By Alfredo Cepero

Healthcare CFOs are facing a challenging year ahead, one where high interest rates, ongoing economic uncertainty, and elevated costs will continue to impact financial stability across the industry. However, the outlook isn’t all bad: According to BDO’s 2024 Healthcare CFO Outlook Survey, which polled healthcare CFOs on their outlook for the year ahead, healthcare leaders are expecting a return to growth this year, with 79% anticipating revenue increases .

To realize this growth, healthcare CFOs will have to navigate ongoing challenges and move quickly to take advantage of new opportunities. Read on to learn the top three industry trends that healthcare CFOs need to know to succeed in 2024.

1: Bond and Loan Covenant Violations Are a Major Risk

While most CFOs are optimistic about growth in 2024, 41% admit they are concerned they may violate their bond or loan covenants in the next 12 months. Additionally, while actual violations are trending downward year-over-year, 52% report they violated their covenants in 2023.

At the same time, cash on hand remains an issue: Only 35% of healthcare organizations reported having more than 60 days of cash on hand. It comes as no surprise that 39% are planning to adjust their revenue cycle management to improve liquidity this year, making it their top-cited financial improvement strategy.

Healthcare CFOs need to not only revisit their revenue cycle management, but also develop a sustainable revenue strategy that combines cost optimization with strategic investments, with an eye towards long-term financial stability.

2: Healthcare Is Using Generative AI for Clinical Decision Support

Historically, healthcare has been slow to adopt new technologies. But that seems to be changing: BDO’s survey found that 98% of healthcare organizations are already piloting generative AI programs in 2024, with 46% building their own proprietary platforms (likely on top of an existing solution).

Furthermore, AI use isn’t restricted to administrative functions: 39% of healthcare CFOs are using generative AI to create treatment plans. Clinical decision support is a key opportunity for healthcare providers to leverage AI, but it comes with serious risk: roughly one in four healthcare CFOs say their top generative AI risk is its potential to generate or act on incorrect information. Healthcare leaders exploring generative AI need to keep a clinician in the loop to ensure the AI output is accurate and appropriate to the patient’s needs.

3: Shifting Investment Plans Could Impact Care Access

Specialty services like cardiology, oncology, and dermatology will see more capital in 2024, with 52% of CFOs reporting they plan to increase investment in these areas, likely because these services can generate significant revenue for healthcare organizations. At the same time, primary care — a major access point for many patients — is seeing decreased investment, with 42% of healthcare CFOs planning to divest this year.

Primary care has become a target for divestment largely due to significant cash flow pressures and a shift in site of service towards the retail market. However, less investment for primary care could reduce access to care for many patient populations, making it more difficult to receive preventive care. The result could be higher volumes of more acute patients, putting an even greater strain on the healthcare system in the long term.

Healthcare CFOs need to first consider the needs of their patient population before making any divestment decisions. While some services, like OBGYN services, may be expensive to maintain, they are crucial to the patient population the healthcare organization is serving, and as such, the top priority must be maintaining access to these critical care offerings.

Closing Thoughts

The road ahead for healthcare isn’t an easy one — healthcare organizations will need to navigate continuing challenges that have no simple answers. However, by understanding the financial, clinical, digital, and operational landscape, healthcare CFOs can make their organizations more sustainable and stable, even as they remain surrounded by instability.

To learn more about what the healthcare landscape will look like in 2024 and how you can successfully navigate it, read the full 2024 Healthcare CFO Outlook Survey at https://insights.bdo.com/2024-BDO-Healthcare-CFO-Outlook-Survey.html

Contact:

Alfredo Cepero, Principal, Assurance Market Leader

(305) 420-8006 / acepero@bdo.com