Healthcare treasurers are on the front lines of a constant financial battle. Tight margins squeeze profitability. Delayed reimbursements from insurers can create significant cash flow gaps, hindering the ability to pay bills, invest in growth initiatives, and maintain optimal patient care.
In fact, according to a healthcare finance trends report for 2024 by CommerceHealthcare®, cash flow has been negatively impacted throughout 2023 by well-publicized delays and denials in authorization from payers. Half of hospitals and healthcare systems reported $100 million in receivables for claims over 6 months old. This alone shows a clear need to improve cash flow in global healthcare companies. Yet, these challenges are further amplified by increasing regulations, fluctuating currency rates, and evolving patient payment structures.
Navigating these complexities requires a proactive approach to cash flow management. In this article, explore how to improve cash flow in global healthcare companies by leveraging real-time data and innovative technologies. These solutions will empower healthcare treasurers to evolve from a reactive approach to treasury management into strategic financial leaders, ensuring the long-term financial health of their organizations.
Cash Flow Challenges in the Healthcare Landscape
Healthcare treasurers face a unique set of cash flow challenges:
- Disparate Systems: Legacy systems and siloed data make it difficult to consolidate cash positions across various bank accounts, payers, and providers. This lack of transparency hinders accurate forecasting and proactive cash management.
- Delayed Reimbursements: Slow payer turnaround times lead to significant cash flow lags. Predicting and managing these delays require real-time insights into outstanding receivables and payer performance.
- High Deductibles and Patient Co-pays: The rise of high-deductible health plans (HDHPs) and increasing patient co-pays translates to more upfront patient responsibility. Treasurers need to factor in these trends to forecast collection rates and potential bad debt.
- Inventory Management: Healthcare organizations juggle a complex inventory of medical supplies and pharmaceuticals. Optimizing inventory levels to minimize carrying costs while ensuring adequate stock requires real-time data on purchasing trends.
- Visibility in Multi-Entity Healthcare: Whether it’s a multi-practice clinic, a group of long-term-care providers, a network of hospitals, or a chain of imaging centers, stakeholders want and need to understand various lines of business, allocate capital and fund the organization. Gaining visibility of cash flow amidst this complexity becomes a challenge. It becomes difficult to identify cash flow imbalances between entities, potentially leaving some under-resourced while others hold excess capital.
The Power of Real-Time Data: How APIs Bridge the Gap
API-first treasury management technology acts as a bridge, seamlessly connecting healthcare organizations with their financial data across their bank mix. Open banking APIs provide secure, real-time access to cash positions, transactions, and account activity across different banks and institutions. This eliminates the need for manual data aggregation, reducing errors and delays.
- Consolidated Cash Visibility: With API-driven data aggregation, treasurers gain a holistic view of cash positions across all accounts, providing a real-time picture of their financial health. This enables them to make informed decisions about resource allocation, investment opportunities, and potential borrowing needs.
- Improved Accounts Receivable Management: Real-time data on outstanding receivables enables better tracking of payer performance and identification of potential delays. Treasurers can use this information to initiate proactive collection efforts and improve cash flow predictability.
- Strategic Inventory Management: By integrating real-time data treasurers can optimize purchasing decisions. This minimizes carrying costs associated with overstocking while ensuring adequate supplies to meet patient needs.
- Enhanced Forecasting and Scenario Planning: API-driven technology empowers treasurers to move beyond static spreadsheets. Real-time data allows for dynamic forecasting models that incorporate the latest trends in patient volumes, payer mix, and other relevant factors. This enables more accurate projections and facilitates scenario planning to prepare for potential cash flow fluctuations.
Strategic Insights for Growth
API-first treasury management technology goes beyond simply improving cash flow management. It unlocks strategic insights that empower healthcare organizations to make informed decisions that drive growth. Here are some key examples:
- Mergers and Acquisitions: Real-time data on a potential acquisition target’s financial health empowers treasurers to perform in-depth due diligence and make informed decisions.
- Expansion Strategies: API-driven technology helps treasurers assess the financial viability of new service lines or geographical expansions by providing real-time data on costs, revenues, and potential cash flow impacts.
- Investment Opportunities: By analyzing real-time data on cash flow and borrowing costs, treasurers can identify investment opportunities that optimize returns without jeopardizing financial stability.
The API-First Advantage: A Streamlined Treasury Workflow
The traditional approach to treasury management involved logging into multiple bank portals, manually downloading data, and painstakingly consolidating it into spreadsheets. This not only consumes valuable time but also increases the risk of human error. Here’s how API-first technology streamlines the workflow:
Automated Data Aggregation: APIs eliminate the need for manual data entry, ensuring accuracy and saving valuable time for treasurers.
Real-time Insights: Data is updated in real-time, allowing for immediate access to the latest information on cash flow, account activity, and financial performance.
Improved Collaboration: Secure dashboards provide a central platform for the entire treasury team to access and analyze data, fostering collaboration and informed decision-making.
Recommended: 4 Steps to Accelerate Healthcare Treasury Transformation
Trovata: Modern Tech to Improve Cash Flow in Global Healthcare Companies
Trovata is an API-first treasury management platform that enables a secure digital bridge that connects your various banks directly to a centralized Multi-Bank Data LakeTM. Think of it as a real-time pipeline constantly feeding the latest financial information from each entity. With Trovata you gain a seamless, error-free flow of data, ensuring you have an accurate and up-to-date reflection of your global cash position.
For healthcare treasurers managing global cash flow, Trovata offers key benefits:
Automated Cash Consolidation: Say goodbye to tedious manual consolidation efforts. Trovata automates the process, presenting a unified view of your entire organization’s cash position across all bank accounts, currencies, and transactions – all in one place. This real-time visibility empowers you to make informed financial decisions quickly, whether it’s responding to an unexpected event or adjusting your strategy based on new insights.
Intelligent Data Organization: Trovata goes beyond just data aggregation by offering powerful tagging capabilities. You can add customized tags to your transactions, allowing you to categorize and organize bank data in a way that best suits your organization’s needs. Furthermore, Trovata leverages AI and machine learning to automate this process once tags are set up. As data is updated in real-time through API bank connectivity, transactions are automatically assigned to their relevant tags. This eliminates manual data categorization tasks and ensures consistent organization for effortless analysis and reporting.
Unveil Deeper Insights: Trovata empowers you to not just see your data, but to truly understand it. Our intuitive Trovata Query Language (TQL) allows you to conduct highly specific searches across over 20 supported metadata properties within your financial data. This goes beyond basic keyword searches. You filter transactions based on specific combinations of tags, dates, vendors, amounts, and custom fields – all within a user-friendly interface.
Seamlessly Integrate New Entities: Trovata’s system is designed to handle an increasing number of entities as your business grows. Whether you’re adding a few new accounts or hundreds, Trovata can handle the import and organization effortlessly. You can effortlessly bulk import entity data and assign accounts. This makes it easy to integrate new bank data and keep it organized as your organization scales. Set your entity structure to categorize and prioritize data.
In today’s dynamic healthcare landscape, real-time cash flow visibility is paramount for global organizations. Trovata empowers healthcare treasurers to break free from siloed data and embrace a streamlined approach to cash flow management, ultimately ensuring the financial health of their entire network.
The healthcare landscape is constantly evolving, and cash flow management remains a top challenge. Trovata gives you powerful tools to spend less time wrangling data, and more time on improving cash flow for your organization. If you’d like to see how Trovata works for yourself, book a demo today!
