CFOs Eye Brighter Financial Days Ahead

HealthLeadersMedia | There’s a barrage of data in healthcare – I’m not just talking about patient and billing data – I’m talking about the multitude of surveys that offer insights on the direction of healthcare and the economy. While there may be a lot of information coming at you, this research offers key insights as to the direction your peers see healthcare moving—so pay heed.

In the last few months several reports have echoed similar sentiments: Healthcare CFOs aren’t optimistic about healthcare reform or the economy. Yet in spite of the pessimism, financial leaders think the future is looking up and capital expenditure plans are being dusted off.

Healthcare reform doesn’t make CFOs feel all warm and fuzzy. There are a lot of costly directives in this legislation, so it’s understandable that 61% of financial leaders have responded that they feel healthcare reform will have a negative impact on their business. The finding, from the recently released GE Capital CFO Survey, was part of a larger look at the opinions of CFOs across seven major industries including healthcare.

“It’s not surprising that the majority [of respondents] expect this to have a negative impact,” said Randy Waring, managing director, for GE Capital,Healthcare Financial Services. “There’s still a lot of uncertainly around the implementation of healthcare legislation. Plus there is the weak economy and the prospect of cuts in Medicare and Medicaid… [all of these] are cause for genuine concern.”

Interestingly, the GE Capital survey findings from its Q1 2011 survey nearly mirror the results gathered in the HealthLeaders 2010 Industry Survey (taken earlier in October 2010), in which nearly 60% of CFOs polled said that the financial position of their organization was being weakened by healthcare reform. The pessimism, however, isn’t pervasive; many financial leaders also believe the future is looking up, according to both surveys. And another economic survey backs CFOs up on that assertion.

In May, Standard and Poor’s Healthcare Economic Indices released data showing:

  • The average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 5.39% over the 12-months ending April 2011.
  • Since May 2010, annual rates of growth of healthcare costs have been largely decelerating.
  • Over the year ending April 2011, healthcare costs covered by commercial insurance increased by 7.13%, as measured by the S&P Healthcare Economic Commercial Index.

The rate of growth in healthcare inflation has been steadily decelerating since it hit a high of 8.74% for the 12-month period ending May 2010. S&P analysts note that hospital employment growth has correspondingly slowed significantly, falling from 2%-3% increases between 2008 and early 2009, to 1% since the middle of 2009. S&P analysts believe that slowing rate of inflation in healthcare is also tied to high unemployment in the overall economy, but they also warn that the slowing trend could quickly reverse.


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