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Hospital CFOs as Quality Leaders

 |  By ebakhtiari@healthleadersmedia.com  
   August 16, 2010

When Paul Weygandt was presenting to a room full of hospital CFOs about the potential ramifications of the not-yet-passed healthcare reform legislation last year, he asked for a show of hands of how many in the room were involved in their organization’s clinical quality program. Not many went up.

But they should have, argues Weygandt, whose credentials include an MD, JD, MBA, and MPH. He is currently vice president of physician services with Atlanta-based consulting firm J.A. Thomas & Associates.

When an industry undergoes a major transformation, the priorities and skill sets of its leaders often change as well. We can already see the impact of reform and recent changes in healthcare, as physicians rethink how they deliver care and hospital CEOs shift their strategic priorities. Hospital CFOs are adapting, too, and in the future they will need to be much more focused on and involved in quality improvement than in the past, he says.

For the last couple of years, financial leaders have been captains in a storm. While long-term strategy hasn’t completely faded, weathering the recession has been priority number one. Now that the storm is breaking, the future is starting to become clear: Accountable care organizations (ACOs), bundled reimbursement, pay for performance, and other value-based purchasing systems will become the norm.

As revenue becomes increasingly tied to quality, the financial management and quality improvement efforts within a hospital or healthcare system will grow interdependent. “CFOs now recognize that linkage of revenue and quality, and they’re going to be seriously concerned about quality metrics,” he says.

A CFO looking at the bottom line is now not only concerned with costs and revenue growth, but also with poor communication among clinicians, hospital-acquired infections, patient follow-up, and a host of other quality issues. Documentation and measurement will also be front-of-mind, because that will be the basis for reimbursement. An organization with high-quality clinical care will not get paid for it if the documentation is poor.

Beyond Medicare pay-for-performance systems, many private payers are already paying a premium for higher quality, which is becoming a bargaining chip in contract negotiations.

On a practical level, that means CFOs and Chief Medical Officers and clinical improvement leaders will need to start attending more of the same meetings and reading more of the same literature, he says. In addition to financial spreadsheets, CFOs should be able to review case-mix index, acuity reporting, and other major metrics.

Does this mean financial leaders of the future will need a clinical background or will spend an equal amount of time focused on clinical issues? Probably not. But the silos need to be broken down, and communication between the two areas will need to improve.

The entire healthcare system is in the process of transforming based on the notion that money and quality are not only connected, but that one can influence the other. That means hospital CFOs will not only have to take more interest in quality improvement efforts under a new payment system; they will have to lead them.

Elyas Bakhtiari is a freelance editor for HealthLeaders Media.

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