CFO Exchange: Weighing Expenses Against Quality Mandates

Cheryl Clark, September 16, 2011

With revenues from commercial and federal payers precipitously dropping, and mandates for reporting and quality dramatically climbing, what is the thoughtful hospital CFO to do?

How much should be invested in ICD-10 technology, which is mandated by the government to take effect in two years, if productivity and revenue may drop as a result? 

How much emphasis should be placed on value-based purchasing and accountable care–style alignment with physicians? And at what point can a CFO determine whether to expect these initiatives to pay off, or advise his or her fellow executives to just move on?

And overall, how can hospitals and health systems take on the tough task of reducing costs – by 10% or 20% over the next five years – while maintaining high quality of care in the best interests of patients?

Those were among the questions weighing on 28 healthcare CFOs, as they gathered at HealthLeaders Media’s inaugural CFO Exchange event  Thursday at the Lodge at Torrey Pines in La Jolla, CA.

Concerns Over Care Coordination
Crystallizing the comments of many attendees, Jerry Arndt, senior vice president of business services at Gundersen Lutheran in La Crosse, WI, described a recent dilemma:

"We have a care coordination program that we use for 1-2% percent of the sickest patients that we take care of," he said. "We spend about $3 million on nurses to run that care coordination program, helping people with medication management and getting their periodic treatments in a timely save the government $18 million of what would have otherwise been revenue coming into our place because those patients are kept out of the hospital."

Gundersen Lutheran, he continued, is doing the right thing for patients in the belief that over the long haul, those types of programs "will fit well into the way healthcare is delivered and the way we finally deal with this cost crisis we've got."

But from a strictly financial standpoint, he continued, healthcare CFOs everywhere are asking, "Is that a safe investment?"

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