4 Steps to Accelerate Healthcare Treasury Transformation

Written by Jason Mountford
January 26, 2024

Over the past few years, every industry and market sector has talked about change. And for good reason. The world went through one the fastest and most unexpected upheavals we’ve ever seen, which left companies scrambling to adjust.

And while just about every corner of the business world can claim some impact to their company, the healthcare industry has arguably been one of the most affected of all. While many industries practically shut down during the pandemic, healthcare businesses were struggling to keep up with demand, with a 16% increase in imports and exports of medical goods worldwide. This put incredible strain on finance practitioners in healthcare treasury management.

It’s not just the pandemic itself which has caused this. While Covid-19 did create an acute issue that necessitated drastic measures and agile strategic leadership, it also uncovered issues in the way the system operates. For example, the reliance on overseas suppliers of PPE and other medical supplies caused serious problems.

In the aftermath, we’re seeing the healthcare industry adjust and change based on the learnings of this difficult period. Even multiple years post-pandemic, medical supplies imports to the US increased by 10% in 2023, with exports up 4%. 

For treasurers in the healthcare sector, that means new objectives to plan for and new risks to assess, adding further complexity to cash management in an already complex industry.

But there’s good news. Technology has also taken massive steps forward in recent years, giving treasurers more tools than ever to help navigate the changing environment. In this article, we’re going to be taking a look at some of the biggest challenges facing healthcare treasury operations today, and look at four steps treasurers can take to integrate technology into their operations to allow their team to work faster and more efficiently. 

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The Rising Challenges in Healthcare Treasury Management

Complexity is a hallmark of the healthcare sector. From the development of pharmaceuticals, to the delivery of frontline healthcare to navigating the funding models, there are a huge number of moving parts. 

When it comes to cash management, that means treasurers need to simultaneously work from strategic plans that could take many years to fully implement, while balancing immediate cash needs in a market that’s always changing.

Some of the specific challenges we see as most pertinent right now include:

Global Logistics and Supply Chains

If this wasn’t on the radar prior to the pandemic, it sure has been since it hit. The global scramble for masks and other PPE brought into stark reality the reliance on global supply chains for healthcare supplies.

But it’s not just PPE that this issue applies to. Many segments of the industry take advantage of a global economy. From the manufacture of pharmaceuticals, building of medical equipment and even the immigration of skilled medical professionals, treasurers need to be able to plan their cash management strategy while taking into account global links that can be disrupted at any time.

Changing Demographics

The traditional funding models in the healthcare sector are coming under pressure. Changing demographics mean the population is getting older, while at the same time advances in medicine are keeping people alive even longer.

It means that for insurance models, both public and private, there are fewer and fewer people contributing for those withdrawing from the system. Treasures can’t necessarily rely on the tried and true profitability calculations, and some believe we are entering uncharted territory when it comes to healthcare funding.

Complex Funding Models

While we’re on the topic of funding, the channels by which payments are received are incredibly complex too. Treasurers need to be able to reconcile income from private insurance, government programs and direct payments from patients, while at the same time navigating mind boggling billing processes and a complex system of rebates and reimbursements.

All of this needs to be done while also ensuring that healthcare providers are adhering to stringent regulatory and compliance requirements. That would all be difficult enough if it was a complicated, yet static system. But it’s not, with political and economic pressures meaning funding is in a constant state of change.

Digitization of Service and Payments

One of the ways this complexity is being managed is through increased digitization of both service delivery and payments. That’s a positive for the industry in the long term, with the potential to deliver better patient outcomes, more efficiently, but the transformation process can create growing pains. 

Check out our recent episode of FinTech Corner as Jeff Macke, founder and President of Macke Asset Management, interviews Brett Turner, Founder & CEO of Trovata, and Joseph Drambarean, CPO & CTO of Trovata, about the impact of recent market forces and how cutting-edge technology is empowering finance teams to respond.

4 Key Steps for Transforming Healthcare Treasury Operations

What all of these issues have in common is uncertainty. In most cases, treasurers are limited in how much they can reduce the level of uncertainty facing their company, but what they can do is manage cash in a way that makes dealing with uncertainty easier and more effective.

One of the best ways to do this is my having access to the right financial data. After all, gaining a clear and transparent view of the current position is the necessary first step to dealing with unplanned events. The longer it takes to establish the current footing, the slower the response and the bigger the impact will be on the business.

The problem is that traditional treasury management systems make gathering data cumbersome and inefficient. Manual consolidation of data from multiple sources is required, bringing with it the potential for miscalculations, transcription errors and delays. But with data that is accurate, current and easily analyzed, it’s not just treasury that can be transformed, but strategic decision making across the entire company.

Here are four steps that healthcare treasurers can take to improve data integrity and the way they use it, to help transform their treasury operations:

1. Combine Information by Using a Data Lake

One of the biggest challenges for treasurers in any sector is simply gaining a clear view of the current financial position of a company. Banking data is spread across multiple accounts and platforms, and potentially in multiple currencies as well. With platforms like Trovata, treasurers can access a data lake that consolidates all of a company’s banking and transaction data into a single source of truth. 

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There’s no longer any need for treasury and finance teams to manage multiple banking portals, and then manually export, consolidate and review financial data. Instead, all of this data can be available in one place, and when combined with open banking APIs (more on that next) it’s available instantly, and with 100% accuracy.

This capability creates a massive shift in the way treasurers spend their time. In the event of a crisis or an event that requires decisions to be made, there’s no longer any need to lose valuable time in figuring out the ‘what’ of the current situation. Instead, you can shift straight into the ‘why’ and work on strategic decision making to navigate the company through the situation.

2. Connect Your Accounts Using Open Banking APIs

While the data lake provides a clear dashboard overview of all of the data, it’s open banking API technology which feeds the data in. If we imagine the data lake as an actual lake, APIs are the pipelines that feed the information from its original source, like your company bank accounts.

Open banking APIs really is revolutionary technology, allowing you to connect your bank information directly with a central data repository (such as Trovata). This then creates a real-time mirror of your actual banking data on the platform, meaning there is no chance for transcription errors and no delay in the numbers you’re seeing.

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Cash consolidation becomes an automatic process that takes no time at all. Using the Trovata dashboard, treasurers get access to a real time view of the entire company’s current cash position, consolidating every bank account, currency and transaction in one place. In the face of an unexpected emergency or new information that suggests a review of finance strategy, the base case scenario is ready to go immediately.

The added benefit that comes with linking your banking portals through open banking, is the ability to consolidate your payment processing as well. Treasury teams are able to make transactions through all of their different bank accounts in the one place, as well as integrating bulk payments.

This again improves efficiency, which is always something healthcare sector companies are looking for, but it reduces risk as well by limiting the number of people who need direct access to your banking credentials.

3. Collaborate Using Cloud Native Platforms 

Where open banking and data lake functionality allows for data to be accessible, consolidated and accurate, its cloud technology which allows your team to collaborate on it efficiently. 

Traditional cash management which uses spreadsheets not only significantly increases the chance of an error in the data, but it also makes it a challenge for colleagues to work together. Even for businesses who aren’t heavily focused on remote work, keeping data integrity across multiple versions of a model or spreadsheet is nigh on impossible.

And of course, there’s always the risk that the wrong version will be sent to executives, who might subsequently base their strategic decisions on data that is outdated or completely wrong.

Having everyone using a single, cloud based source of truth puts them all on the same page. Literally. There’s no need to confirm whether it’s Scenario A1.4 or B1.4 that is being worked on, and no need to try and decipher the formulas that someone else has entered into the master spreadsheet.

With Trovata, everyone can access the same dataset, the same forecasts and the same scenarios, with having access specified by permissions you set. 

4. Leverage AI and Machine Learning in the Right Way

It wouldn’t be an article about financial technology without mentioning AI. Yes, there is a lot of hype around AI lately, but unlike many of the other hype cycles we’ve seen in recent years, AI actually has true, proven use cases, and a lot to offer treasury teams.

Where data lakes, open banking and cloud native platforms give you a foundation of accurate and timely data, AI and machine learning transforms the way users can interact with that data.

Trovata AI is an example of one such tool, giving users the ability to create complex financial models and build forecasts including multiple scenarios, in a matter of minutes. It can take you junior employees and hand them the capabilities of a senior analyst, without the need to put them through a PhD course in statistics.

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That might sound like hyperbole, but it’s really not. Generative AI builds a conduit between the natural language we use to ask questions, and the statistical formulas and models that need to be used to find the answers.

For treasurers in the healthcare sector, that means being able to build cash flow scenarios in minutes on just about any scenario you can imagine, all through the use of simple natural language prompts. Manufacturing costs increased by 5%? Just ask Trovata AI to adjust your base forecast with that new information. Government reimbursement rates drop by 7%? Ask Trovata AI how that might impact your net income for the year.

And while AI is incredibly powerful for forward looking models and forecasts, it’s just as valuable in reviewing your historical data. For example, maybe you need to find every payment received from a specific insurer from 2020 to 2023. This could take hours of manual sorting through thousands of individual line items. Now, you can just ask Trovata AI to pull it all together and combine it into a report for you. 

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Accelerate Healthcare Treasury Management Transformation with Trovata

Transformation isn’t really a choice. As all experienced treasurers know, the world and the way we work is going to change, even if we resist it. That’s especially true with technology, with new products and features seemingly launched on a daily basis.

That’s why modern treasury teams need to embrace technology. Because if they don’t, they run the risk of being left behind by those who do. Practically speaking, it’s those businesses who make the right changes, the quickest, who will have first mover advantage. 

With Trovata, you can accelerate the pace of that transformation by bringing multiple business functions together, on a single platform.

Companies like Krispy Kreme, Block (previously Square), Orbus, Eventbrite, Sonos, Bosch and many more are already experiencing the benefits of aggregated banking data, managing payments on a single platform and integrated AI providing insights to their financial data like never before.

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While the healthcare sector isn’t likely to get any less complex for treasury teams, the right technology has the potential to make it feel like it has. If you’d like to see how Trovata can improve your cash visibility, bank reconciliation, financial forecasting, scenario planning and more, book a demo today.

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