergoes a transformative journey to adapt to a dynamic environment, organizations embrace innovative methods like driver-based planning, rolling forecasts, and scenario planning. These are well-advised to incorporate the following best practices implemented by the Cloud ERP.

1. Understand Historical Data

While forecasting should not solely rely on historical data, it remains a crucial element. Historical data offers baseline comparisons and provides evidence of how specific drivers impacted finances in the past, aiding in informed planning.

2. Use the Right Forecasting Models

Timely forecasting requires more than projecting historical performance. Recognizing the impact of changing business, policy, and technology trends employed by the forecasting models that adapt to evolving circumstances. Rolling forecasts, especially suited for the healthcare sector, accommodate the unpredictability in demand driven by trends like telehealth and home patient monitoring.

3. Consider External Factors

Meaningful rolling forecasts through ERP Implementation reflect external market forces and internal operational changes. Anticipating the impact of factors like inflation on costs, organizations should forecast and plot scenarios for varying inflation levels to consider real-world medical data such as epidemic curves.

4. Maintain Transparency
Synchronizing operational and financial data through linking budgeting and planning software with an ERP system fosters transparency. This centralized approach creates a single, agreed-upon version of information, ensuring it is consistently updated and visible to all stakeholders.

5. Train Staff

Recognizing staffing challenges and potential resistance to change, organizations should allocate resources for training and upskilling employees. Automation and centralized data can alleviate work burdens, and a positive shift is encouraged by empowering staff with efficient Cloud ERP solutions.

6. Validate Your Forecasts

Regularly comparing and analyzing actual versus projected results enhances forecast accuracy. The finance team should refine forecasts based on insights from this validation process. If a forecast proves inaccurate, revising the underlying assumptions and updating the forecast ensures continual improvement.

Get ERP To Stand A Class Apart!

When you implement ERP for Healthcare, you add a transformative solution for navigating complexity with enhanced data visibility and agile planning tools.

This platform equips them with the ability to engage in proactive, actionable forecasting, enabling more effective operations in the dynamic landscape of their industries.

With ERP role-based management dashboards, real-time data access empowers the finance team and colleagues across the organization, fostering informed decision-making for unparalleled efficiency.