CFOs navigating healthcare staffing risks

Staff shortages and legislative uncertainty dominate discussion at our healthcare roundtable of finance leaders.

After a tumultuous two years in an industry upended by COVID-19, healthcare CFOs are getting a chance to step back just a bit and take a longer view as they plan for a business forever changed by the pandemic. Staff shortages and the federal healthcare agenda are emerging as two major areas of focus, given the uncertainty they have added to the planning process.

Those are among the main insights that emerged from the fourth edition of the KPMG Healthcare CFO Roundtable, which gathered financial leaders from the industry to discuss their current challenges, recent changes that will affect their planning, and industry trends that could create new growth opportunities for 2022 and beyond. 

In general, uncertainty around cost management is a major focus, and especially against the backdrop of the new financial planning pressures wrought by inflation. The CFOs we met with are trying to balance the staffing and policy risks against potential opportunities to double-down on innovations that began during the pandemic, as we detail in our full roundtable report—download it here.

A staffing crisis

Staffing continues to be a major and growing concern for the entire healthcare industry. Burnout has significantly expanded normal attrition rates, even while demand—and competition—for staff has increased dramatically as well. As one CFO at the roundtable noted: “One thing we didn’t prepare for is the sea change in labor staffing and the difficulty in finding new hires.” 

CFOs don’t see the staffing shortages ending anytime soon, and some are starting to look at enhanced workforce management solutions to better align current resources with demand. Broadly, these solutions are focused on four areas:

  • Understanding patient demand
  • Assessing available staff skills
  • Forecasting demand more proactively
  • Moving fully to technology-enabled scheduling solutions.

Digital, centralized scheduling can help streamline care for patients while also helping to reduce labor costs—for example, by balancing shifts between full- and part-time staff or prioritizing non-overtime staff for assignments when appropriate.

  

One thing we didn’t prepare for is the sea change in labor staffing and the difficulty in finding new hires.
Healthcare CFO roundtable participant, on the surprise of employee attrition.

Updating the approach to care delivery is shaping up as another opportunity for improved cost-efficiency, especially with the emergence of telehealth and virtual consultations, which have become more familiar behaviors post-pandemic. Innovations like clinical decision units (CDUs) can help identify when telehealth can replace the need for more labor-intensive in-patient visits, particularly on initial consultations. The CDUs can further support centralized scheduling efforts, working across an entire health system rather than just a single facility, and staying mindful of the evolving payer reimbursement rules.

The federal agenda

Some of the contemplated healthcare legislation presents the potential for both new risk and opportunity, with measures that would include additional incentives for the shift to value-based care, lower prices for prescription drugs, and expanded Medicare and Medicaid. But the biggest unknown remains the timing and certainty of any of this legislation.

There is no crystal ball, of course, but the tax leader for healthcare for KPMG, Lori Robbins, shared with the roundtable four potential areas that have the best potential, whether as part of the Build Back Better Act or as separate legislation:

Lowering health insurance premiums with more permanent measures in line with the pandemic’s temporary tax credits

Expanding hearing benefits for Medicare 

Expanding Medicare’s ability to negotiate prescription drug costs and cap out-of-pocket expenses

Increasing coverage for home care and community-based services


Looking ahead

Our roundtable CFOs expect staffing will remain a dominant issue in both the short and long term. Many expressed their intent to closely monitor trends and do more demand planning, while also assessing whether the staffing crunch is a one-time knock-on from the pandemic or a new reality. They are closely watching the rise of retail health and potential loss of staff to that channel. 

While there is certainly much more stability these days post-pandemic, healthcare CFOs clearly will be navigating a volatile and uncertain business climate for at least a few more years.

Contact us

Tony Bevacqua

Tony Bevacqua

Principal, Advisory, Finance Transformation, KPMG US

+1 267-256-2929