BDO’s New Nonprofit Survey: Spotlight on Healthcare Finances & Funding

BDO’s first nonprofit survey, Nonprofit Standards, which polled nonprofits nationwide on strategic planning, operations and board governance, includes new data specific to health and human services (HHS) organizations that speaks to the unique challenges healthcare organizations—especially nonprofit ones—are facing in the transition to value-based payment models. 

The most interesting findings for healthcare organizations centered on finances and funding shifts:
  • Fee-for-service revenue made up half of HHS organizations’ funding, compared to 29 percent across all nonprofits. That’s followed by government grants at 31 percent, which made up just 20 percent of revenue across all nonprofits.
 
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  • The transition toward value-based payment could be squeezing nonprofit HHS organizations’ finances. Across care settings, reimbursement is migrating to episode-based bundles. While 63 percent said their operations yielded net income last year, one-third (32 percent) said their results of operations last year was net loss. Compare that to 22 percent of all nonprofits that reported net loss.
 
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  • Funders of HHS organizations are asking for more information on the outcomes and impact of their dollars. Three-quarters say some or all their funding sources now require more information, compared to 55 percent across all nonprofits surveyed. Specifically, the number of HHS organizations that say 75 percent or more of their funders require more information this year than last far outstripped the average among all nonprofits.
 
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For more findings, read the full report and view the GIFographic here: www.bdo.com/nonprofitstandards.

Ultimately, for health care institutions to survive and thrive through the transition toward value-based care and payment models, they will need to understand the evolution of their revenue streams, funder expectations, and the nature of emerging and existing competition. From there, they can begin to understand how they will create and measure value in this “new normal,” as well as how to create a valuable, sustainable competitive advantage.

For more updates on this topic and others, please subscribe to the BDO Knows Healthcare blog.