Funding uncertainty and continued challenges with hiring and retention will make having accurate and timely operational metrics more important than ever, according to Open Minds and the American Bankruptcy Institute.
However, there are 4 difficulties confronting nonprofit boards of directors. Many C-levels can’t “see” (visibility) the information they need. As a result, they don’t know which parts of their strategy and operations work, why they work, and what needs to be changed to adapt to future conditions. These obstacles include:
The Disconnect Between Finance and Operations
For too many providers, there is a disconnect between finance and operations. In this situation, board members and executives don’t know how much it costs to deliver their services, which services are profitable, and which ones are financially unsustainable. When leadership doesn’t know how much it costs to deliver a service or support an individual, they can’t judge if that cost is worth it, and the financial risks can only grow.
After-the-fact quarterly financials can obscure new challenges and weaknesses. Budget reports might show that expenses are relatively in line with last year and revenue appears flat, but is anyone asking the deeper questions?
Are we paying for equipment or software solutions we no longer use or can’t use effectively?
Are labor costs bloated due to overtime and turnover?
Are we funding roles that do not directly support care?
Poor Infrastructure Creating Setbacks
Outdated or disjointed software infrastructure that lacks integration presents a management team (and board) with a whole host of problems. There are ongoing costs to keep old software functional while undermining efficiency, data accuracy, and compliance.
Eventually, allowing software infrastructure to age without updates disrupts billing, documentation, outcomes tracking, and regulatory reporting. And without integrated business intelligence dashboards—which most old software doesn’t offer— leaders can’t see or manage the real-time performance.
Not fixing ineffective or unproductive workflows might seem fiscally necessary in the short term, but it often evolves into a failure to invest in long-term sustainability. Deferred change increases risk, impairs productivity, and reflects deeper strategic misalignment between strategic plans and the future service line investments the organization has prioritized
Underestimating Billing Complexity is Costly
Finally, many executive teams are not able to manage their RCM because they underestimate or don’t understand the complexity of billing. Denials, aged receivables (A/R), and coding gaps often go unmonitored, resulting in a revenue cycle that reduces the proportion of services provided that are paid and further erodes financial viability.
Many organizations’ board members and executives think they know all they need because they have profit and loss statements that track closely with prior years, leading them to believe that their revenue and margins are stable. But using this single measure of organizational health can mask sustainability-killing issues underneath.
Madison Jackson is the Partnerships & Events Manager at MITC.
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