Another buzzword in healthcare is Rolling forecasting; under descending financial pressure, increasing revenue, and market volatility.
Most healthcare industries have started implementing their forecasting strategies right during the Coronavirus pandemic. But the pandemic is not over yet and we are slowly moving back to normal; The New Normal (Living with the Coronavirus).
In their new report, Kaufman Hall stated that even before the coronavirus outbreak healthcare industry in the US is facing a stumble in revenue.
Due to the steep decline in Hospital financial Health, 2020 is considered “Tumultuous” since the decline of hospital margin hits 55.6% downhill.
We cannot blame the virus completely for the downfall; even before the pandemic, most hospitals hit a negative operational margin. To be precise the hospital margin was 3.5% but why?
When the coronavirus hits, the figures kept going down; facilities are forced to stop non-Covid care programs since they are busy handling the virus-affected patients. This resulted in a decrease in patient visits and revenue; on the other hand, expenses in the form of PPE kits soared up. (Most facilities ran sort of this kit, physicians, nurses, and nurse practitioners had to buy it themselves.)
Reasons behind the downward flow of healthcare operational margin are:
- Increased Covid-19 hospitalization rate
- Decreased elective care program visit
- Declined outpatient revenue
- Expense soaring up
Know the statistics behind the tumultuous 2020:
By end of the 2020 calendar year, hospitals in the US closed down their financial and operational records with the following figures.
- Without funding from the CARES act, the median operation margin was as thin as 0.3%. It was 2.7% with the CARES act funding.
- The invasion of Covid-19 caused a decline in patient days which resulted in the drop of 7.3% (low) discharges in the entire calendar year.
- But the average length of stay from January to December increased by 6.6%.
- Emergency visits took the hardest hit, the figures fall short of 16.2% in the entire 12 months.
- The operating room minutes also descended to 10.5% in 2020 when compared with the previous year.
Why Rolling Forecasting?
If you want accurate forecasting of your financial health and transparent data then Rolling Forecasting is the only solution. Rolling forecasting helps finance experts to develop a new finance model appropriate for this pandemic situation, to positions themselves well in the short-term and long-term effects that brings hanges to the liquidity, profitability and capital structure.
Rolling Forecasting empowers healthcare organization in making the correct decision and bringing change to the budgeting environment.
By making use of current data available in the hospital records comparing it with the present data meanwhile taking multiple scenarios into account rolling forecasting is carried out.
Most of the organizations usually run three tests with conditions such as Very favourable, Favourable, and Unfavourable in their Rolling forecasting model.
Based on the analysis made by rolling forecasting, finance expert calculate and make strategies for their financial health for short-term and long-term. Rolling Forecasting provide more detailed insights compared with traditional budgeting method.
Not only in Budgeting but Rolling forecasting helps healthcare organization in staffing adjustments as well.
The world is slowly going back to normal, but many hospitals till now experience the effect of the pandemic by means of reduced flow in patient visits. Every organization is struggling to set things back to normal which is not an easy work like a snap of finger to do.
Budgeting and Financial drop can be pulled up by using Rolling Forecasting model. If you have doubts on implementing rolling Forecatsing model in your organization feel free to Contact our Finance leaders for expert insights.