Healthcare’s leadership challenge: balancing immediate needs with future readiness

Amid rising financial challenges and pressures to maintain high standards of care, a survey of healthcare finance professionals suggests leaders are more focused on directing resources toward financial sustainability strategies and compliance than innovation.

The findings raise concern that leaders are overemphasizing financial viability and regulatory compliance over investments that could transform care delivery and population health — putting short-term needs over long-term value.

“There is a complex balancing act that health systems must perform to navigate financial pressures while delivering high-quality, patient-centered care,” said Alex Ding, MD, deputy chief medical officer at Humana. “Doubling down on textbook efforts to improve performance and efficiency in current practice models, while directing fewer resources toward innovation puts health systems in a weakened position from which to drive value over the long term. Without increasing investment in supporting better health outcomes, providers will struggle to make a deeper impact on the health of their communities.”

Taking a closer look at survey results

Two-thirds of the 166 professionals surveyed hold leadership positions ranging from director (42%) to vice president or CFO (nearly 25%), giving them a view and often a voice into health system strategy.

The survey results point to four patterns in leaders’ decision-making around where to allocate investments in a resource-constrained environment.

Leaders are prioritizing longstanding tactics for optimizing revenue and efficiency. They are heavily leaning into approaches such as negotiating better rates with suppliers and payers (72%), streamlining administrative and workflow processes (nearly 70%), implementing staff training to reduce errors (55%), diversifying revenue streams and implementing robust compliance programs (both at 49%). Less focus is on investing in programs for preventive care (39.6%), leveraging data analytics to strengthen population health (44%) or adopting value-based care models (33%). These are critical areas for investment given that the United States has more avoidable deaths than comparable countries — in part due to lack of investment in primary care, according to a Commonwealth Fund analysis. ^[1]

New tech innovations are taking a backseat to existing capabilities. For example, in revenue cycle, there is heavy emphasis on process automation (nearly 67%), EHR upgrades (66%) and patient payment portal capabilities (59%), but just one out of three are investing in AI-powered analytics or advanced billing software. Only about one out of 10 plan to invest in healthcare startups, making systems like Bon Secours Mercy Health, Memorial Hermann and Northwell Health, each known for either investing in health startups or creating their own, the exception rather than the rule.

Organizations are still largely clinging to a fee-for-service payment model. Just 39.6% seek to manage the financial risks associated with care delivery through risk-sharing arrangements with health plans. About one out of three (34.9%) are exploring insurance- and risk-pooling arrangements.

Increased regulatory pressure has turned up the heat for compliance investments. Among survey respondents, 58% say their organization faces increased compliance costs, with nearly 69% saying there’s a need for additional staff training to meet requirements. At a time when 58% of healthcare organizations are focused on implementing new reporting requirements, investment in innovation to manage risks or control costs are lower on leader priority lists.

The irony, according to Ding, is prioritizing innovative tools, models and approaches could actually help organizations reach revenue and growth goals faster while supporting their ability to manage risk. And it can be done in collaboration with health plans, Ding attests.

“We could continue to stay in a segmented fee-for-service system and fight a zero-sum game of providers versus payers, but if we choose to instead work with a spirit of collaboration, we will actually grow revenue while improving health outcomes and population health,”
Ding said.

Putting innovation into play through partnership

How can healthcare leaders take a collaborative approach to innovation that allows them to make future-forward investments in health tech and models of care while ensuring financial stability and compliance? Here are three things to keep in mind.

1. Approach innovation from the standpoint of population health management. When providers demonstrate transformative outcomes for a member population by leveraging new technologies and outside-the-box models for care and care management, they will be better positioned to negotiate higher rates of reimbursement or a portion of the savings achieved. They also strengthen their ability to ask for payer assistance in making technology investments that supercharge population health management, such as risk stratification software that helps providers pinpoint which patients are most in need of immediate support.
2. Look for ways that payers can contribute to increased operational efficiency — and bring these opportunities forward in monthly meetings with health plans. For example, where do administrative bottlenecks on the payer side — from claims processing to prior authorization to sharing of data around members’ medical history, patterns related to medication adherence and more — present barriers to care and payment? How could health plans help streamline processes to minimize delays and reduce clinician burnout and patient frustration? Collaborative efforts in optimizing efficiency can help reduce resource constraints, opening up avenues for innovation that benefit providers, health plans and patients.
3. Explore a shared “innovation hub.” Given that health plans have access to significantly higher volumes of data around health trends, risks and performance than providers, it makes sense that health plans should contribute to decisions around where to innovate for improved population health and how. An “innovation hub” model of partnership could help facilitate shared decision-making around the types of investments needed now, soon and in the future to promote healthcare value for all. It could also establish a foundation for more strategic alignment of priorities for deeper and more long-term impact.

About the survey

HFMA fielded the survey on behalf of Humana in July 2024. A total of 166 respondents were asked to reflect on their organization’s investment priorities in the following areas:

• Managed medical costs (n=136)
• Revenue cycle management (n=133)
• Risk management (n=106)
• Revenue diversification (n=115)
• Impact of regulatory changes (n=119)
• Workforce management (n=128) 

About Humana

Humana Inc. is committed to putting health first for our teammates, our customers, and our company. Through our Humana insurance services, and our CenterWell health care services, we strive to make it easier for the millions of people we serve to achieve their besthealth – delivering the care and service they need, when they need it. These efforts are leading to a better quality of life for people with Medicare, Medicaid, families, individuals, military service personnel, and communities at large. Learn more about what we offer at Humana.com and at CenterWell.com.

_{This published piece is provided solely for informational purposes. HFMA does not endorse the published material or warrant or guarantee its accuracy. The statements and opinions by participants are those of the participants and not those of HFMA. References to commercial manufacturers, vendors, products, or services that may appear do not constitute endorsements by HFMA}.

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^[1]. Blumenthal, D., et al., “Mirror, mirror 2024: A portrait of the failing U.S. health system,” fund reports, The Commonwealth Fund, Sept. 19, 2024.