In Part 1 of this series, I explained what rolling forecasting is and why healthcare organizations benefit from both annual budgeting and rolling forecasting processes. Of course, this is a significant change for many healthcare organizations, and adding rolling forecasting might sound impossible for finance teams already working hard to guide their hospitals and health systems through COVID-19’s unprecedented change and volatility.
But now is actually the perfect time to leverage financial and operational data to inform strategic decisions — which 96% of healthcare CFOs think their organizations should be doing better — while actually reducing workloads using the right software tools.
Here’s how to integrate rolling forecasting:
- Look for opportunities to improve existing budgeting processes. You can significantly reduce staff effort and process time without compromising essential budget information by consolidating relevant data into one system, automating budgeting processes with modern technology, and getting the right people involved at the right time.
- Look for a rolling forecasting solution designed for healthcare. Rolling forecasting is manually intensive when you don’t have the right tools for the job, so this is critical. Rolling forecasting solutions should provide a higher level of detail than traditional budgeting so you can focus on rate-per-unit variances, for example, as opposed to traditional budgeting, which focuses on dollar amount variance. The level of detail is equivalent to a director-level view rather than a general ledger view.
- Determine your forward-looking timeframe. Advanced rolling forecasting should include the ability to create 24- and 36-month forecasts, which will provide valuable insights to guide budgets and financial plans during and after the pandemic.
- Connect key financial systems. In addition to providing short-term managerial guidance, rolling forecasting should integrate seamlessly into the larger financial decision-making process, which includes strategic planning, financial planning, budgeting/forecasting, capital allocation, capital budgeting, and outcomes measurement.
- Consider reporting needs. Biweekly or more frequent productivity reporting should roll up into monthly performance reports, which inform rolling forecast updates on that monthly and/or quarterly basis. In turn, these rolling forecasts can be used to update strategic planning and associated initiatives, financial plans, and capital allocation and management.
With rolling forecasting, actual performance and a better understanding of future conditions can guide strategic decisions, organizational initiatives, plans, and expenditures — driving financial performance improvement across the healthcare organization.