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CFO Exchange: Top Execs Talk Strategy

August 16, 2013

At HealthLeaders Media's third annual CFO Exchange, chief financial officers from hospitals and health systems across the country discussed cost reduction strategies and the impact of HIT initiatives on the revenue cycle.



Mark Bogen, SVP and CFO
South Nassau Communities Hospital

Photo: Dana Thomas

What do senior finance executives talk about when they meet with their peers from other facilities, away from the daily demands of leading their healthcare organizations through reform-era turbulence? Cost-reduction strategies. The fate of health insurance exchanges. HIT projects.

Thirty seven chief financial officers from some of the most innovative health systems and hospitals around the country have gathered at the Broadmoor in Colorado Springs for HealthLeaders Media's third annual CFO Exchange from Aug. 14-16.

In roundtable discussions held Thursday morning, the senior finance executives discussed a range of topics and trends, including new cost reduction strategies, the impact on the revenue cycle of IT initiatives and EMR systems, changing reimbursement structures, the clinical shift from a volume to a value-based business model, and the uncertainty surrounding health reform.

When it comes to the Patient Protection and Affordable Care Act, Mark Bogen, senior vice president and CFO at South Nassau Communities Hospital, in Oceanside, NY, says he is skeptical that health insurance exchanges will deliver on the financial promise of decreasing bad debt and providing more insurance coverage to low-income healthcare consumers.

"The whole plan hinges on the expectation that you would get the young folks to buy insurance and that you would take those premiums that they would pay to help subsidize the entire health system. But, in many cases, they don't see themselves as needing health insurance, are not paying into it, and generally not using it... I just think that it more than remains to be seen if it will work. The individuals may decide they would rather take the penalty than buy the insurance even at what may be considered a cheaper premium," Bogen says.


See Also: Preview: At CFO Exchange, Cost Reduction Tops Agenda


Bogen also believes that well-managed provider organizations may still experience financial losses due to healthcare reform by virtue of their geography and other factors that are beyond their control.

"For example, 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. Historically, it has been the employer-sponsored plans that have covered the majority of us [on Long Island]."

Bogen says because 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, health reform may not be a net positive for hospitals and health systems.

"You are now going to have to chase an even greater amount of dollars for the self-pay portion so this idea that Medicare is now going to phase out disproportionate share and all of these other things saying now everybody is going to be covered is ludicrous," he says. "Intentionally or not, the ACA is going to create winners and losers."

On the topic of finding successful cost-reduction strategies, the CFOs were in agreement that simply buying and installing an IT product is not enough to create efficiencies. To truly get the most bang for the buck out of an EMR or other technology product, healthcare leaders must think through workflows and all revenue cycle related processes, they say.

Craig Richmond, associate CFO and vice president of revenue cycle at Cleveland-based MetroHealth, says his organization used its current revenue cycle IT initiative as a chance to reevaluate its entire front-to-back revenue cycle process to find cost savings.



Photo: Dana Thomas

"Currently, we are in the process of replacing our ADT system and moving toward one enterprise IT platform," Richmond says. "One of the approaches that we took was we weren't just going to go ahead with our existing business practice and implement a new technical solution…"

"What we decided to do is take a look at our current practice and our current workflows and see how we could optimize them during the system install. I refer to it as a revenue cycle transformation and at the conclusion of our implementation, which is now set for Feb. 1, 2014, we would be in a position to realize the true value and benefits from our system implementation," Richmond said.

Jerry Arndt, senior vice president, business services, at Gundersen Lutheran in La Crosse, WI, concurs that process improvement must be thought through before an IT implementation begins.

"In my opinion, I think it is important to get the process optimized before you automate it," Arndt, says. "Institutionalizing chaos or automating chaos is not progress. Optimizing and then wrapping your system around it is a much more efficient way to operate."

One change several CFOs say they're making to their organization's processes is to move much of the collections work from the back end to the front end of the business office. There is a trend in staff resources being reallocated to the front end, as well.

"The skills translate very, very well," says Mary Ann Freas, senior vice president and CFO at Southwest General Health Center based in Middleburg, OH. "The added skill that is needed is that ability to handle the customer service piece of it, and they really understand and seem to get it that it's the best thing for the patient not to come in and be surprised by a large bill… Employees really have rallied around helping patients access additional health coverage, either through the state or our own charity programs, so it's really turned out well."

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