4 Reasons Medical Practices Miss Revenue Forecasts

Forecasting is one of the most difficult activities financial leaders in Healthcare have to tackle. Key assumptions required for good forecasting are often not defined, and KPI's not identified.

Forecasting must be based in reality, and in the real world, many considerations outside of a medical practice's internal operations can effect its financial future. Taking a proactive approach to forecasting is the key to success.

But to achieve the fundamental shift from reactive to proactive decision making requires the right mix of trust in your data, financial visibility, and strategies for regular, consistent forecasting processes.

So how can you avoid the pitfalls of poor forecasting, and hit your revenue forecasts quarter after quarter? First you must identify the reasons why medical practices miss revenue forecasts. Then you can find a solution that fits your needs.

#1 - A STATE OF CONSTANT DAMAGE CONTROL  

Lack of real-time variance reporting can result in realizing that revenue forecasts will be missed after it's too late.  Then the group is in damage control and may overcorrect (e.g. dramatically decreasing costs across the board even for profitable areas) or may need to restate revenue forecasts because it’s too late make up missed revenue for the current cycle/year.

#2 - LACK OF VISIBILITY

Lack of convenient drilldowns into detail to analyze and assess how/why numbers are off is another key point of failure. Great financial analysis doesn't happen at the 30,000ft. level. Financial leaders in the field of healthcare must be able to dig deep into the numbers to source the true levers effecting revenue. When you can't drill down, your forecasts are based on assumptions, not reality.

Without access to detail, your financial group is not conducting revenue what-if analysis to know where to focus marketing spend to find new clients and plan what the ideal payor mix should be.

Not having proactive alerts prevents you from knowing when trends start breaking or when anomalies occur in KPIs. So when you miss the indicators in your analysis, you loose the opportunity to address issues when they happen, as opposed to playing catch-up.

#3 - NOT AUDITING FORECASTING ACCURACY

Are you reviewing the last 12 months of revenues and comparing it to the revenue forecasts for that same period to assess how accurate/or not your forecasts are?

A careful review can uncover errors with formulas, errors in the forecast template itself, issues with collections, etc. Many companies lack the ability and/or bandwidth to audit their forecasts simply because they are too busy with manual, outdated processes to allocate time for this important task. Without a clear understanding of the historical data, it's near impossible to plan for the future. 

#4 - EXCEL, EXCEL, EXCEL

90% of spreadsheets contains errors. Which errors are in yours and to what extent are the errors impacting your revenue forecasts and ability to stay on budget? From the dreaded fat finger adding zeros where they don't belong, to complex calculations triggering incorrectly, Excel can confuse, confound and frustrate when the numbers aren't adding up.

How about version control? If you're working in Excel, there is a high likelihood that all of your team members are not working with the same data-set at the same time. This nightmare scenario is one of the most common causes of discord within the finance team, and undermines the teams ability to trust the results of the budgeting and forecasting process.

But Wait... There's Hope!

With the right systems and processes in place, your growing practice can achieve forecasting nirvana. We help clients leverage technology to automate data integration, visibility and the proactive management of revenue forecasts, financial reports and budgets.

Our solution, geared specifically towards scaling medical practices, and designed in conjunction with top finance leaders in the Healthcare vertical, is providing businesses like yours with the ability to trust the numbers, and generate accurate, achievable forecasts.

• PROACTIVE MONITORING & VARIANCE REPORTING
  Up to date variance reporting and dashboards with alerts when trends are breaking and there are anomalies in KPIs.
• GREAT VISIBILITY
  Automated integration of data from your accounting, billing and HR systems.
• FORECASTING ACCURACY REPORTS
  Keep your pulse on accuracy. Reports and dashboards to monitor and assess the accuracy of your revenue forecasts and associated formulas.
• BENEFITS OF EXCEL WITHOUT DEPENDING ON IT
  A leading cloud-based platform with the features and benefits of Excel but not the risks and errors common with Excel.

Want to learn more about how your company can generate better revenue forecasts and hit your goals quarter after quarter? Contact Business Solution Partners Today to explore our finance solutions for the Healthcare Industry, and learn how we're helping companies just like yours transform the way they budget and forecast with technology, process and training.

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