• Written by Sonali Subhadarsini, Product Manager

A typical Monday morning for the finance team in a healthcare provider often begins with a flurry of activity, as they scramble to gather data for the week's reports, with the financial controller waiting to review the latest budget variance, and the procurement manager needing an update on outstanding commitments. The team spends hours poring over spreadsheets, searching for specific figures, and verifying data accuracy, only to have the report delayed because a crucial piece of information is missing or outdated. This is a common scenario, where finance teams in healthcare providers struggle to get the data they need, when they need it, due to the complexity of their clinical operations and the strict privacy obligations that come with handling sensitive patient data.

The finance questions that currently wait on a report

The finance team in a healthcare provider typically has a long list of questions that they need to answer on a regular basis, such as what is the current budget variance, what are the outstanding commitments, and what is the status of the receivables. These questions often wait on a report, which can take days or even weeks to compile, and even then, the data may be outdated or incomplete. The financial controller may need to know the current budget variance to make informed decisions about resource allocation, while the procurement manager may need to know the status of outstanding commitments to plan for future purchases. The delay in getting this information can hinder the team's ability to make timely decisions and respond to changing circumstances.

For instance, the financial controller may need to review the budget variance to identify areas where costs are exceeding expectations, and to take corrective action to get back on track. However, if the report is delayed, the financial controller may not have the necessary information to make informed decisions, which can lead to further budget variances and potential financial losses. Similarly, the procurement manager may need to know the status of outstanding commitments to plan for future purchases, but if the report is delayed, the procurement manager may not have the necessary information to make informed decisions, which can lead to stockouts or overstocking of critical supplies.

The data behind them: general ledger, budget, open commitments and purchase orders, receivables and terms

The data that the finance team needs to answer these questions is typically stored in various systems, such as the general ledger, budgeting system, procurement system, and accounts receivable system. The general ledger provides a comprehensive view of the organisation's financial transactions, while the budgeting system provides a detailed breakdown of the organisation's financial plans. The procurement system provides information on open commitments and purchase orders, while the accounts receivable system provides information on outstanding receivables and payment terms. However, accessing and analysing this data can be a complex and time-consuming process, especially when dealing with large datasets and multiple systems.

The finance team may need to access data from multiple systems, such as the general ledger, budgeting system, procurement system, and accounts receivable system, to get a complete picture of the organisation's financial situation. For example, the financial controller may need to review the general ledger to identify unusual transactions, while the procurement manager may need to review the procurement system to identify open commitments and purchase orders. The accounts receivable system may provide information on outstanding receivables and payment terms, which can help the finance team to identify potential cash flow issues and take corrective action.

Sector constraints: scheduling and utilisation and supply consumption variability

Healthcare providers face unique challenges when it comes to managing their finances, due to the complexity of their clinical operations and the strict privacy obligations that come with handling sensitive patient data. The scheduling and utilisation of resources, such as operating rooms and medical equipment, can be highly variable, making it difficult to predict and manage costs. Additionally, the consumption of supplies, such as medications and medical devices, can be highly variable, making it difficult to predict and manage inventory levels. These constraints can make it challenging for the finance team to accurately forecast and manage the organisation's finances.

For instance, the finance team may need to take into account the variability in scheduling and utilisation of resources, such as operating rooms and medical equipment, when forecasting costs and managing budgets. The team may also need to consider the variability in supply consumption, such as medications and medical devices, when managing inventory levels and predicting future demand. The strict privacy obligations that come with handling sensitive patient data can also limit the team's ability to access and analyse data, making it even more challenging to manage the organisation's finances.

What improvement looks like: variance to budget, commitment coverage, days sales outstanding

Improving the finance function in a healthcare provider can have a significant impact on the organisation's ability to manage its finances and make informed decisions. By having access to real-time data and analytics, the finance team can quickly identify areas where costs are exceeding expectations, and take corrective action to get back on track. The team can also use data and analytics to improve commitment coverage, ensuring that the organisation has sufficient funds to meet its financial obligations. Additionally, the team can use data and analytics to reduce days sales outstanding, improving cash flow and reducing the risk of bad debt.

For example, the finance team can use financial analytics to identify areas where costs are exceeding expectations, and take corrective action to get back on track. The team can also use data and analytics to improve commitment coverage, ensuring that the organisation has sufficient funds to meet its financial obligations. By reducing days sales outstanding, the team can improve cash flow and reduce the risk of bad debt, which can have a significant impact on the organisation's financial stability. The finance team can also use data and analytics to identify opportunities to improve efficiency and reduce costs, such as streamlining processes and reducing waste.

What this does not do, or when it is the wrong choice

While AI for finance in healthcare providers can be a powerful tool for improving the finance function, it is not a silver bullet. It is not a replacement for human judgment and expertise, and it is not a solution for all financial management challenges. There are times when it is the wrong choice, such as when the data is incomplete or inaccurate, or when the organisation lacks the necessary expertise and resources to implement and maintain the system. In these cases, it may be better to focus on improving existing processes and systems, rather than investing in new technology. If you are unsure about whether AI for finance is right for your organisation, you can contact us to discuss your options and determine the best course of action.