Healthcare can be a knotted-up, twisted maze of financial complexities, where every decision carries weight far beyond balance sheets. When accounting goes sideways in the healthcare industry, it doesn't cause a delay in widget distribution. No, the stakes are much, much higher—as in a potentially direct impact on operational efficiency and patient care. Families. Lives. And it doesn't get more critical than that.

Yet, this critical area is under siege by a shortage of qualified accountants, putting additional pressure on a system already strained to its limits. So what's a well-meaning healthcare organization such as yourself to do when the accountant well has run dry and workloads are piling up?

That's exactly what we're discussing today, looking at the operational and strategic impacts of the accountant shortage, the talent craters it's leaving in leadership, and what healthcare organizations can do to protect themselves, their stakeholders, and patient care itself. 

Causes of the Accounting Shortage in Healthcare

So, how did this all begin? Did this accountant shortage come out of nowhere and catch everyone off-guard? As you know, getting into accounting isn't exactly a walk in the park. First, there's the daunting 150-hour learning requirement to sit for the exam—which by itself is enough to make many think twice about the profession. Unfortunately, when the urgent need for qualified accountants in an industry starving for them—like healthcare, for instance—bumps up against such tough entry barriers, it's a recipe for shortages.

But the 150-hour mandate isn't the lone cause, of course. Plenty of occupations have even stiffer upfront requirements and aren't seeing such an exodus. In the case of accounting, there are other dynamics at play as well, including:

• Increased Demand: The growing complexity of financial regulations and compliance needs has created additional demand for accountants.
• Declining Enrollment: Fewer students are pursuing accounting degrees.
• Aging Workforce: Baby Boomers are retiring, creating a shortage of replacements. As of 2020,  almost 75% of CPAs had already reached retirement age.
• Talent Competition: The finance and tech sectors often offer more appealing opportunities.
• Burnout and Attrition: Long hours and high stress are leading to more early career changes. Over 300,000 accountants and auditors have left their jobs in recent years.
• Pandemic Effects: COVID-19 prompted many early retirements and career shifts.

And that's just the tip of the iceberg. Suffice it to say, it's a complex problem with complex causes, and it's not going away anytime soon. If ever. Sure, there's chatter about the regulators possibly easing up on the 150-hour requirement. And healthcare organizations could pump some fresh appeal into the profession by spotlighting paths like Certified Management Accountant (CMA) or Chartered Financial Analyst (CFA) that might resonate more with what drives the younger workforce. Both directions would be a big help, but neither is a cure-all.

In the end, it will take a long time to unwind everything plaguing the accounting profession. In the meantime, healthcare leaders must still deal with the steep effects of the shortage.

The Healthcare Accountant Shortage: Operational Impacts and Short-Term Challenges

Speaking of those effects, we could fill acres of digital space with the countless ways the accountant shortage is impacting healthcare operations. From massive hospitals to rural clinics, small practices to long-term care networks, the shortage has hit every possible corner of the industry. It's relentless.

However, to keep this discussion reasonable, we’re just going to examine the immediate, most obvious ways the shortage is affecting healthcare organizations.

Day-to-Day Financial Operations

Hampered accounting and finance functions can make you feel like you're constantly walking a tightrope. High off the ground with no net beneath you, it's a recipe for disaster that can lead to:

• Delayed Reporting and Compliance Issues: When you're short on skilled accountants, financial reports—an essential pulse check for any healthcare facility—start running late. This isn't just inconvenient; it's risky. Late reports mean compliance deadlines whizz by, resulting in glaring regulators, nasty fines, exhausted stakeholders, and angry investors.
• Overwhelmed Staff and Error Surge: With fewer hands on deck, existing staff must pick up the slack. This not only cranks up their stress levels but also increases the chance of errors sneaking into your financials. More mistakes mean more time and resources wasted on fixing them, which no healthcare provider wants to deal with.
• Risks of Fraud: Thinner staffing leads to stretched oversight, creating gaps in internal controls. Fraudsters love such gaps, creating yet another danger that can spiral from disruptive to disastrous if not checked swiftly.

Challenges in Mergers and Acquisitions

The M&A scene in healthcare isn't slowing down. It's essential to the sector. In its DNA. So, if you want to compete, you need some definite M&A chops. Of course, the accountant shortage can throw a bucket of water on your M&A ambitions in several ways, even if you rely on outside specialists for the heaviest transactional lifting:

• Strategic Oversight: Without enough savvy accountants on deck, aligning acquisitions with big-picture corporate strategies gets tougher. Remember, the goal isn't just to close the deal but, more importantly, to ensure it syncs with your long-term goals.
• Integration Snags: What happens once the deal closes? Integrating operations is a monumental task, and understaffed internal finance teams—despite external help—often stumble in orchestrating this complex dance. The result? Bumpy transitions that drag on profits.
• Coordination Gaps: Effective M&As need tight teamwork between in-house finance folks and external experts. But if your internal squad is stressed out and stretched thin, expect mismatches and missed beats in due diligence, opening doors to costly missteps.

Ultimately, quick, strategic decision-making is vital, but without the right people in place, even the best-laid M&A plans could face serious hurdles. 

The Leadership Void

The accountant shortage isn't just impacting staff-level accounting. No, it's rippling up and down the entire chain of command in healthcare finance departments. Only now, on top of the usual stressors, CFOs and controllers are also dealing with:

• Increased Workload: With less staff on deck, finance leadership is drowning in work, covering roles that junior accountants should handle. This overload is driving them to burnout.
• Talent Retention Challenges: Struggling to fill key finance seats, senior leaders are pressing to fill gaps and maintain team continuity and morale.
• Difficulty Achieving Strategic Goals: The lack of experienced accountants means strategic plans often stall or miss the mark, leaving CFOs and controllers frustrated and unable to deliver on promises.
• Increased Regulatory Pressure: Compliance and regulatory demands don't ease up just because an organization has less staff, putting leadership at risk of penalties and even personal liability at times.
• Inadequate Compensation and Recognition: Despite piling responsibilities, many leaders feel like they're not recognized or compensated fairly, prompting them to jump ship for better opportunities.

Once a senior leader leaves, a brand new domino effect kicks in. All of a sudden, junior staff get saddled with responsibilities they're not quite ready for, and the whole department can start to falter under the weight of expectations and workloads. And that's when things can really go sideways.

Finance’s Impact on Patient Care

We saved the most dire and obvious impact for last—patient care. But how, exactly, does a lack of accountants—or even financial leaders— directly affect those in the hospital beds, you ask?

Financial mismanagement doesn't just destabilize the books. Unfortunately, it trickles down into every aspect of healthcare delivery, including quality of care.

For example, when funds are misallocated or lost through errors or fraud, less money is available for critical needs like up-to-date medical equipment, adequate staffing, and essential research. In other words, accounting and finance issues can lead to:

• Reduced Access to Treatments: Budget strains force hospitals to cut back on non-urgent treatments or specialized care, leaving patients with fewer treatment options.
• Delayed Innovations: Because of financial issues, hospitals often delay investing in new treatments and technologies that could improve patient outcomes.
• Lower Staff-to-Patient Ratios: With less staff available, healthcare workers are stretched thin, increasing the risk of burnout and compromising patient care quality.
• Outdated Equipment: Hospitals may delay updating aging medical equipment due to tight budgets, leading to increased maintenance costs and risks of equipment failures.
• Increased Wait Times: Budget cuts affect staffing and capacity, causing longer wait times for patients needing non-urgent care.
• Higher Risk of Errors: Overworked medical staff and a lack of resources can lead to more medical errors, directly impacting patient safety.
• Disproportionate Impact on Vulnerable Populations: Financial challenges force hospitals to cut community programs or specialized services that mainly support vulnerable populations.
• Reduced Preventive Care Initiatives: Budget cuts lead to reductions in preventive care programs, like vaccinations, putting patients at greater risk.

Between day-to-day operations, M&A, leadership voids, patient care, and the endless list of other ways the accountant shortage affects healthcare, the total operational impact is extensive and, to put it mildly, pretty alarming.

Strategic and Transformational Changes in Healthcare

To cope with the challenges we just discussed—and the many we left out—the most successful healthcare organizations are already turning their gaze down the road, toward a future where accounting doesn't necessarily mean what it once did. Some of the strategic and transformational, longer-term changes we're seeing from our healthcare clients include:

A Shift in Healthcare Leadership

It's no secret that the healthcare field is seeing younger faces in the CFO's chair. While it's refreshing to see new people step into leadership roles, a lack of experience, competencies, and leadership skills—especially with complex healthcare operations—can make things tricky.

Yes, young leaders can bring visionary leadership styles to the senior management ranks, bursting with ideas. In that sense, an innovative mindset can undoubtedly help address many of the issues stemming from the accountant and turnover crisis. However, greenhorn CFOs—and CEOs, for that matter—can also struggle with the gritty details of effective leadership and financial management. Therefore, there's a real need for both leadership development programs and seasoned financial wizards to serve as role models, guiding enthusiastic but often overwhelmed newcomers into their new leadership positions.

Investing in Financial Technologies

Expanding on the previous point, innovation is the future of finance in healthcare. Or, put another way, the old-fashioned spreadsheet just doesn't cut the mustard anymore. Although healthcare has traditionally trailed other industries on the back-office technology front, the time to catch up is now, primarily by:

• Automating the Mundane: AI and Robotic Process Automation (RPA) aren't just buzzwords—they can take over mind-numbing, number-crunching tasks, freeing up finance pros to focus on bigger pictures and better strategies.
• Securing the Data: A secure and stable data environment makes for a secure and stable organization. Rock-solid IT is a big deal in healthcare, especially with so many M&A deals occurring. Thus, all things digital—including financial matters—are under the microscope.
• Better Integrating Technology: Sure, technology sounds great, but the real hurdle is getting everyone and everything up to speed. That's what makes a strategic integration plan so critical for continued high performance. A sound plan accounts for project and change management needs to ensure you implement the tech properly while maximizing adoption and collaboration. Not an easy task.

Talent Retention and Acquisition Strategies

This is the elephant in the room. While the accountant's role in healthcare is definitely evolving because of the shortage, there will always be a need for bright, eager accountants. Which begs the question—how do you buck current trends to both attract and retain the accounting talent you need to make everything go?

Well, finding and keeping bright minds is more of a marathon than a sprint. That said, a few immediate things to keep in mind:

• More Than Money: Yes, competitive salaries are important, but how about throwing in perks that really matter, like stellar health coverage, ample PTO, or even gym memberships? That's just for starters.
• Work that Flexes: Being rigid doesn't work anymore. Offering options like remote work days or flexible hours can be a game-changer in healthcare management and staff retention.
• Keep Growing: Encouraging ongoing education and advancement opportunities not only polishes skills but also shows team members they're valued and their growth matters to your organization.

Outside Specialists

Last but not least is the ever-growing importance of experienced outside specialists to organizations across the healthcare industry. The right partners are a competitive advantage that others simply can't match, whether for M&A, identifying and implementing the ideal ERP,  revamping your budget process, or virtually anything else.

Because, like it or not, it's a new day in healthcare accounting and finance. People are retiring. Entering other fields. Chasing their van life dreams. Bottom line—the accountant's role in healthcare is forever changed. Granted, you can make the exact same statement for many other industries since accounting as a profession is taking the hit, not healthcare specifically.

Still, few industries have such high stakes as yours. Therefore, how do you flourish when everything seems up in the air? When you can't keep the accountant coffers full? You turn to the right outside experts, that’s how. You turn to Embark.

We understand healthcare. We've been in your shoes. And there aren't too many partners out there that combine such deep industry expertise with the accounting, finance, tech, HR, and operations chops you need to get you through every storm. To thrive. Yes, the accountant shortage is significantly impacting you and your industry. But that's okay, because we're going to help you adapt and conquer. So let's talk and see how Embark can transform you into the healthcare organization of tomorrow. And there's no time to start like today.