Although the worst of the COVID-19 pandemic may be behind us, the results of the pandemic — including rising expenses in healthcare — are lingering. One study on National Healthcare Spending found that healthcare spending in 2020 increased nearly 10%, reaching $4.1 trillion. That’s more than double the 4.3% increase we saw in 2019. So, what does 2022 hold in terms of healthcare finance trends? A few things we can definitely expect are continued costs associated with COVID-19 testing, patient care, and vaccine administration, which are likely to persist well into 2022 and beyond. But the financial trends don't stop there. In this article, we’ll explore the top healthcare trends to watch this year.
Top Financial Challenges in Healthcare
Financial management has always been a crucial element of healthcare to manage the skyrocketing costs of medicine. In the wake of the pandemic, however, it’s taken an increasingly important role. Here are the top financial challenges in the healthcare industry in 2022:
Recovering from the Covid-19 Pandemic
The COVID-19 pandemic wreaked havoc on the medical field — financially, logistically, and emotionally — as healthcare workers became burdened with hospital beds filling up at record rates and an unprecedented global pandemic.
As the healthcare system attempts to recover from the effects of the pandemic, there’s no telling when the next variant could emerge and send the industry back to square one. This is causing agencies across the nation to prepare for the next pandemic while trying to recover from the last one. Some ways the industry is preparing for another pandemic include:
- Investing in better forecasting after supply chain disruptions and shortages.
- Spending more on staffing and safety measures, including personal protective equipment (PPE), staffing, and infrastructure. Investments are also being made in remote workforces and cybersecurity.
- Addressing health disparities the pandemic highlighted, including working toward more diversity in clinical trials
Global Supply Chain Delays
When the pandemic hit in 2020, it sent shock waves through global supply chains as production in every industry came to a halt. The effects of those stoppages are still being felt to this day, as doctors and hospitals struggle for medical supplies and pharmaceuticals. In fact, 99% of U.S. hospitals and health care systems have reported challenges in acquiring supplies since the pandemic, with eight in ten reporting supply shortages caused them to seek out new vendors for supplies.
Raw material shortages are hampering the production of pharmaceutical drugs and medical equipment as manufacturing facilities worldwide struggle to keep up.
New Restrictions and Regulations
The evolving regulatory environment has had a significant impact on healthcare business management as well as how providers can supply care. The use of digital health tools, such as telemedicine and artificial intelligence (AI), emerged to fill gaps during the pandemic. These innovations are not without their unique challenges, however. For example, it’s now up to healthcare financial management to understand how their organizations can deploy these new technologies while staying in compliance with changing regulations.
Aside from COVID-19 restrictions and regulations, healthcare agencies have a broad spectrum of regulations to worry about, including:
- Pricing-related regulations.
- IT integration and the rise of interoperability rules aimed at facilitating effective system integration and information exchange. The regulations cover data sets and the accelerated use of APIs.
- Anti-competitive behavior.
Growing Need for Cybersecurity
With the emergence of digital health tools, concerns about cybersecurity are increasing. Healthcare agencies are top targets for cybercriminals due to the massive amounts of patient health information their databases contain. More than two-thirds of healthcare organizations reported ransomware strikes, and at least 33% reported two or more. The total downtime cost of these attacks is nearly $21 billion.
One study found 74% of all healthcare data breaches stem from hacking and IT incidents, which can be attributed to:
- Understaffed IT departments
- Legacy technologies improperly configured for new medical technology
- Lack of interoperability standards
The top cybersecurity threats healthcare organizations must monitor and find solutions for include:
- Digital health and telehealth technology
- IoT-connected medical devices
- Understaffed IT departments
- Lack of employee cybersecurity training
The pandemic accelerated burnout among healthcare providers and staff, worsening labor shortages across the industry. Moody Investors Service even adopted a negative credit outlook for the healthcare industry due to shortages and increased costs. These factors are expected to decrease operating cash flow by between two and nine percent.
The labor shortages are reducing the availability of physicians, nurses, and lab technicians. In fact, nursing is being hit the hardest. According to federal data, the United States will lose about 500,000 nurses by the end of 2022, which will increase the nursing shortage to 1.1 million.
The industry is also experiencing high turnover rates. Emergency medicine, ICU, and nursing are reporting record high rates.
A competitive talent market is also contributing to the labor shortages as more and more administrative workers opt for part-time jobs rather than committing to full-time positions. In addition, “The Great Resignation” has millions of Americans resigning from their posts in favor of work-from-home or hybrid roles with more flexibility.
Opportunities to Improve Healthcare Finances
The good news is that healthcare organizations can take advantage of several opportunities in 2022 to improve their financial outlook, including:
Digital Communication and Payment Platforms
As the world becomes more digitized, digital payment and communication platforms are increasing in popularity and acceptance, including:
- Real-time payments: Estimates predict that real-time healthcare bill payments will reach more than 70 million this year thanks to its convenience, efficiency, and safety.
- Electronic Funds Transfers (EFT): In Q2 of 2021, the healthcare sector processed 108 million electronic funds transfers — a 36% increase from the same period the year prior. EFTs are electronic messages used by health plans to order financial intuitions to electronically transfer funds to a healthcare provider’s account to pay for services. The speed and convenience of these services are highly applauded industry-wide.
Virtual Care Capabilities
Virtual care played a pivotal role during the pandemic as social distancing guidelines and fear of transmitting the virus took over. Even as the effects of the pandemic wane, telehealth is expected to grow. In fact, more than half of hospital systems expect to increase their investment in telemedicine over the next two years.
Virtual care provides several advantages for healthcare organizations, providers, and patients, including:
- Increased patient access
- Increased productivity
- Reduced cost for providers
Automated Financial Services
Healthcare providers and managers will continue to leverage automated payments to reduce costs, improve operational efficiency, and even create new profit streams. These solutions can also complement existing ERP and payment systems, giving them the potential to create additional revenue opportunities and ensure healthcare organizations aren’t leaving money on the table.
Financial automation can even help solve staffing shortages by automating scheduling processes and freeing staff from mundane scheduling tasks, allowing them to focus on higher-level, patient-facing duties and complex situations.
Prepare for the Future With Multiview Financial Software
Healthcare has undergone seismic changes in the past two-plus years. You need financial management software that can keep up. Multiview Financials ERP provides our clients with a comprehensive software suite that empowers their finance teams to advance their organizations. Request a demo today to learn more about how we can help.