Finance execs are focused on cutting costs through technology

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Healthcare finance leaders are increasingly focused on cutting costs, with 38% identifying it as their top priority, according to U.S. Bank's latest CFO Insights Healthcare Report.

Artificial intelligence has emerged as a critical area of investment, with 57% of executives planning to invest in AI technologies this year, up from 45% in 2023.

The technology is being leveraged primarily for fraud detection, process automation and risk management, reflecting the sector's strategic focus on harnessing technology to drive efficiency and mitigate risks.

According to a Philips report from June, healthcare leaders are targeting AI and automation to address financial and operational pressures, with 81% reporting these challenges are directly impacting patients.

The U.S. Bank report is based on a survey of 250 senior finance executives in the U.S. healthcare sector. It reveals that leaders are prioritizing cost reduction through technology investments rather than headcount reductions, with 44% planning to invest in technology to achieve savings.

WHY THIS MATTERS

Despite ongoing challenges, such as labor shortages and the complexity of digital transformation, the sector is showing signs of optimism as it recovers from the impacts of COVID-19 and inflationary pressures.

The survey also highlights a gradual shift in priorities as healthcare finance leaders begin to refocus on growth initiatives.

There is a rise in leaders who are targeting new investments, with 40% now prioritizing this, up from 33% in 2023.

Nearly a quarter (27%) of healthcare finance leaders surveyed said they are now emphasizing revenue growth, compared to 21% last year, signaling a cautious pivot toward expansion.

The top risk for these leaders remains talent shortages, with 44% citing it as their primary concern, up from 40% in 2023.

This issue outweighs other significant risks such as cybersecurity attacks and inflation, which have seen a decline in concern compared to previous years.

More than a quarter (28%) of leaders surveyed said they now consider cybersecurity a major risk, down from 34% last year, while only 25% see inflation as a top risk, compared to 40% in 2023.

In the realm of payments, healthcare finance leaders are increasingly prioritizing transparency and efficiency.

The report noted that 56% of leaders are focusing on better use of payments data, and 54% are prioritizing payment automation, both up from the previous year.

Despite these advancements, the sector still lags others in adopting new payment methods, with only 26% using APIs for payments, compared to 31% in other industries.

THE LARGER TREND

The survey data comes from 250 senior healthcare finance leaders. Of these, 18% are group, regional or divisional CFOs; 100% work for a business that generates at least $100 million in annual revenue; and 18% work for a business that generates more than $2 billion in annual revenue.

The research is part of a larger study of 2,030 senior finance leaders who work in U.S. businesses. The report is the fourth in a series, and follows "Leading the Transformation," a U.S. Bank survey of 1,420 finance leaders released in 2023.

A July report from Deloitte found healthcare CFOs are looking to optimize the workforce as a primary lever for achieving cost savings.

The study also found marketing and branding have emerged as the foremost strategic growth priorities, along with investment in advanced cybersecurity technologies.

ON THE RECORD

"The U.S. healthcare sector has emerged from the challenges of COVID-19 and high inflation on its feet but now faces a complex market landscape," the report concluded. "Despite obstacles such as labor shortages and slow digital payments adoption, healthcare finance leaders are embracing technology, particularly AI, to enhance efficiency, transparency and patient care."

The HIMSS Healthcare Cybersecurity Forum is scheduled to take place October 31-November 1 in Washington, D.C. Learn more and register.