Senior financial executives gathered for HealthLeaders Media's annual CFO Exchange say their top priorities include managing overall cost reductions and changes to reimbursement models as a result of healthcare reform.
Nearly 40 financial executives from hospitals and health systems around the country have gathered at the Broadmoor resort in Colorado Springs, CO for two days of small-group discussions on the critical issues facing their organizations and the healthcare industry.
This is HealthLeaders Media's third annual CFO Exchange.
To build this year's agenda, we surveyed the attendees beforehand on their priorities and strategies. Two priorities rose overwhelmingly to the top:
- Overall cost reduction and efficiency
- Reimbursement and the impact of healthcare reform
The CFOs also named these dual priorities as the most challenging, which presages a difficult year ahead.
Goals
These financial leaders reported a 10% goal, on average, in reduced operating costs over the next 3-5 years. That figure has remained consistent over the three years of the CFO Exchange. Their organizations have pursued a range of cost reduction and performance improvement programs, with varying success.
Most effective is setting overall system goals and metrics. Nearly equal numbers of CFOs reported positive results as were neutral on the effectiveness of Lean and Six Sigma programs to identify process waste, and dedicated improvement staff and resources.
At the bottom of the list was employee- or unit-based programs with incentives, which the CFOs were either neutral about or had not tried.
Spending Priorities
Spending priorities planned for the 2014 budget led off with medical equipment (such as advanced imaging and robotics) at 30% of capital budgets, on average. Next: brick-and-mortar expansion for outpatient facilities (21%), IT/EMR expansion (19%), and bricks and mortar expansion for inpatient facilities (18%).
HealthLeaders Media's third annual CFO Exchange brings together nearly 40 healthcare finance executives from across the country Photo: Dana Thomas |
In working with payers, three-fifth of the CFOs said they expect a "mixed" relationship in the coming years, described as "we have contracts to reduce costs and improve patient care, but we still struggle to get paid." Smaller percentages described symbiotic relationships and negative dealings.
Regarding value-based contracts with payers, the largest share of CFOs said they had had initial conversations with payers about ACOs, but agreements had not been set. Smaller but sizeable numbers said their organizations had invested significantly in active commercial contracts that cover more than 5,000 lives, or that they are participating in limited pilots with less than 5,000 lives.
Strategies
Despite the challenging environment—or perhaps in response to it—nearly three-quarters of the financial leaders gathered for the CFO Exchange describe their organizational growth strategy over the next three years as "selective." Another 28% say the strategy will be "aggressive." Only one CFO has outlined a cautious strategy.
We asked CFO Exchange attendees to describe their organizations' leadership strategy in a single word. Two words jumped out: innovation and aggressive.
We will be reporting on these discussions in the coming days and weeks, and using the CFOs' insights to deepen HealthLeaders' coverage of the business of healthcare.
Edward Prewitt is the Editorial Director of HealthLeaders Media.
