Deriving revenue from patient education, behavioral health treatment, and ambulatory care is a hot topic among more than 40 chief financial officers attending HealthLeaders Media's fourth annual CFO Exchange.
Healthcare providers are growing their top line revenue by investing in behavioral health, medical office buildings, even athletic rehabilitation facilities – although often as minority investors, according to a gathering of hospital and health system CFOs convened by HealthLeaders Media.
In roundtable discussions held Thursday morning, the senior finance executives not only discussed growth opportunities, they also tackled cost containment, health reform, insurance exchanges, risk-based payments, care continuum coordination, IT needs, revenue cycle pressure, and other complex financial challenges.
Forty-one chief financial officers gathered at the Grand Del Mar in San Diego, California for HealthLeaders Media's fourth annual CFO Exchange Aug. 13–15.
"Our health system has, in essence, doubled in size in 5 years, a little bit through acquisition, but primarily through primary care growth [and] some specialty group acquisitions," says Jim Dietsche, executive vice president and chief financial officer of Bellin Health System in Green Bay, WI.
Among the innovations that have kept Bellin growing are an oncology program which takes patients from diagnosis to treatment in three days, an expanding orthopedics program, and a partnership with D1 Sports Training, which brought the growing national training and rehabilitation chain onto the Bellin campus.
Another provider at the CFO Exchange, Jupiter Medical Center in Jupiter, Florida, is taking a 40 percent stake in a D1 Sports Training facility as part of its service offering.
"We're trying to be involved in many post-acute care and ambulatory ventures, but we don't want to run them because hospitals generally don't run these non-acute care businesses very well," said Jupiter CFO Dale Hocking.
Another growth strategy employed by Jupiter: It's converted part of a skilled nursing facility into a detox facility that can produce more profits. "We also lease out part of the facility to a hospice, which has [also] proven to be more profitable than skilled nursing," Hocking says.
Education as Revenue Source
In addition, Hocking says health systems may gain previously unavailable revenue from the Centers for Medicare & Medicaid Services to provide education to patients on a cardiac wellness program being offered to hospitals by Healthways, which is implementing the Dr. Dean Ornish Program for Reversing Heart Disease.
"We have all of that infrastructure to do it, and you get paid a pretty good amount of money to do education," says Hocking, who adds that the hospital is evaluating its own demographics to determine if the cardiac wellness initiative could boost revenue.
Partnerships as a path to top-line growth are also continuing.
"In the past 18 months we've partnered on eight ambulatory surgery centers in our market," says Karen Testman, chief financial officer of MemorialCare Health System in Fountain Valley California. "They are joint venture partnerships with physicians and a national surgery center operator, Surgical Care Affiliates."
Behavioral Health Revenue
MemorialCare also recently acquired six freestanding imaging centers. "Our goal is to capture a piece of the growing ambulatory revenue stream and at the same time create meaningful partnerships with our physicians and others who are experts in operating in the freestanding ambulatory environment."
"In addition to our focus on ambulatory growth, we have also recently entered into affiliations with UCI Health to expand primary care access and with Torrance Memorial to expand pediatric access in our local communities."
At Firelands Regional Medical Center in Sandusky, OH, its standing as one of the largest providers of outpatient behavioral health counseling services in the state is now allowing the organization to be the recipient of federal grants aimed at reducing drug and alcohol addiction, says Daniel J. Moncher, executive vice president and chief financial officer.
The behavioral health move is benefiting other revenue streams, Moncher says.
"We've been the beneficiary just recently of grants to do a patient-centered medical home for behavioral health patients, because they tend to have acute care issues and primary care physician issues, but they don't have a doctor," Moncher says.
"Just because of the nature of that patient, they don't take care of themselves clinically. So we've gotten grants and actually put inside of our counseling centers nurse extenders and PAs, and they actually take care of those patients, and that's grown our outpatient revenue."
Outpatient Revenue Growth
After evaluating acquiring other hospitals to grow revenue, Mission Health System in Asheville, NC, decided instead to build medical office buildings in those rival hospitals' service areas, says Mission senior vice president of finance and chief financial officer Charles Ayscue. "We just opened a 30,000 square foot MOB and three more are in the works, one in an area with a new market tax credit."
Since 2010, Mission has grown its outpatient revenue from 32 percent to "the mid-40s," Ayscue says. "We won't settle until we can get that percentage up to around 60 percent."
One barrier to revenue growth at some hospitals: capacity constraints.
"Last week the occupancy at one of our hospitals was at 101 percent for several days," says Beth Ward, chief financial officer of University Hospitals and Clinics, UT Southwestern Medical Center in Dallas, Texas. "The other hospital was at 96 to 98 percent. So a big issue with us is throughput [and] length of stay. We're quaternary/tertiary care. We don't have a lot of the lower-acuity activity that you would find in other hospitals."
Even though revenue growth opportunities seem promising, numerous executives remain nervous about shifting healthcare market conditions that could shrink their existing revenues.
In the past several weeks, MemorialCare has heard of several large local employers who are considering getting out of managing healthcare insurance, so that healthcare would be arranged between physicians and patients directly.
The talk "woke us up a bit, because we had been talking about going direct to employers," Testman says. "If they actually do that, it would definitely change our strategy on the commercial front."
Scott Mace is the former senior technology editor for HealthLeaders Media. He is now the senior editor, custom content at H3.Group.