Healthcare CFO Survey 2023
The challenges facing healthcare leaders today
Deloitte’s Healthcare CFO Survey for 2023 captures the views of 50 healthcare finance leaders across both private and public health providers in Australia. The report explores their priorities and responses to financial sustainability, talent management, capital strategy, health equity and ESG.
Australia’s healthcare system continues to be disrupted by significant challenges, including increasing inflation, supply chain difficulties, and workforce burnout and shortages. The challenges have become even more pronounced against the backdrop of a global landscape reshaped by the COVID-19 pandemic.
This new healthcare environment has acted as a catalyst for change, compelling Chief Financial Officers (CFOs) to re-evaluate their priorities and work methods, rethink workplace culture, and embrace new technologies to navigate the evolving landscape. As the focus continues to sharpen on delivering ‘outcomes’ rather than ‘activity’ – and funding models evolve accordingly – the speed of transformation is bound to intensify.
"We are focused on clearly identifying the long-term additional costs in a living with COVID environment and finding efficiencies to offset them"
- Chief Financial Officer, Western Australian healthcare provider
Explore the key themes found in this year’s report below.
CFOs are anticipating revenue growth, but this may not be enough to counterbalance rising costs, with 62% of CFOs expecting further erosion of operating margins. Labour costs were identified as a key driver behind increased costs, with 48% of healthcare service providers experiencing higher-than-historical pay increases for their healthcare staff.
These increased labour costs, in conjunction with the impact of inflation on consumables, systems and operational costs, are contributing to the erosion of profit margins throughout the healthcare industry, necessitating a more vigilant approach to cash management.
In response to this issue, 64% of CFOs are diligently focusing on monthly cash flow management, with a strong emphasis on ensuring financial sustainability. The two most common actions undertaken by CFOs to enhance their cash positions are improving cash collection from own source revenue and streamlining funding arrangements.
Q. What is the projected outlook for operating margin and operating revenue for your organisation?
The shortage of nurses and clinical staff continues to have a significant impact on the healthcare sector, with 76% of CFOs witnessing the shortage. More substantially, 84% acknowledge a shortage of finance talent.
Based on CFO interview responses, it’s evident that staff shortages are most noticeable in regional areas and for in-demand specialists. Various reasons have been cited for this issue, including challenges with visa approvals, as well as the unavailability of affordable accommodation due to the rapid escalation of property prices.
Addressing talent shortages will be essential for healthcare organisations, enabling them to meet community expectations for service quality and to undertake the investments required for a digitally empowered healthcare system.
Q. Level of agreement on organisational talent-related situations
Clinical, financial, and technological challenges persistently impact the healthcare system, exacerbated further by the COVID-19 pandemic. These various ongoing pressures on healthcare delivery are a driving force for digital transformation of the industry. This is evident in the survey results, with an anticipated increase in investments by healthcare organisations in digital technologies, core business technologies, and data and interoperability tools.
Similarly, the adoption of healthcare cloud solutions continues to rise, as organisations turn to cloud technologies, including Platform as a Service (PaaS) and Software as a Service (SaaS), to enhance their operations and manage capital expenditures more efficiently.
CFOs are also observing increased expenditure on hospital and health service infrastructure (54%) and alternate care sites (44%). These developments will drive the need for further investment in technology to expand capacity and elevate capability across services and sites.
Q. How do you plan to prioritise your organisation’s capital expenditures in the next three years compared to 2022?
