4 Top Concerns of Healthcare CFOs

At HealthLeaders Media's recent CFO Exchange, top finance executives from hospitals and health systems opened up about EHRs, health insurance exchanges, and other strategic challenges.

HealthLeaders recently gathered nearly 40 chief financial officers from hospitals and health systems from around the country for our annual CFO Exchange—a three-day event designed to give attendees a chance to share strategies and solutions for tackling some of their most complex challenges through a series of peer-driven roundtable discussions.

While at the event, I took the opportunity to ask these executives what they see as the biggest financial problems their organizations are currently facing. Four themes clearly emerged:

1.Electronic Medical Records

Mary Ann Freas, senior vice president and CFO at Southwest General Health Center in Middleburg Heights, OH, says her institution is grappling with the implementation of a new EHR, an initiative that may not lead to operational efficiencies—at least not immediately—despite its high price tag.

"A particular challenge that we face is the current transition to the electronic health record. Unlike many industries, banking comes to mind, the implementation of automation in healthcare often comes with the need for more staff as opposed to allowing for less."

Freas also notes the need to rethink workflows before installing an EHR. "The implementation of a system in itself will not achieve efficiency if the underlying process is not thoroughly examined prior to the implementation."

Marlene Weatherwax, vice president and CFO at Columbus Regional Hospital in Columbus, IN, says her organization has spent years developing good processes and "leaning about our revenue cycle through the Lean Sigma Six process" improvement initiative.

Even so, achieving a good return on investment on its EHR has been a struggle for Columbus Regional.

"The hard dollar ROI has been very minimal," she says.

2.Physician Alignment

Mark Bogen, senior vice president and CFO at South Nassau Communities Hospital in Oceanside, NY, says formulating a strong strategy around physician alignment is one of his organization's toughest challenges, and one he and his colleagues have yet to get their arms around completely.

"The trickiest part is really the physician alignment piece. We are dabbling in it, but it's not an all out assault. Long Island is unique where there aren't a lot of large medical groups. It's a lot of small practices. We've been reacting when these men and women have been coming to us regarding employment, but we are still trying to figure out what to do with these practices, either to expand them or make them less costly to run," Bogen says.

"That is probably where we have been the most vulnerable and where we haven't been able to spend as much time, money, and effort because of recent requirements of technology and facility upgrades."

Eddie Soler, executive vice president and CFO at Florida Hospital Health System in Orlando echoes Bogen's concerns about finding the right strategy for dealing with physicians, both employed and independent.

"The cost associated with the physician enterprise is not sustainable in the long term, whether it is subsidies for physicians we employ or other fees to physicians we don't employ," Soler says. "The costs definitely outweigh the benefits. We need new models that create better alignment."

3.Health Insurance Exchanges

Bogen also says he is troubled by the uncertainty surrounding the potential financial effects of health insurance exchanges when they go live in New York.

"We don't know what the heck is going to happen in the first year. It's likely that it's going to take some time to develop. It may actually take several years to develop really the trends and the impact of what will ultimately occur under reform," he says, adding that it "remains to be seen if it will work."

Bogen believes that small business owners may opt to take the penalty rather than offer insurance coverage to employees and that most consumers who buy an insurance product through New York's health insurance exchange will choose the plans with high deductibles and co-pays. As a result, provider organizations may find themselves having to spend more time and resources collecting from this high-deductible patient population.

"On Long Island most of the job creation is really by small employers and the ones that have truly been, whether intentionally or not, targeted by penalties that will start in a year," he says. "… [Providers] are now going to have to chase an even greater amount of dollars for the self-pay portion…"

4.Managed Care Delivery Design

Dennis Dahlen, senior vice president of finance and CFO at Phoenix-based Banner Health says his organization's biggest difficulty is building the framework that is necessary to prepare for value-based purchasing and the move toward population health management.

"While it's difficult to isolate just one financial challenge among the many facing our industry, the one that is the least contained—to use a firefighting term—is the investment required to create a care management infrastructure that will provide sustained performance in a value-based revenue environment," Dahlen says.

Building this new infrastructure under the financial pressures created by risk-based payer contracts has not been easy, Dahlen adds.

"We have very mature and highly effective approaches to hospital cost management and moderately effective approaches to managing medical groups, but building an effective care management infrastructure while we're performing under risk arrangements has been more difficult than we originally thought. That infrastructure requires new elements, [such as] navigators, central referral capabilities, armies of care coordinators, and brand new technology that must all work seamlessly together if we're going to provide a highly-coordinated experience."