5 Major Concerns CFOs Have About Healthcare Reform

Mar 31, 2014

insurance folderAccording to a recent survey by Bank of America, CFOs are increasingly optimistic in almost every area except one: healthcare costs. Most CFOs are ready to comply with the Affordable Care Act, but the residual effects of healthcare reform heavily affect day-to-day business management.
The Hardesty Healthcare Practice has identified five major concerns that CFOs have about healthcare, why they’re worried and how to address the concerns.
1.       Maintaining sufficient cash reserves.
Cash flow is always a concern for any CFO, but healthcare costs are still an unknown threat to the CFO’s ability to protect the continuing operation of the enterprise. Though it could take years before executives can adapt to and accurately predict the healthcare costs for their business, it’s impossible to know what the business impact will be in the beginning. Your best bet is to develop a 13-week cash flow, which can provide simple visibility into when cash will come in and in what order obligations need to be addressed.
2.       Keeping pace with regulatory changes.
Complying with the new healthcare policies could mean significant tax increases as well as healthcare reimbursement changes. Still, most CFOs view this as a cost of doing business and it is not expected to negatively affect hiring in 2014. Most CFOs anticipate hiring more employees this year.
3.       Managing workforce response to the Affordable Care Act (ACA).
One of the big cost increases on the horizon stems from a penalty for small businesses not covering their full-time workers, at a cost of $2,000 per employee. To offset these costs, some businesses will reduce non-essential staff to part-time in order to avoid tax penalties.
Companies must also provide insurance programs at reasonable rates for employees or face penalties. In addition, managing the actuarial mathematics of healthcare exchanges – premium rates, dividends, risks, and other statistics – could be daunting. Since adjusting to these changes could consume precious staff resources, CFOs should consider outsourcing certain assignments to firms that specialize in helping businesses manage transitions.
4.       Delayed economic turnaround.
The patient portion of healthcare bills will be paid by individuals out of pocket. These increased consumer costs might have an impact on the overall economic turnaround, creating a stall due to the domino effect of decreased consumer spending.
5.       Ensuring access to capital in the healthcare sector.
Healthcare CFOs have more concerns in that new standards (such as the conversion to ICD-10, a medical classification list by the World Health Organization) could delay payments and credit lines will need to be increased to accommodate for the slowdown. This could have a significant impact on whether or not capital will be easily accessible to healthcare organizations, and it could also change investor attitudes toward viewing the healthcare sector as a desirable investment opportunity.
Hardesty’s Healthcare Practice has C-level experts who can help businesses manage the impact of healthcare reform. Learn more at hardestyllc.com.