What You Should Know:
- Healthcare organizations are facing unprecedented financial pressure; several macroeconomic factors—including the COVID-19 pandemic, inflation, and staffing shortages—have forced organizations to work around decreased revenues and increased costs.
- At this critical time, organizations are looking to consulting firms to help improve their financial performance and circumnavigate obstacles. KLAS’ 2020 Financial Improvement Consulting report examined how firms were providing guidance to healthcare organizations during the early months of the pandemic.
A Look at Achieved Outcomes in a Financially Challenging Environment
Roughly three years later a new report offers an updated look at the types of work consulting firms are doing and the outcomes clients are achieving in this financially challenging environment. Key insights from the report are as follows:
- Market Insights: Financial Performance Improvement Is Most-Reported Type of Engagement, while Improved Efficiency Is Most-Reported Outcome: Financial improvement consulting encompasses various types of projects, with the most common being financial performance improvement, which saw a 56% increase from KLAS’ 2020 report, accounting for over half of the client engagements. Irrespective of the engagement type, many clients seek operational evaluation to enhance revenue, reduce costs, or both. Some clients also request more specific services, such as labor force optimization, physician compensation redesign, and contract negotiation. Notable changes since 2020 include a threefold increase in ambulatory improvement engagements (now at 18%), a nearly twofold increase in strategic risk services engagements (now at 9%), and a decrease in HIM engagements (from 12% to 4%). In terms of outcomes, more than half of respondents report improved efficiency and performance, with increased net revenue and reduced costs frequently mentioned as positive results.
- Impact Advisors Seen as Strategic; Guidehouse Drives Value and Exceeds Client Expectations: In the realm of financial improvement consulting, Impact Advisors, the 2023 Best in KLAS awardee, impressively garners high satisfaction from nearly all respondents. They stand out as the highest-rated firm for partnership strength, with clients commending their long-term commitment to relationships and deep understanding of individual situations and the healthcare industry. Notably, clients often achieve improved net revenue, efficiency, and performance. Similarly, Guidehouse demonstrates a remarkable improvement in satisfaction levels, with nearly all respondents reporting high satisfaction, a significant rise from 2020. Guidehouse consistently exceeded client expectations and is highly rated for delivering value. Clients appreciate their practical and down-to-earth approach. A client organization exceeded their financial goals and saw success in their revenue cycle under Guidehouse’s guidance. The majority of clients engaged Guidehouse for financial performance improvement, with a significant portion experiencing enhanced efficiency and performance.
- Chartis & ECG Management Consultants Have Most Validated Client Organizations, with at Least Twice as Many as Other Firms: Chartis stands out as the sole firm with multiple validated engagements spanning 8 out of 10 engagement types, garnering high satisfaction from approximately two-thirds of their clients who value the firm’s industry expertise and thought partnership. However, concerns about cost and perceived value exist, as Chartis has the highest comparative cost among fully rated firms. For ECG Management Consultants, they offer a diverse range of services, frequently engaged for physician compensation model development. Their engagements are typically less complex with lower budgets and shorter durations, and they have the lowest estimated hourly rate in the report. Most clients express high satisfaction, commending the team’s revenue cycle management expertise. Nevertheless, execution issues affect nearly one-third of respondents, who suggest more proactive updates and better explanations in their engagements.
- Reputable, Cross-Industry Firms Deloitte & PwC Drive Positive Outcomes for Clients: Despite their renowned presence in the professional services market, Deloitte and PwC have limited client validations in this report, with neither firm sharing their client list with KLAS. Respondents for Deloitte emphasize the advantages of working with a cross-industry firm, highlighting strong partnerships and professionalism, all reporting performance improvements. However, one client had to establish boundaries to control project scope and costs. PwC’s clients attribute project effectiveness and timeliness to the firm, rating them highly for money’s worth and having a lower estimated hourly rate. Some clients noted that senior consultants were initially involved but the project was completed by junior consultants, leading to a less tailored feel for the organization.
- Among the Other Limited-Data Firms, Optum Stands Out for Consistently Driving High Client Satisfaction: Optum stands out as a limited-data firm with exceptional performance, as all interviewed clients give them an overall performance score of 90 or higher, and all have seen improvements in their net revenue. Clients appreciate their extensive healthcare knowledge but note occasional deviations from original recommendations due to accommodating doctors’ preferences. KPMG clients praise the consultants’ subject matter expertise, particularly those with real operator experience, although some feel the firm’s approach is better suited to larger organizations. Nordic, a newer entrant in financial improvement consulting, impresses clients with top-tier consultants and a strong focus on outcomes, but some find them costly, raising concerns about affordability for smaller organizations. Accenture’s clients value their broad expertise and external perspective but express less satisfaction with engagement execution and a desire for fresher, more creative approaches in contrast to templated presentations, with only half reporting exceeded expectations, the lowest among the firms in the report.