forecasting

no longer an expensive luxury

Announcing FUTURECAST™

Executive Information Systems’ FUTURECAST™ forecasting tool, the culmination of more than ten years of development, is now being launched. 


FUTURECAST™ is a unique financial reporting and economic forecasting package that enables organizations to extrapolate from current trends or alter any number of variables affecting future performance. FUTURECAST™ delivers the capability to analyze and model the precise financial and operational outcomes of changing patient and service mixes over the next  five years, a first in forecasting.  FUTURECAST™ even splits a hospital into its inpatient and outpatient components automatically so that executives can see which parts are profitable and which aren’t. 


Not just a pile of reports, but an integrated system of tables, charts, and narratives makes it easy for non-financial managers to analyze the forecasts and scenarios that they help create. The result? Exceptionally informed decisions.  

The Challenges

  • The budget as a forecast is increasingly inadequate. It’s too short term, too detailed, takes too long to prepare, and can’t be easily revised. 
  • We've tried fixed budgets, flex budgets, and service line budgets, but they're all budgets, and they all have the same failings.
  • Organizations have mountains of data, yet have trouble using it all to see into the future and plan for a new business environment.
  • Non-financial managers don’t understand, and can’t participate, in economic decisions. 

Background

While every hospital and health system has reams of data, knowing what to do with it, and what actions to take from that data, has been problematic. “Dashboards,” concise top-level reports for executives, are in use at many hospital systems, but they are snapshots of the past. They do not allow executives to control the future performance drivers essential to success, nor the modeling of their future plans. Similarly, decision support and cost accounting systems look backward, not forward. They are detailed, expensive, and time-consuming; not readily accessible to senior management, and do not model future scenarios. They analyze what a particular procedure has cost or the historical return from a certain service line, but they have nothing to say about where the organization should head—the primary responsibility of any executive team. Finally, the main financial planning tool of healthcare organizations is the budget. They’ve tried fixed budgets, flex budgets, and even service line budgets, but they’re all too static, detailed, top-down, short-term, and inflexible. They can’t adjust quickly to changing business conditions and they take too long to prepare.    


Trying to keep ahead of changes in the business environment, healthcare administration is changing rapidly, but existing management tools are having trouble keeping pace. The regulatory environment saw a major overhaul with the passage of the Affordable Care Act, ushering in multiple uncertainties that affect the viability of healthcare organizations and insurers. The political climate has changed yet again, and it appears likely that much of the ACA will be replaced by something else, unknown at present. Because of these chaotic business conditions, strategic planning, scenario modeling, and forecasting are more critical than ever. But how do we plan in such an environment? How can we quickly create economic models and various scenarios using the latest business intelligence and market conditions? Providers need to model the effects on their earnings from changing patient and payor mixes, new payor rates, and the costs of serving different patient populations in different settings, from inpatient to outpatient, or from hospital-based to clinic-based.   

To address these shortcomings, economic forecasting and modeling is now practically required for responsible governance. It goes to the heart of what finance professionals do as they attempt to steer their organizations to calm waters. Enhancing the revenue structure? Negotiating contracts? Trying to build new service lines? Then healthcare organizations need to model their revenue and expense streams to simulate various scenarios so that decision-makers can make informed and responsible choices.    


According to the American Hospital Association, there are 5,500 registered hospitals, including 1,800 rural community hospitals in the U.S. There are many times more clinics. All of them engage in planning and forecasting, for better or worse, conducted in-house or with vendor software. By far, in-house spreadsheet planning is the dominant method in use today. FUTURECAST™ is designed to replace such haphazard in-house forecasting.   


To that end, EIS has built a new kind of management tool, one that allows non-financial managers, and especially senior managers, to actively participate, not just stand back and see what Finance comes up with. Hands-on usable for both executives and analysts, it pushes understanding beyond finance and into operations, reducing uncertainty and helping to inform decision-makers of the risks or rewards of their decisions before making costly and irreversible commitments.