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CFOs: What 2011 Holds for Hospitals

Karen Minich-Pourshadi, for HealthLeaders Media, September 13, 2010
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John Winfrey, CFO,
DCH Health System,
Tuscaloosa, AL;
848 beds;
projected net revenue 2010: $460 million;
net revenue 2009: $438 million;
net revenue 2008:  $396 million

What are the key areas you believe will affect your hospital in 2011?
Medicare and Medicaid Reimbursement. We are expecting to deal with the negative effects of the Medicare payment reduction. We are trying to project what we will see over the next three to five years, and with the reduction we'll lose $7 million annually?Plus, we are seeing more stringent admission criteria from Medicare, so we could potentially lose 40% of our reimbursements.

In the short-term we expect flat reimbursement from state Medicaid. This year our employees got a pay raise; the year before they didn't. Now with this reimbursement reduction I don't think we will be able to give them raises again this year. That's difficult when you are trying to remain competitive and retain and hire good people, especially in the area that we are located.

Healthcare Reform.
We hope that in the next year we'll get a better understanding of healthcare reform and how it will affect us. It will be interesting to see how CMS will interpret it and what changes we'll need to make.

EHR Meaningful Use.
We are applying meaningful use, but for us it's not just about the technology or how we get there financially, but also how we get there culturally. We have the technology in place already; now we are working to get our physicians on board with the order entry system.

ICD-10.
Although it doesn't kick in until our fiscal year 2013, we are preparing for ICD-10 because we need to get our coders up to snuff. They need more clinical knowledge than they have now, and in our area finding additional coders to add to the team with the new coding education is going to be even more difficult.

How are you offsetting negative influences?
We are continuing to stress productivity and looking at new ways to be as efficient as possible. We want to make sure our systems are working well and we aren't wasting time and effort. To that end we are working with the University of Alabama, which has a productivity center on campus, to figure out in which areas we can be more efficient. We are also reviewing our pharmacy contracts and renegotiating our supply cost contracts. But we realize we also need to look for new sources of revenue. In our case we don't have a lot of competition on the inpatient side; we have it on the outpatient side. So we have the radiology clinic and we are now expanding our spine center.

Do you feel the economy is rebounding?
I don't think there's going to be a double dip—I don't see how we can dip again. I think this is going to be a very slow recovery. On the other hand, the southern part of our state along the Alabama coast may see a double-dip due to the BP oil spill. The state is seeing a loss in tourism and that's affecting the whole state.

Michelle Mahan, CFO,
Frederick Memorial Healthcare System,
Frederick, MD;
269 beds;
projected net revenue 2010: $300 million;
net revenue 2009: $290 million;
net revenue 2008: $270 million 

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1 comments on "CFOs: What 2011 Holds for Hospitals"


Shelton McBride, RPh, Consultant (9/24/2010 at 2:00 PM)
This is excellent. Would like to see similar responses from CEOs, COOS, CNOs, CPOs, etc. A nice series would be great. We have so many challenges due to the unknowns we face. We are within 100 days of Bush tax cut extensions, not knowing what will happen. So much of healthcare reform has not been detailed so that we know true costs. This approach is helpful to share the thinking of our leadership. Once we know the issues, we can go after the details and the solutions. Good old days? Gone forever.