20 NOVEMBER 2023: Two years on from the COVID-19 pandemic, Australian private and public healthcare providers are turning to digital transformation to solve growing cost pressures, talent shortages and high rates of staff burnout.
According to Deloitte’s Healthcare CFO Survey 2023, 72% of CFOs say they will prioritise investment in digital transformation over the next three years to increase revenue. As the sector continues to evolve, embracing digital will not only improve operational efficiency and financial sustainability, but importantly also improve patient care.
The survey of financial leaders from 50 healthcare organisations across private and public health providers found CFOs are anticipating revenue growth; however, this may not suffice to counterbalance rising costs, with 62% of CFOs expecting further erosion of operating margins. The combined challenges of attracting and retaining talent, reducing staff burnout while also dealing with rising wage and investment pressures are all contributing to ongoing operational pressures and reduced profit margins.
The survey found private healthcare providers are significantly more optimistic about their ability to right the ship, with 86% anticipating an increase in operating revenue over the forward period, compared with just 53% of public healthcare providers.
Other key findings from the survey conducted in the first quarter of FY24, include:
Deloitte National Healthcare Leader, Luke Baxby, said: “Health CFOs are reporting more difficult financial conditions than last year resulting in severe budget pressure. When surveyed in 2022, CFOs in the health sector said cost containment was their number one concern for Australia’s healthcare system and 12 months later, cost pressures continue to be a major issue.
“Healthcare providers are turning to digital transformation to lower costs and resolve workforce challenges, as well as process automation to strengthen and streamline existing systems such as data management and literacy. As the healthcare sector continues to evolve, embracing digital technology and core business technologies will not only improve operational efficiency and financial sustainability, but also improve patient care.
“Organisations that prioritise data-driven decision-making and invest in the development of a skilled workforce are poised to be better placed to navigate the complexities of the modern healthcare landscape.
“The report also shows there’s some optimism about an increase in operating revenue, though this is stronger among private healthcare providers who feel more confident about their ability to execute their business transformation plans than their public sector counterparts.
“A stronger emphasis on profitability, ability to negotiate with private health insurers over indexation rates, and a greater flexibility to reset the cost base means private sector CFOs are generally more optimistic about their ability to defy structural challenges to deliver revenue and margin growth.”