The Finance and Accounting Burden
MANY WELL-MEANING HEALTHCARE COMPANIES PUT THEIR MISSION FIRST
But they eventually learn they must run a sound business as well as a sound practice. In some ways, it is not so different from caring for human beings: You must consider the whole individual and provide interventions that extend the healthspan as well as the lifespan. The same applies to a business, which is why financial health is so important.
Any healthcare company, from a hospital to a doctor’s office, clinic, or dental practice, needs financial insights. Only, with greater rigor than in other workplaces, especially around payments, reimbursements, insurance, governance, and oversight because there are more regulations and payments are almost always multi-party.
Yet hiring finance and accounting talent to do this work is growing more difficult:
• 85% of companies are struggling to hire finance managers. - Robert Half
• 300,000 accountants left the industry from 2020 - 2022. - Wall Street Journal
• 28% of companies that had a material reporting weakness also had higher CFO turnover. - Wall Street Journal
It is then no wonder that so many outsource their finance and accounting operations. Choosing the right outsourcing advisor is more critical than ever. In this guide, we’ll show you how to find and evaluate the right advisor for your needs.
Kieran Higgins Partner Citrin Cooperman
Caroline Cheung Manager Citrin Cooperman
The 6 Biggest Operational Challenges Facing Healthcare Companies Today
In addition to the accounting shortage, healthcare companies are facing a number of environmental headwinds including difficulty retaining staff, increased M&A pressure and consolidation, and a rapidly retiring workforce. This leaves healthcare companies facing six financial challenges:
PRODUCING COMPLIANT FINANCIAL STATEMENTS
Healthcare organizations have trouble producing financial statements that adhere to extensive regulatory requirements and accurately depict the organization’s financial wellbeing. For example, some would be better off recording income on an accrual basis than cash basis. And sometimes, organizations will need audit-ready (accrual and GAAP) financial statements.
TIGHT REPORTING DEADLINES
Healthcare organizations often face tight reporting deadlines, especially considering the monthly, quarterly, and annual financial reporting cycles. Those multi-party billing transactions and reimbursement processes often delay period-end closes and create risk.
STRICT DOCUMENTATION IMPEDES PATIENT CARE
Digitization hasn’t really reduced the complexity and difficulty of managing documentation. And inconsistencies in those processes — especially as regulations change — can create risk and inefficiencies. In some cases, backend financial mistakes can deny people coverage and compromise critical patient care.
1 2 3 4
UNDERSTANDING HOW THE BUSINESS IS PERFORMING
Without accurate financial statements, clinics and offices don’t have a comprehensive view of how stable the organization is. It’s only by producing and analyzing accurate statements that leaders can make informed decisions, identify areas of underperformance, and focus their time. For example, few organizations understand the true cost of patient care well enough to address it.
Few organizations understand the true cost of patient care well enough to address it.
5
Healthcare organizations struggle to integrate their data from Electronic Health Records (EHRs) with billing and backend financial systems. A lack of harmony there means a lack of unified reporting, which means a lack of institutional insight. This grows worse with time if they don’t keep up with new accounting systems and software and miss opportunities to streamline their workflow.
6
Healthcare companies by their nature must safeguard troves of sensitive financial and patient data and comply with HIPAA. But their generally outdated infrastructure, the increasing sophistication of attackers, and the increasing value of health data makes this a difficult problem to solve in-house.
"[It disrupted] millions of patients’ prescriptions and services delaying access to medication and care. Even two months after the attack, an AHA survey revealed that many medical practices faced potential closure because of lost revenue from unpaid claims, putting patient access to medical services at risk."
The Great Power of Outsourcing
Somewhat luckily for healthcare organizations, finance is one service that is fairly straightforward to outsource. Not only can experts perform this work remotely, but an outside financial partner who works with many hospitals, for example, may have unique insight, benchmarking, and processes to offer.
Among the benefits of outsourcing your finance operations are:
CLOSING THE BOOKS ON TIME EACH MONTH, QUARTER, AND YEAR
A finance and accounting partner can craft precise and realistic budgets and forecasts, creating a sense of financial stability. They can produce reports to help you meet regulatory requirements and be transparent about the organization's financial health.
AUTOMATING YOUR FINANCIAL OPERATIONS
Consultants with the right expertise can automate rote, repetitive finance and accounting tasks such as reconciling accounts and remitting payments. This can allow your staff to shift to a more analytical mindset and solve other issues.
STANDARDIZING YOUR PROCESSES AND DOCUMENTATION
It is vital to standardize and document your processes. Through this action, you may find duplicative workflows and procedural waste and grow more efficient. It can also help with risk and governance, as you can easily prove you’re following best practices.
GAINING INSIGHT INTO HOW YOUR BUSINESS IS PERFORMING
Some partners can provide a rapid assessment of your financial and operational risks, along with strategies to mitigate them. It’s a good idea to complement this with strategic financial planning to ensure any short-term changes serve the long-term organizational mission.
BECOMING MORE AGILE WITH ON-DEMAND ACCOUNTING EXPERTISE
Finance and accounting demands fluctuate, and your needs may grow around important events like M&A and new legislation. Once you’ve “warmed up” an accounting partner that deeply understands your industry, you’re able to flexibly add or remove headcount on-demand in ways that aren’t possible with a full-time team.
INTEGRATING YOUR TECHNOLOGY
A partner can evaluate your ERP system and related systems to ensure they can support the operations you need. Notably, that your electronic health records and billing systems sync.
PROTECTING PATIENT DATA AND THE COMPANY
An outside cybersecurity advisor can perform a security assessment and identify ways to reduce your vulnerability. Additionally, transitioning to secure cloud platforms like Microsoft 365, AWS, or Microsoft Azure, along with upgrading software installations and optimizing networks, reinforces cybersecurity measures and helps mitigate vulnerabilities associated with aging file servers and workstations.
"Companies that embrace the opentalent model get their work done just as well as those that use traditional staffing models — but 4-5 times faster and 8-10 times cheaper."
- HARVARD BUSINESS REVIEW
OneSolution?StrategicOutsourcing
Modern finance outsourcing solutions run the gamut from low-cost transactional accounting to outsourced CFO services and everything in between. For many healthcare companies, outsourcing will be more efficient and effective than hiring full-time staff — providing you access to specialized talent on-demand and allowing you to scale up and down as needed. Outsourcing is growing in popularity: According to a recent Robert Half report, 78% of finance organizations in the United States are planning to increase their use of contract professionals.
TYPES OF OUTSOURCING:
BOOKKEEPING VS. THE FULL-SERVICE OUTSOURCING MODEL
Not all outsourcing offerings are alike. Broadly, there are two main types:
OUTSOURCED BOOKKEEPING SERVICES
Outsourced bookkeepers provide basic accounting services: They will balance your books, record accounts payable and receivable transactions, reconcile cash, and provide you with a standard balance sheet and profit and loss (P&L) report. To keep their services lowcost, they standardize their service and technology platform across their clients and try to keep those systems and processes consistent across their client portfolio. For simple business structures with basic accounting needs, this can be a viable, low-cost, lowtouch option.
FULL-SERVICE OUTSOURCING MODEL
A full-service outsourcing model is more customtailored to your company’s needs. Engaging a fullservice outsourcing solution can help you build better processes, achieve a deeper and more insightful level of financial decision-making, and select and integrate the right technology to help you achieve faster, more accurate reporting. They can bring in industry specialists as needed to support or augment your team, stay current on the latest changes to both GAAP accounting standards and operating best practices, and help train and upskill your existing finance staff. Working with a full-service provider allows you to establish a long-term advisor relationship, and scale up or scale down your service package as needed.
TECHNOLOGY OUTPUT
OUTSOURCED BOOKKEEPING SERVICES
Standard output: Provide a standard monthly balance sheet and P&L report
Use the client’s tech stack or onboard onto a basic system
STAFF
Employ lower-level staff to perform routine tasks
GOAL
Provide a low-cost solution for simple businesses
COST
Lower cost for a canned solution
FULL-SERVICE OUTSOURCING MODEL
Custom output: Provide a monthly deliverable that supports decisions, including financial planning and analysis
Customized technology stack and processes based on your specific needs, including system selection and integration
Employ highly specialized professionals who can provide advisement, training, and best practices tailored to the company and its industry
Provide mature finance capabilities to fastgrowing companies
Higher cost for a tailored solution
Our perspective is that not every company needs to strive for the highest level of financial maturity. Each company should individually evaluate the complexity of its business and determine the level of speed and maturity required on its reporting and analytics. If all you need is bookkeeping services, an outsourced bookkeeper can be a great and cost-effective option. Business leaders should understand, however, that not investing in the accounting function can put you behind your competitors and have costly implications in the long run.
For healthcare companies with any level of financial complexity, you likely need faster and more in-depth reporting to be able to make timely, well-informed decisions. An accelerated month-end close, more detailed processes and financial reporting (e.g. at a business unit, service, or patient-segment level), regular forecasting with your P&L leaders, and enhancing the level of automation all add value. Choosing a financial consultant as a service provider can unlock a world of additional benefits, which we’ll delve into in the next section.
Benefits of a Full-Service Outsourcing
Solution
GO FROM MANUAL TO MODERN IN MONTHS
Achieve financial maturity in just 60 days.
The first step in moving toward a mature financial model is being able to identify the areas of improvement. Having professionals who know your business model and the healthcare industry is key to being able to access every part of the model from tech stack to people and processes. You can become financially mature in a much shorter time by using an outsourcing solution than by attempting to do it yourself. The right partner will bring in a ready-made team — or experienced people to augment your existing systems and team — to quickly improve your financial capabilities.
Our outsourcing clients typically go from slow, manual processes (a level one or two on the scale below) to fast, in-depth reporting in 60 days.
PEOPLE
PROCESSES
Disconnected people and processes
Steps towards centralization
Ill-defined roles and responsibilities
Defined roles and responsibilities
Transformation through automation
Leadership through innovation
Well-trained and appropriately deployed staff
Highly specialized staff
GOVERNANCE
TECHNOLOGY
Manual, timeconsuming processes
Informal and ineffective policies and procedures
Unintegrated systems and data architecture
Fewer manual processes
Centralized activities
Fully automated processes
Defined policies and procedures and procedures
Integrated policies and procedures
Automated governance
Common platforms
Integrated and automated systems
Machine learning / Artificial Intelligence
DATA
Limited data which is rarely used
Level 1: SUSTAINS
Ad hoc analysis; manual data cleansing
Level 2: REACTS
Data is clean, accessible, and easy to use
Level 3: TRANSFORMS
Predictive analytics
Level 4:
INNOVATES
Building internal capacity to achieve these kinds of results can be difficult and time-consuming, but when you hire a financial consultancy, you can level up your maturity in a shorter period.
3
ACCESS TOP TALENT WITHOUT THE HIRING HASSLE
"Top talent is hard to find. Cost accountants, finance managers, compliance officers, and financial analysts are currently the toughest roles to fill."
– ROBERT HALF
More than anyone else, healthcare companies are struggling to find and hire top finance and accounting talent. Given that the industry is going to be understaffed for the foreseeable future, outsourcing is the most feasible way to access the best people who can be available almost immediately and transition seamlessly into your clinic or hospital’s accounting function.
Our outsourcing practice specializes in talent arbitrage. Because we partner with so many companies in healthcare, we can offer career paths that are appealing to top-level accounting talent. Since we are always hiring, we have strong candidates joining our team on a continuous basis, not just the moment there is a need. We always work as a team. As people progress in their careers, there are strong candidates who are being trained and mentored behind them and can sustain excellent work quality while adopting best practices. All that means is we’ve already done the hard work of finding the right people for your finance and accounting function — and we can match folks who have the right skills and expertise for your needs.
NEVER WORRY ABOUT STAFF TURNOVER
"44% of managers cite staff turnover as a key reason they need to add to their teams."
– ROBERT HALF
Not only can you avoid a potentially long and arduous hiring process, but choosing to outsource also means you don’t have to worry about staff turnover. If you choose to hire in-house and an important person leaves on short notice, the lift for identifying and hiring the right replacement can be arduous and lengthy. When you work with an outsourced finance partner, you can easily scale up and rest easy knowing that your finance team has continuity.
For instance, say your organization’s controller quits with two weeks’ notice — your outsourcing partner will be able to provide a solution to execute the necessary responsibilities on an ongoing basis, while continuing to train and mentor your junior accountants. Or perhaps your outsourcing partner will recommend that you don’t actually need a full-time controller, and they can instead provide you fractional support by the hour. This ensures you get the help you need while putting everyone’s time toward their most effective use.
4GET BETTER VALUE FOR YOUR MONEY
"46% of hiring managers say meeting candidates’ salary expectations is a challenge."
– ROBERT HALF
Hiring talent is growing more expensive. Using an outsourced finance consultancy gives you access to the expertise you need without hiring full-time employees. If you compare it to the cost of having full-time employees cover all of the skill and knowledge areas you require, it can be more costeffective. Ultimately you’ll gain a much broader range of skills and expertise through outsourced support. Furthermore, salaries of qualified accounting staff have been increasing disproportionately to the market. As a result, accessing a fractional solution will enable you to gain a more flexible option and more control over a normally expensive fixed cost.
Your outsourcing partner can help you build more efficient processes and systems, so you can meet your needs with experts in fractional roles. Instead of hiring a suite of full-time staff, you only have to pay for the hours you actually need.
6
STAY UP TO DATE ON CUTTING-EDGE TECHNOLOGY AND BEST PRACTICES
"60% of employers identify an inability to bridge skills gaps as a barrier to business transformation."
– WORLD ECONOMIC FORUM
The finance and tech landscape is constantly changing and it can be difficult for small teams at healthcare companies to stay on top of the latest best practices and technology. When you choose to work with an outsourcing provider, all that knowledge comes as part of your engagement.
Through experienced advisors in various healthcare industry verticals, outsourced finance consultancies like ours are always on top of the latest trends, improvements, and new regulations. If you have an internal finance staff, you would likely have to bring in a third party to help you understand the latest standard and see how you can apply it, which carries additional costs. We consult on this for all of our clients as part of our core services.
GET ACCESS TO EXPERTISE AS YOU NEED IT
"89% of finance and accounting senior managers in the U.S. report challenges finding skilled talent."
– ROBERT HALF
Evaluating a potential sale? Need to analyze and update your standard costs? Pursuing a new financing structure? For all these and other finance questions that come up in the course of managing your clinic or hospital network, an outsourcing firm likely has access to the specialists you need to resolve these issues.
Having dedicated staff who already know your health organization makes it easier to identify and engage these resources. They bring with them the tools, technical expertise, and methodologies that already integrate with how your books and records are being maintained. Our approach makes it so you receive high-level, senior capabilities for any of these areas as you need them.
UPSKILL YOUR EXISTING TEAM
"76% of employees agree that they are more likely to stay with a company that offers continuous training."
– TALENT LMS
Finally, bringing on an outsourcing advisor can be a boon to your existing finance and accounting team. Their financial consultancy can help mentor your team and bring them up to speed on the latest best practices so they can be more efficient.
This is very much in your hospital or healthcare organization’s best interest — the more skilled your internal people are, the more efficient and effective your outsourcing advisor will be. At Citrin Cooperman, we view ourselves as part of the internal finance and accounting team and focus on developing other team members’ technical and accounting skills.
The Citrin Cooperman Solution
Our solution to outsourcing finance and accounting allows us to provide all of the capabilities our clients need as they manage, grow, and evolve their businesses. We help your finance function become more efficient and effective through people, processes, governance, and technology.
When you choose to work with Citrin Cooperman as your outsourcing advisor, here is what you can expect:
1
FINANCE ASSESSMENT (Approximately three weeks)
The first step in our process is what we call a finance assessment. During this process, our team evaluates the quality of your documented procedures, the EHR and financial systems you are using, the maturity of your financial reporting, and the level of support you currently receive from the accounting department. We identify where there might be opportunities for improvement and where there are significant issues or gaps. The output from this phase is a list of recommendations and an implementation roadmap that our team can help you achieve. The leader of this assessment stays engaged afterward on an ongoing basis.
2
ONBOARDING (First month through first close)
The month-end close begins with an onboarding phase, at which time we start implementing the findings from the assessment and setting up the delivery structure for our services. This includes things like:
• Establishing a month-end close checklist
• Documenting standard operating procedures
• Agreeing on financial reporting formats and KPIs
• Setting approval thresholds, workflows, and other key controls
• Onboarding the team who will perform all of the in-scope tasks
• Setting up the monthly deliverable deadlines and collaboration technology used to work with your team
STEADY STATE
Once we’ve laid the foundation for our work together, we settle into a monthly cadence. In addition to your engagement lead, you will have a dedicated staff divided into functions who work alongside your internal staff. Our documented processes show everyone what’s assigned to them, and we have digital portals that everyone uses to track their deadlines and other weekly activities.
We pursue continuous, incremental improvement to your processes and financial information. We can provide a much-needed external perspective so your finance and accounting functions can continue to improve.
DECISION SUPPORT
Our ultimate goal is to provide management with decision support platforms that enable you to make crucial decisions about your healthcare company’s direction. These forward-looking tools include budgets, financial forecasts and re-forecasts, projections, and key performance indicator dashboards. We tailor these analyses to your specific needs and present them in a clear and concise format. Having the right decision-making support system in place is crucial to your clinic or hospital network’s success.
About Us
BUSINESS PROCESS OUTSOURCING
Citrin Cooperman's Business Process Outsourcing (BPO) Practice is designed to help businesses achieve efficiency, cost savings, and strategic growth. We understand the challenges executives face in managing operations with limited resources and time. Our BPO practice offers a comprehensive suite of outsourced services to support your finance, accounting, and IT needs, allowing you to focus on your core business activities.
Citrin Cooperman’s BPO team consists of industry-specific finance and accounting, and IT professionals with extensive experience in providing outsourced solutions. Our focus is on delivering cost-effective services tailored to meet your business needs, whether on an ongoing or project basis. We integrate our BPO services with our firm’s other offerings, such as tax advisory, digital services, cybersecurity, and transaction advisory, providing a holistic approach to supporting your business.
HEALTHCARE
Healthcare organizations continue to confront and adapt to significant challenges associated with new payment models and stagnant reimbursement, rapid consolidation, new market entrants, changing technologies, growth of telehealth, enhanced patient expectations, and more.
Citrin Cooperman’s Healthcare Practice is well-positioned to help healthcare organizations navigate the current environment. With a suite of services specifically designed to add value, we help organizations position themselves for short-term profitability, long-term sustainability, and strategic growth. Our dedicated healthcare team supports efforts throughout the full continuum of care while servicing providers, payors, and investors.
We work with owners, operators, and investors in the healthcare space and we are well-versed in the complexities of the different industry segments.
DIGITAL SERVICES
Citrin Cooperman approaches Digital Services with a unique perspective, focusing on helping businesses grow by combining innovative technology with efficient processes. Whether an organization is just beginning its digital transformation or advancing to the next stage, Citrin Cooperman provides the expertise needed to ensure systems work together seamlessly in real time. The goal is to deliver secure and streamlined experiences for both customers and team members.
As technology continues to evolve, managing and protecting data has become more critical than ever. Effective use of insights from across the organization—from back-office operations to frontline activities—requires strategic integration while maintaining compliance and security. With artificial intelligence (AI) enhancing processes, Citrin Cooperman helps businesses prepare for the future and make the most of emerging opportunities.
CYBERSECURITY
In today’s rapidly evolving digital landscape, organizations face an increasing array of cyber threats that can jeopardize their operations, reputation, and financial stability. Citrin Cooperman's Cybersecurity Practice is dedicated to helping businesses stay secure and resilient in the face of these challenges.
Our Cybersecurity team brings extensive experience in risk management, threat detection, compliance, and incident response. We deliver tailored solutions that address your unique cybersecurity needs, ensuring your organization is protected against evolving threats. From proactive assessments and penetration testing to incident response and compliance support (including PCI DSS, HIPAA, CMMC and more), our team provides the guidance necessary to safeguard your critical assets.
We integrate our cybersecurity services with our firm’s other offerings, such as digital advisory, business process outsourcing, tax advisory, and transaction advisory, providing a comprehensive and cohesive approach to your organization’s security and business continuity.
Citrin Cooperman’s Cybersecurity Practice is committed to empowering organizations with the tools and strategies needed to mitigate risks and secure their digital future.
